Crowdfunding and crowdinvesting were among the main topics of the conference. Oliver Gajda, President of the European Crowdfunding Network (ECN) and Paul Pöltner, co-Founder of CONDA Crowdinvesting presented the global best practices of crowdfunding.

Oliver Gajda, President of European Crowdfunding Network, the most significant European association of the crowdfunding market institutions which is involved in the preparatory discussions about the EU regulations, highlighted the significant role of crowd funding in improving the competitiveness of SME’s, as it offers access to capital to typically non-bankable, but very significant and innovative market segments like the IT.

Lecture by Oliver Gajda at the event. Image source: Privátbankár.hu. Photo: András Bánkúti.

Mr. Gajda mentioned the significant growth of the European crowd investing sector: alone on Crowdcube 19% of the British unicorns were crowdfunded and the portal completed 15 rounds over EUR 1 million. Crowdcube has reached over 1000 campaigns in the value of GBP 580 million; out of which were several over EUR 1 million. Seedrs, another UK platform had over 900 successful campaigns through 330,000 investments. The French, the Italian, the Spanish, the Austrian, the Scandinavian and the Baltic countries have a flourishing crowdfunding culture, too. In Lithuania, a Law on Crowdfunding strengthens the sector since 2016. This crowdfunding activity results in a competition among investors for the best startups; and since the main resources a startup can raise are the funds it can raise, startups will choose the platform with the most promising funding options.

The growth opportunities will elevate from the new crowdfunding regulation ECSP (European Crowdfunding Service Providers Regulation) that is expected to enter into force in 2020. The ECSP focuses on the harmonization of the currently fragmented European crowd funding market with the aim of increasing the volume of crowd investing while also ensuring investor protection. Mr. Gajda recalled that the most significant law of the domain, the Prospectus Regulation already eliminated the member states’ rights to demand a Prospectus for public offerings under EUR 1 million. “The current trialogue between the European Commission, European Parliament and European Council are focusing on raising the minimum from the current EUR 1 million to up to 8 million. We may end up with 8 million or 5 million or different thresholds in different member states”. As Mr. Gajda concluded: “We hope of course, and we believe that the trends in the market indicate this too, that we will get a harmonised threshold at the 8 million level.”

Paul Pöltner, co-founder of one of the largest Austrian crowdfunding platforms CONDA, summarized the results and experiences of the CONDA platform. Since the Austrian Alternative Financing Act entered into force 4 years ago, in over 100 campaigns, EUR 22 million entered into the Austrian economy through the platform, as the Austrian startups could take advantage of all aspects of crowd funding, such as open innovation, branding and marketing, community building and the power of crowd capital. The Austrian law allows companies to raise funds up to EUR 5 million per annum without the obligatory Prospectus, and puts a limit of EUR 5000 per annum for individual investors to participate in such offerings.

Lecture by Paul Pöltner at the event. Image source: Privátbankár.hu. Photo: András Bánkúti.

Mr. Pöltner mentioned a few of CONDA’s successful campaigns, such as building a sports stadium, investment in an innovative hotel, several craft beer campaigns and tech companies. Most of the campaigns on the platform were highly successful, which is due to the careful selection of the companies and their preparation to the campaigns. However, investors must be informed of the possibility that the campaigning companies might fail. The platform does not take any responsibility for the information published in the campaign but validates them with the best effort. All these campaigns go through CONDA’s validation process, which usually takes 4-6 weeks. The platform reinforces KYC and AML processes in order to identify investors in accordance with the relevant regulations.

After the lectures of the international professionals, the audience had a chance to hear a few pitches. The pitches were given by startups that will launch equity crowdfunding campaigns on Tokeportal.hu soon. The summary of the pitches will be in focus in the next blog post.