Crowdfunding in Europe: data and trends

Each year the Crowdfunding Research Center publishes the European Crowdfunding Market Report, a document that analyzes the crowdfunding situation in Europe based on the previous year's data provided by platforms.

The report released at the beginning of 2024, with data from 2023, is particularly interesting because it gives us a transitional snapshot with which to compare, next year, the effect of the entry into force of the ECSP Regulation, which kicked off the unique European crowdfunding market. All member states, in fact, from the end of 2023 are subject to the same regulations regarding crowdfunding service providers.

The European Crowdfunding Market Report analyzes data on platforms, investors and lenders, and bidding companies.

Crowdfunding platforms in Europe

In 2023 there were 594 crowdfunding platforms in Europe, some of them operating in multiple countries and most of them active for 8-9 years. It will be interesting to see, in next year's report, how this number has changed: we know that some platforms have had difficulty implementing all of the compliances required by the ECSP Regulation, so some of them will probably be closed at the next survey, or will have been taken over by others.

The countries with the largest number of platforms active in absolute terms are Germany, the United Kingdom, and France. The Baltic countries (Estonia, Latvia, and Lithuania), however, stand out for the high number of operating platforms in relation to the number of inhabitants-a fact that relates to the strong tech propensity of these states.

Overall, the average annual volume of funds raised per platform increased from €16 million in 2021 to €19 million in 2022 (latest complete data). Platforms in northern Europe are the ones with the highest volumes raised, with an average of 27 million.

Superimposed on what has just been reported is the data from the Crowdfunding Market Readiness Index: the states where the market is most ready and suitable for crowdfunding are the Netherlands, Norway and Denmark.

We come to perhaps the most interesting information for companies that are looking around for a crowdfunding platform in Europe for their projects:

• The seniority of the platform does not correlate significantly with the success of its collections, so even young platforms can record large volumes.
• Sixty percent of the European platforms surveyed operate a single crowdfunding model. 25% of platforms combine 2 models, 10% operate 3, and 4% offer all types.
• In equity, only 10 percent of campaigns pass selection, while in lending the share is 14 percent. In the donation and reward models, on the other hand, selection has very wide meshes; in fact, 95% of requests are accepted.
• The success rate of campaigns exceeds 90%.
• Lending crowdfunding platforms are the ones growing at strong rates, while equity, reward and donation collection remains stable.

Identikit of European fundraisers

Who raises capital by crowdfunding in Europe?

• Young people are more likely to use lending crowdfunding or donation and reward models, while equity crowdfunding is favored by more mature entrepreneurs. 
• Most fundraisers in crowdfunding are men. The female share is high only in reward and donation models, while it remains around the 30% average for equity and lending. Southern Europe, in this respect, is particularly unbalanced, with only 3.5 percent of women doing equity crowdfunding, for example.
• In all crowdfunding models, bidding companies that identify themselves as SMEs predominate.
• Those who do equity, donation or reward campaigns tend to do only one, whereas in lending crowdfunding fundraisers are more recurring. This is not strange: lending crowdfunding, because of its speed, lends itself to doing multiple campaigns in a row to fund different phases of a project as they go. It is also interesting to point out that collection volumes are on average higher for platforms with more recurring fundraisers: it pays to do more crowdfunding campaigns! Credit is due to the strength of the community built with the first campaign, as well as the expertise and resources acquired.

Identikit of crowdfunding participants in Europe

The average number of users per platform is 500, with equity crowdfunding declining, while lending continues to grow.

Let's look at their main features:

• In lending crowdfunding, most investors are in the 36-45 age group.
• In equity crowdfunding, Europe is divided, in fact in Eastern Europe investors between 36 and 45 years old prevail, in Western Europe those over 46 years old, and in Northern Europe those between 26 and 35 years old. 
• Donation and reward crowdfunding together see a prevalence of supporters over the age of 46.
• Women represent only between 18% and 27% of equity investors, and between 7% and 27% of lending investors, while over 50% are female supporters in the donation and reward models.
• Most investors are individuals.
• Most people participate in domestic rather than international campaigns (for now!), 12% of investors are foreign in lending crowdfunding, 5.4% in equity.
• In equity and lending crowdfunding, most backers turn out to be repeat investors, accounting for 60.6 percent of equity investors and 66.6 percent of lending investors.

This last point highlights a difference between the European average and Italy: in our country, most people who participate in an equity crowdfunding campaign do so only once, because they are interested in a specific project. The situation is more similar to the European average for lending crowdfunding, which by its nature lends itself to regular investment activities.

Cross-border Crowdfunding

The ECSP Regulation, by equalizing regulations on crowdfunding services in all EU member states, has made it possible to raise capital abroad. Data from 2023 still show a majority of platforms (about 82 percent) operating in one country, but already by the end of 2023 many had applied for authorization to operate in multiple states, as per the regulation. 

As we have already mentioned, so far only 12% of investors are foreign in lending crowdfunding and only 5.4% in equity crowdfunding (the percentages are negligible in reward and donation), but foreign capital flows are growing, especially in equity crowdfunding. The area where this growth is greatest is northern Europe, while we in southern Europe have not yet begun to significantly attract capital from abroad with crowdfunding.

Most of the platforms surveyed are quite satisfied with the current regulation for crowdfunding in Europe, but suggest some changes to the ECSP regulation:

• Inclusion of consumer lending crowdfunding (lending to individuals).
• Increasing the 5 million annual collection limit.
• Implementation of knowledge qualifications rather than minimum portfolio thresholds or maximum investment thresholds.

Crowdfunding of the future

Crowdfunding platforms in Europe are investing heavily in research and development from a technology perspective. Here are the main trends found:

• mobile app development
• structuring a secondary market
• financial consulting
• asset tokenization
• cryptocurrency payments
• Artificial intelligence and machine learning for fraud prevention

Crowdfunding in Europe is proving to be dynamic, constantly evolving, with some trends established and others on the horizon: all that remains is to stay up-to-date to seize all the opportunities for businesses and investors.