The number of opportunities presented online fell 17 per cent in the first half of 2016, when compared to the same period a year ago. The research didn’t reveal if the number of completions has also dipped.
The research is, at best, inconclusive. The vote was only on the 23rd June this year, so right at the end of the first half. Expectations were very strongly in favour of a ‘remain’ vote right up until the actual result on the 24th June. So without conclusive evidence that this vote had an effect on the number of campaign listings, this research seems to come to the wrong conclusions.
So, what might the alternative reasons for this slowdown be?
One very obvious one is pure exhaustion. Whilst Equity Crowdfunding started back in 2011, investors have, as yet, not seen many significant returns, and are beginning to see a number of high-profile failures and perhaps even some suggestions of fraud. It is quite likely that early adopters have had enough of jam tomorrow and are looking for other interesting ways to spend their spare cash.
There was always bound to be a shakeout in this sector at some stage. The differing platform models offer two very distinctive approaches – one is fundraising-led and the other is a more serious attempt to balance fundraising with an ROI for investors. The former is likely to run out of steam if investors, who are the fuel in this process, don’t see any ROI.
Sure the “Brexit affect” will have an impact on post-Brexit campaigns, but the evidence for this is still anecdotal.
The recent Crowdcube raise on their own site might be evidence of this slowdown also. The platform claimed to have over £40 million in pledges before the campaign went live. In the first 24 hours, the campaign roared to over £6m, but only rose to £8m in total rather than the pre-pledged £40m, despite valiant PR efforts to get it going. Perhaps some of the fuel is spent?