Crowdfunding for SMEs

A European Perspective

herausgegeben von: Roberto Bottiglia, Flavio Pichler

Verlag: Palgrave Macmillan UK

Buchreihe : Palgrave Macmillan Studies in Banking and Financial Institutions

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Crowdfunding for SMEs: A European Perspective provides a valuable insight into this new source of capital. In particular, the authors focus on financial return crowdfunding, which repays the crowd either through debt or equity. This source of capital might play a significant role in the future becoming an alternative or a complement to traditional funding sources. It is therefore of the uttermost importance to understand what has boosted its exponential growth in recent years, as well as the key drivers of success of P2P lending and equity crowdfunding campaigns on both the funders and the fundraisers side.

Due to the financial nature of the return provided to the crowd, financial return crowdfunding has been the object of recent waves of regulation, although the European Union still lacks a set of common rules. The aim of regulation should be twofold, to protect investors and, at the same time, to favor the financing for SMEs. In this book, the authors explore such issues and the regulatory policies, while looking to the future of financial return crowdfunding as an evolving source of capital.

Inhaltsverzeichnis

Frontmatter

1. Introduction

Abstract

Crowdfunding for SMEs: a European perspective gives a valuable insight into this new source of capital. In particular, the focus is on financial return crowdfunding, since its role in the future as an alternative or a complement to traditional funding sources is likely to become even stronger. It is important to understand what led to this exponential growth in recent years and identify the driving forces of success of peer-to-peer lending and equity crowdfunding campaigns on both the funders’ and the fundraisers’ sides. Because of the financial nature of the return provided to the crowd, financial return crowdfunding has become a focus for regulators, although the European Union still lacks a set of common rules.

Roberto Bottiglia, Flavio Pichler

2. Crowdfunding as a New Phenomenon: Origins, Features and Literature Review

Abstract

Crowdfunding is a relatively new funding practice that is undergoing strong growth based on the predominance of such Web 2.0 technologies as social media in the past few years and the opening created by the credit squeeze that has continued since the global financial crisis that broke out in the summer of 2007. To gain an understanding of the role crowdfunding can play within the financial system, this chapter starts with its origins, highlights its main characteristics and draws attention to the associated risks and financial return crowdfunding in particular. Due to its novelty, literature on crowdfunding is quite scarce, but the chapter reviews the most important studies on success factors for crowdfunding campaigns and suggests paths for future research.

Flavio Pichler, Ilaria Tezza

3. Web 2.0 as Platform for the Development of Crowdfunding

Abstract

Crowdfunding is a recent development that has changed the way start-up business are created and funded, as well leading to investment opportunities and boosting related markets. In a broad perspective, the consequences of crowdfunding for the organisation and functioning of economic activity in general are potentially significant and largely unexplored. Indeed, if crowdfunding continues to expand, the whole system of production and distribution could change. This possibility is not, however, considered here.

The internet and so-called Web 2.0 enabled crowdfunding to develop. To understand crowdfunding in more than its technical and financial aspects it is therefore necessary to have a notion of the logic, instruments and background of online technologies. Accordingly, we first consider the general features of Web 2.0 as an individual and collective environment for communication and interaction. We then describe crowdfunding and the features of Web 2.0 in relation to crowdfunding, defining the participants, information and financial flows and the objects exchanged. We also discuss the consequences of this new form of collective funding-investment and conclude with some questions to stimulate reflection about theoretical and practical aspects.

Federico Brunetti

4. Competitive Frontiers in P2P Lending Crowdfunding

Abstract

Lending-based crowdfunding or peer-to-peer (P2P) lending is a major expression of ‘alternative finance’ and is often considered in two components: P2P consumer lending or personal finance for private consumption, and P2P business lending for small and medium-sized enterprises. P2P lending can be defined as the collection of financial resources and the issue of loans via web platforms. Hence, a new financial circuit is created with respect to the traditional financial circuit operating in credit and financial markets. A crucial question emerges about whether this new circuit is complementary or alternative to traditional financial intermediation. This chapter firstly describe how P2P lending platforms work and how P2P lending has spread in the past few years. Second, we sketch the characteristics of P2P lending to illustrate the causes of its recent strong development and to identify traits that may assist us in defining its future outlook. Third, we focus on the competitive advantages of P2P lending platforms and on issues and risks stemming from their operating model.

Roberto Bottiglia

5. How to Obtain Credit from Alternative Funding Agents

Abstract

This chapter identifies the main features of European alternative funding agents that issue debt-based securities. These features are highly significant in boosting investors’ participation in the process of funding individuals, start-ups and SMEs. This chapter analyses the most important alternative funding agents in two ways: first, it focuses on European P2P lending platforms and their business models. The analysis investigates the best practices among the platforms, which need to construct a long-term strategic relationship with their clients to ensure their regular participation and to establish their own presence in the P2P lending market. Second, it focuses on mini-bond markets across the largest European countries: UK, Italy, Spain, Germany and France. The results of the analysis are interesting for banks and other financial services providers that could participate in supporting retail operations or offer their advisory services.

Giuliana Borello

6. Competitive Frontiers in Equity Crowdfunding: The Role of Venture Capitalists and Business Angels in the Early-Stage Financing Industry

Abstract

The issue of the stimulation and funding of young or newly created SMEs has been discussed in recent years by professionals, academia, bankers and policymakers, in the context of the capital constraints that have been a part of the economic recession that followed the 2007–2008 global financial crisis. In this environment of constrained lending, it is crucial to shed light on an opaque segment of the capital market industry that is well suited to filling the equity gap. The participants early-stage financing include institutional as well as non-institutional investors, such as technology parks, venture incubators, business accelerators, academic spin-offs and the recently emerged equity crowdfunding platforms. This chapter provides an insight into the roles these different actors can play as a way of investigating whether equity crowdfunding platforms will challenge or complement the existing sources of early-stage financing.

Vincenzo Capizzi, Emanuele Maria Carluccio

7. The Role of Equity Crowdfunding in Financing SMEs: Evidence from a Sample of European Platforms

Abstract

To assess the fundraising potential of equity crowdfunding for SMEs and start-up firms, this chapter presents an analysis of the features of a sample of funding campaigns seeking funds on five European crowdfunding platforms. The expansion of equity crowdfunding in Europe began in the second half of 2011 and since then there has been gradual and continuous growth. Our results reveal that technological start-ups are not the only type of firm seeking equity funds and that equity crowdfunding can be considered a new type of funding model for established companies and for firms operating in more traditional fields of business. Consequently, we can also affirm that the ways in which equity crowdfunding is regulated will affect its capacity to supplement traditional sources of finance.

Veronica De Crescenzo

8. Financial Crowdfunding Regulation in EU Countries

Abstract

Financial crowdfunding, as an alternative source of financing, has become an important phenomenon in EU Countries in the past few years. Nevertheless, the judicial framework for this instrument is not so clear, because few EU countries provide specific rules about it. This chapter will analyse: crowdfunding-specific legislations (showing the different approaches followed by some of the main European countries); the impact on financial crowdfunding of national financial regulations (when specific rules do not exist); and some proposals for rules that could constitute an adequate common framework. Such proposals will look for the most effective balance between the two pillars of crowdfunding, the need to facilitate financing for start-up businesses and the need to protect investors.

Paolo Butturini

Backmatter

Titel: Crowdfunding for SMEs
herausgegeben von: Roberto Bottiglia
Flavio Pichler
Verlag: Palgrave Macmillan UK
Electronic ISBN: 978-1-137-56021-6
Print ISBN: 978-1-137-56020-9
DOI: https://doi.org/10.1057/978-1-137-56021-6