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Europe's Five Biggest CrowdFunding Centres

Europe's Five Biggest CrowdFunding Centres


Europe’s alternative finance sector grew by 144 per cent last year but remains completely dominated by the UK. A new study conducted jointly by Cambridge University and the consultancy EY suggests the alternative finance market across Europe as a whole raised €2.96bn over the whole of last year, up from €1.21bn in 2013, with the UK accounting for around three-quarters of the 2014 figure.

On current trends, EY and Cambridge University expect to see alternative finance raise €7bn during 2015. Consumer lending remains the biggest sector of the market, but small business funding – through equity, debt and rewards-based financing – is catching up fast.

Moreover, as well as supporting small businesses, the alternative finance industry is almost entirely comprised of fledgling enterprises itself. These operations are succeeding, says EY partner Andy Baldwin, because they take a customer-centric approach that has been sorely lacking in conventional financial services.

“The sector showcases innovation, in terms of both business models and technological platforms,” Baldwin says. “A high proportion of the businesses featured in this survey operate solely online, with websites that have been designed from the outset with the needs of the customer in mind – compare that with traditional financial services firms that are working hard to redesign their products and processes to meet the demands of the internet age.”

The question now for these traditional players, Baldwin suggests, is to work out how seriously to take their potentially disruptive new rivals – and whether to pinch their ideas. As that debate continues, the alternative finance sector is set to continue growing throughout the 27 countries that the study’s authors looked at. At the end of 2014, the top five European alternative finance markets were:

UK (industry worth €3.56bn)
Britain’s crowdfunding sector has benefitted from its early-mover status – the concept was invented by Zopa a decade ago – and a regulatory system that has been supportive since the beginning. Now seen as mainstream, peer-to-peer lending is about to win new tax breaks, paving the way for further growth, while equity-based crowdfunding has been helped by new investor protection rules.

France (€253m)
The French crowdfunding sector is growing remarkably quickly, with 70 platforms today, compared to just two six years ago. With supportive government – new regulation introduced last year has eased the way for a number of launches, while public money is now being channelled through certain platforms – that growth looks set to continue.

Germany (€236m)
Germany’s crowdfunding market dates from 2006 and is well-established, with peer-to-peer consumer lending accounting for the lion’s share of the overall totals raised so far. There is concern, however, that new laws published last year on information disclosures and advertising could be an inhibiting factor on future growth.

Netherlands (€155m)
Around 30 companies currently offer one form of crowdfunding platform or another to Dutch savers and investors, with the industry attracting increasing support from the government of the Netherlands. For now, the industry remains fragmented, with regulators waiting for it to reach greater maturity before introducing formalised rules.

Spain (€101m)
As Spain continues to fight its way back from financial crisis and recession, innovative new financial services are welcomed by public and policymakers alike, which is in the country’s crowdfunding sector’s favour. Legislation prevents projects raising more than €2m in any one fund-raising (or €5m for accredited investors) and there is some confusion about conflicting regulation. Nevertheless, both consumers and small businesses are increasingly making use of platforms.

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