The Latest Crowdfunding News – 12/9/16
The Latest Crowdfunding News
Hi guys and welcome to our first September crowdfunding news edition. As usual we will be taking a look at the latest goings-on in the world of crowdfunding and today we start our round-up by focusing on Kickstarter who have headed east and launched in Asia to looking at how European alternative finance performed in 2015. Missed our recent round-ups? If so, catch up here.
Kickstarter Launches in Asia
Kickstarter, one of the most well known crowdfunding sites has launched in both Hong Kong and Singapore respectively, and are their first ever sites in the continent.
Prior to launching in Asia, Kickstarter only operated in Europe, North America, and Australia.
In the past, entrepreneurs from Singapore and Hong Kong had to co-operate with overseas partners if they wanted their ideas published on the site.
With the crowdfunding giant now launching in Hong Kong and Singapore, people can present their projects from a local network as well have their fundraising goals set in Hong Kong/Singapore dollars.
Kickstarter will now compete with local sites such as FringeBacker from Hong Kong as well as the likes of OurCrowd and MoolahSense from Singapore.
Just like other crowdfunding sites, Kickstarter gains a cut from each project that has been pledged by its backers.
Well known Kickstarter projects include the Oculus Rift, which received its first funding via Kickstarter back in 2012 to the Pebble smartwatch.
Image Source : BBC News
Finnish Crowdfunding Act Updated
From Asia to now travelling to Scandinavia! A few days ago in Finland, the government updated its crowdfunding act, the new legislation makes it easier to register, for example, until now, equity crowdfunding in the Scandinavian country has required an investment firm license from the Finnish Financial Supervisory Authority (FIN-FSA). However, the license slowed the market entry for new players.
Registration is a considerably more affordable alternative to the investment firm license, and this therefore allows new players into the market.
Investor protection is still at a good level under the new act, despite the fact that the registration process is a lighter form of regulation than a license.
In addition, the new Finnish crowdfunding act does not cover rewards or donations based crowdfunding models. For example, rewards-based models that are used by the likes of Kickstarter fall under consumer protection acts. In contrast, donation based crowdfunding in Finland is legal, anyone who wishes to create a donation based campaign must obtain a special fundraising permit from the police.
To sum it up briefly, Whilst the overall market size of alternative finance in Finland is relatively small, the government and industry bodies are hopeful that a balanced regulatory approach will help boost the up and coming sector.
Native equity crowdfunding company Invesdor’s CEO Lasse Mäkelä recently told Crowdfund Insider that the new Act should increase growth of the Finnish crowdfunding market. He stated :
“On a European level, crowdfunding volume is expected to double this year. We believe that with the new legislation Finland will be able to reach similar numbers.”
Crowdfunding in a tub! A brief insight into Oppo Ice Cream
At The House Crowd we love a good crowdfunding story and thought this was worth a mention (especially if you love ice cream!).
Back in 2015 Oppo Ice Cream at the time, was the most the “most overfunded” offer ever on Seedrs.
The London based company had originally set out to gain £150,000, however, they received triple the specified amount. Earlier this year they was again returned for further funding via Seedrs and smashed their £150,000 in just six hours!
Just like us, they too went on Dragon’s Den, they might not of had much of a slaying as what Frazer experienced, but again just like us being on the show helped propel their product.
Although they came out of the den empty handed, they revealed that they had no intention of taking The Dragon’s money as they had already funded the business by offering shares to their fans which they felt was a much better way of growing their brand. Going on the show for them was about spreading their message to the British public that you can indeed indulge in luxury ice cream… without looking like you have.
As we know, gaining business success is not a walk in the park, and it is something that takes hard work to cultivate. Oppo is also a great example of a small company that leveraged investment crowdfunding to take their business and product to the next level and a tasty investment it turned out to be!
Image source : Crowdfund Insider
FCA Calls for Input on Equity Crowdfunding Regulation
Upon releasing the new rules in 2014, the FCA promised a post-implementation review of the crowdfunding market and regulatory framework in 2016 (the “Review”). (Lexology, August 2016)
The financial body has released a ‘Call for input’ which describes the results of their initial market research and sets out a number of questions. The questions are linked to a range of areas and the document contains some hints on the future direction of investment based crowdfunding regulation.
Firstly, one key area that they will be taken into consideration is due diligence. Current regulations do not set a minimum standard of due diligence, the regulations cite concerns relating to financial crime and stresses the importance of protecting the interests of investors. They therefore suggest that minimum standards may be introduced.
Secondly, they’ll take client assessment into consideration. The regulator wants to review the extent to which firms are meeting these requirements and whether clients are sufficiently informed to understand the risks that are involved. In addition, they may consider publishing further advice on how to ensure retail investors meet certain criteria as well as introduce sanctions for companies who do not abide by the rules.
Lastly, the FCA will be looking at disclosure. As Lexology mention in a recent blog article, equity crowdfunding platforms are required to provide potential investors with sufficient information so that they are reasonably able to understand the nature of the product and its risks.The Review will look at whether this high-level rule is sufficient to protect investors.
So what happens now? There are currently no proposals to change the regulatory framework for crowdfunding platforms. However, anyone with an interest in equity (or loan-based) crowdfunding has to submit their response to the FCA before 8 September 2016. The feedback will then be used to inform the FCA’s continuing review of the current market. After the Reviewing process, the financial regulator will consider publishing a new consultation document which will include any proposed rule changes.
European Alternative Finance Jumps to €5.4 billion in 2015
One news story in particular that we stumbled across this week and everyone in the alternative finance community was talking about was Europe.
A report published by the Cambridge Centre for Alternative Finance (CCAF) entitled “Sustaining Momentum“, looks at the rapid growth of alternative finance across Europe.
In a nutshell, the CCAF reports on the ongoing growth of alternative finance including peer to peer lending, crowdfunding and more. Their findings show that alternative finance jumped 92% year over year to €5.4 billion in 2015.
In addition their research revealed that the UK continues to dominate the continent at €4.4 billion in aggregate funding. France and Germany are second and third with €319 million and €249 million respectively. The Dutch also performed well with €111 million. If you remove the UK out of the picture, European alternative finance increased by 72% year over year going from €594 million in 2014 to €1.019 billion in 2015. While the overall rate of growth slowed, the industry is gaining momentum as new regulations from across the continent take place as well as an array of platforms start to mature.
Interested in the CCAF’s research? If so, read their research embedded below.
What Are Your Thoughts?
Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.
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