In November 2021, pan-European crowdfunding rules became actionable after approval by the European Union in 2020. Under the new rules, or European Crowdfunding Service Providers Regulation (ECSPR), a platform may raise up to €5 million from investors in all member states. This opens up investment crowdfunding to over 300 million EU citizens. The industry has heralded the new rules as a transformative event – a change in policy that took around 9 years of advocacy from industry insiders. At the same time, ECSPR is foundational to the concept of European monetary union – the ability for goods and capital to flow seamlessly across the EU.
Under the new rules, a securities crowdfunding provider must be approved by the “relevant authority” within the country where it is based. This has led to some discrepancies between regulators as some have moved quicker to craft a process for ECSPR approval while others have moved more slowly. The disparity between countries led the EU to delay full compliance until November 2023 (originally set for last November).
After a two-year period, the updated rules are expected to be reviewed, and there is a possibility the funding cap will be raised.
Crowdcube, a UK-based online investment platform that had established a European operation based in Spain years ago, because the first issuer to raise capital under the harmonized rules. In the ensuing months, multiple platforms have received approval from their member state regulators.
The harmonization is expected to generate more competition as well as consolidation in the industry. Invesdor is one platform that moved quickly to merge with other platforms. ECSPR will also encourage international (or non-European) platforms to enter the EU. Wefunder, one of the largest Reg CF Funding Portals in the US, was only recently approved to provide securities crowdfunding service in the EU. Seedrs, once a top UK platform that has been active in Europe, was purchased by Republic in 2021.
Below is the list of current ECSP-approved platforms as of today. Some of these platforms are debt focused; some are niche like real estate or renewable energy. Some plan on offering secondary transactions via a bulletin board-type service. What is certain is that expectations are for more to follow as online capital formation for private securities picks up in Continental Europe.
- Crowdcube Europe – Spain
- CrowdedHero – Latvia
- LendaHand – Netherlands
- Villyz – France
- Oneplanetcrowd – Netherlands (acquired by Invesdor)
- Spreds – Belgium
- Seedblink – Romania
- NLInvesteert – Netherlands
- Kapitaal Op Maat – Netherlands
- Fellow Funders – Spain
- ZIB Investments – Netherlands
- Enerfip – France
- Fundeen Platform – Spain
- Beefordeal – France
- Horeca Crowdfunding Nederland – Netherlands
- Wefunder EU – Netherlands