Not so long ago an investor could reasonably object to some of the processes inherent in European crowdfunding. The use of popular, open investment calls really got underway in the late 2000s driven by pioneering platforms in the US, like Indiegogo and Kickstarter, followed closely by peers sanctioned under EU rules, the likes of Crowdcube, Lendahand, others.
A major detriment to crowdfunding has been the lack of quality control for investors; this was exacerbated in the EU by the existence of 27-28 separate private equity markets, each having possessed its own regulatory structure.
A couple of years ago the EU moved to standardise crowdfunding rules: introducing the ECSPR framework. With a common playbook now covering investor complaints, conflicts of interest, and diligence on the investee's default record, the stage is set for further crowdfunding ecosystems to emerge.
EU bigwigs became keen on the idea given that crowdfunds represent a viable alternative to raise financing, but also because it connects entrepreneurs to more people enthusiastic about their concept, providing insights, info and marketing opportunities.
Streamlined regulations have piqued the interest of the US equity crowdfunder WeFunder, which, for the first time since its inception in 2013, is accepting registrations by EU startups.
The launch comes after WeFunder initiated Berlin to open a new branch office, becoming the first facilitator to "bridge the US-EU startup fundraising ecosystem at scale." In addition to Berlin, Tech.eu has learned WeFunder has a remote presence in Barcelona and Amsterdam.
EU companies already using WeFunder to procure crowdfunded venture capital include Germany's Kombuchery, Everjump and AheadApp, along with BarnaBrew in Spain, Volup in Portugal, and Denmark's Wedio.
Kombuchery's CEO and co-founder, Maximilian Seedorf, said WeFunder had given his team an opportunity to professionalise the resourcing of its future crowd investments.
Seedorf said: "As a company with sustainability, social responsibility and transparency in its DNA, it is mportant to us not to compromise on the shareholder list either. Wefunder offers us, in comparison to traditional crowd-funding, the possibility to have a professional setup for tens of thousands of customers, as well as experienced investors from all over the world."
In the US, Wefunder currently has a 40 percent market share facilitating community round fundraisings, the company having supported more than $575 million in crowdfunds being raised to date. Up to €5 million in crowdfunds can be raised by startups through EU-licenced platforms under the new rules, whether the founder lives in Tallinn, Madrid or Stockholm.
Nick Tommarello, the CEO and founder of Wefunder who remains based in the US, was keen to talk up the potential to replicate its success democratising capital access for EU founders.
Tommarello said: "We have worked tirelessly to democratise access to capital for founders for more than a decade, and to be able to bring this opportunity to EU-based companies is incredibly exciting.
"One of the most powerful forces in the world is when someone believes in your company and backs it up with a bit of their own money. Wefunder now allows that to happen, at scale in the US and EU.”
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