Starting in the Nordic states, Sweden is and has always led the way. Indeed Crowdcube have an office here and the Swedish firm Fundedbyme has been successful with ECF. Like the UK, Swedish regulators have allowed non accredited investors to take part. It’s still too early to see the outcomes.
Norway has this week launched its first equity crowdfunding platform – Sparkup-Norge. Set up by a Swede, Camilla Andressen, it is run along the lines of private investment club where you bring your own investors; ‘lovemoney’ they term it. The platform facilitates the campaign and the legals. It’s a new development and will be interesting to watch.
The Germans have been very cautious over ECF. They can afford to be with a far better bank lending record for Germany’s 2.1m so called Mittlestand companies (our SMEs). Following the banking crises in 2008, UK banks stopped lending to SMEs’. In Germany bank lending to companies increased. Combine this with a more long term attitude to business growth and the reasons which drove the rise in ECf here do not exist in Germany. Pressure to compete may well change this in the future. Current sites like Seedmatch offer subordinated loans as opposed to equity funding.
In France the need for new sources of SME investment is a critical issue. The French have limited the use of ECf using CIP and other regulations to control the type of investor allowed to use ECF and the total amount raised per annum. This is again a complicated area and use of EU wide regulatory certificates has made it possible for platforms to override the regulations at a national level. The EU needs to set one standard. A space where the French do appear to stolen a march on everyone is the in the creation of the first alternative SME equity market – Alternativa. Volumes are tiny but it is a start. Alternativa’s sister company raises ECF, again in tiny volumes. One notable success was Domaine Chanzy, although plans to then list on AIM along with a Seedrs ECf campaign were cancelled.
As you might expect the situation in Italy is a mess. Decree 3, as the new law passed in the summer of 2015 was imaginatively called, limited the use of ECf to SMEs that were ‘innovative’. According to an analyst at Moody’s, only 7,000 of the country’s 3.7m SMEs would be eligible under the new rules – a figure that translates to 0.2%. With the country’s reputation for financial mismanagement it is hardly surprising that the Government is taking an ultra-cautious approach. Industry experts predict that it will not be until Italian SMEs can access ECf from outside the country that things will change.