Investment crowdfunding has gone through various iterations since its inception. Too frequently confused with rewards offerings, which are really ecommerce with a delay, securities issued in an online offering are a financial ecosystem that will continue to persist and thrive over time.
At the same time, various markets have struggled or declined. Some of this is due to broader economic trends. There also remains a nagging issue of mediocre offerings – or sales of securities with ridiculous valuations that will inevitably end in disaster.
In Europe, a recent post by Eurocrowd is of interest as it highlights two of the larger European Union markets for online capital formation: Italy and France.
In France, as previously reported, the securities crowdfunding market has declined. To quote the Eurocrowd report:
“The French data paints a picture of a market in transition. Beneath stable headline volumes (€819M raised, just 1.3% below S1 2024) lie three divergent trends: the collapse of equity crowdfunding, the resilience of loan-based models, and the stark contrast between struggling real estate and surging renewables.”
The missive posits that for platforms that adapt, these firms will thrive.
More details on the split:
“Equity crowdfunding plummeted by 47%, from €123.7 million to €65.8 million, a stark reversal that undermines one of ECSPR’s central goals: democratizing early-stage investment.”
Debt- or lending-based online offerings “expanded to €680 million,” indicating greater resilience.
Looking at Italy:
“In the last 12 months, inflows in Italy reached €302 million, down 5.3% year-on-year. Equity crowdfunding in Italy dropped 25.5% to €106.5 million.”
Real estate persisted, though, as the property sector generated “€191.6 million in the same period, up 7.2%, but with lending or debt up 20.9% and real estate equity sector declining by 14.7%.
Eurocrowd describes the EU crowdfunding market as “under strain” with the drop in the French market by 47% the most worrying trend.
So what needs to change? Eurocrowd believes that focusing on transparency and earning investor trust is vital. And shifting to assets that are generating more interest is a better strategy.
This is an interesting report, but it makes no mention of digital assets, whether securities, commodities, or something else. All platforms should be migrating to, or planning a digital asset strategy.
And focusing on deal quality, along with combining retail and professional money, could help. Access to more mature private firms is a trend we are seeing in the US and the UK, but it is less prevalent in continental Europe.
The Eurocrowd post is viewable here.