CrowdCon: perspectives on European crowdfunding

The European crowdfunding landscape is characterized by a growing variety of platforms and funding models, with a particular focus on crowdinvesting, or the raising of capital from investors in exchange for equity, profit-sharing or interests. As we saw in the most recent European Crowdfunding Market annual report, the European crowdfunding market has reached a value of more than 10 billion euros, with steady growth in recent years.

The push for crowdfunding growth in Europe has significantly accelerated thanks to the support of associations such as Eurocrowd and GECA (Global Equity Crowdfunding Alliance), which have strongly supported the introduction of unified European regulations. Now that the ECSP Regulation is finally a reality, Europe can embark on a path of joint development on the crowdfunding path and increase the volumes of transactions, their efficiency, and their benefits for businesses.

During the recent 13th edition of CrowdCon, held in Brussels in September 2024, industry leaders and representatives of key associations shared their visions and discussed future challenges for European and global crowdfunding. Also participating was Turbo Crowd, which is characterized by a strong focus on internationalization as a partner for companies interested in navigating the complex crowdfunding ecosystem by taking advantage of all its opportunities, but also for crowdfunding platforms.

The context of European crowdfunding

Historically, the crowdfunding industry in Europe has been limited by regulatory fragmentation among member states, which has often hindered cross-border operations and increased compliance costs. This has led to uneven growth of platforms and limited funding opportunities for businesses. However, with the entry into force of the European Regulation in 2021, the European Union has taken a step toward harmonizing the industry. Indeed, the ECSP allows platforms to obtain an "EU passport" to operate in multiple countries following a single regulatory framework, facilitating access to investors and projects on a transnational basis and promoting transparency.

The entry into force of the regulation has not been without its criticalities, made evident in Italy by the considerable delay with which crowdfunding platforms have managed-and are managing-to obtain the new authorization to operate, so the benefits are yet to be seen, but what is taking place is above all a change in outlook, a cultural change that requires cooperation among all actors in the crowdfunding supply chain at the transnational level.

Crowdcon 2024: innovation and opportunities for European crowdfunding

The 13th edition of CrowdCon was an important meeting point for the European crowdfunding industry, bringing together experts, platforms, associations and political representatives on September 26-27, 2024 in Brussels. Organized in collaboration between Eurocrowd and Fintics, CrowdCon has been a landmark event for the industry for years, providing a space for discussion on regulatory developments, operational challenges, and innovation opportunities.

This year's edition addressed topics such as the evolution of European regulations, the impact of new technologies (including blockchain and artificial intelligence), and the prospects for global expansion of crowdfunding. The keynote speeches and panel discussions highlighted the progress made to date and the challenges still ahead, providing industry players with valuable insights to face the future. Let's find out the main focuses of CrowdCon 2024.

The ECSP Regulation and regulatory harmonization

One of the central themes of CrowdCon was the impact of the European Regulation for Crowdfunding Service Providers (ECSPR), which comes into effect in 2021, and the road ahead for real harmonization of the sector across the EU. Joachim Schwerin, an expert at the European Commission, emphasized that this regulation is a crucial element in creating an environment conducive to innovation and growth in the sector, while acknowledging that challenges remain to be overcome and collective collaborative efforts for full harmonization and true globalization of the sector. For example, the need for a more uniform interpretation of the Regulation by member states emerged, to avoid disparities and confusion.

CrowdCon 2024 reiterated that the European model of regulatory harmonization for crowdfunding could serve as an example for other regions, such as North America and Asia, interested in developing more integrated and secure markets.

Andrew Field, director of GECA, outlined the association's strategic vision to foster regulatory harmonization that not only simplifies cross-border transactions but also encourages greater participation by investors and companies. Field stressed that achieving a truly global crowdfunding ecosystem will require ongoing dialogue between industry players and regulators, with the creation of a true network, as well as a shared commitment to ensuring transparency, security and innovation.

Blockchain and Artificial Intelligence for global change and expansion

Another major theme was the use of emerging technologies, particularly blockchain and artificial intelligence (AI), to improve the efficiency and transparency of crowdfunding platforms. Blockchain technology can be used, for example, to simplify bond registration processes and improve investor confidence through secure and transparent transactions. However, to ensure widespread adoption of these technologies, a strong and shared regulatory base is needed.

Artificial intelligence, on the other hand, is seen as a tool for personalizing the user experience and optimizing fundraising campaigns. For example, through data analysis, AI can help platforms identify the most suitable investor profiles for each project, thereby increasing the effectiveness of campaigns and reducing costs. AI and blockchain, if adopted in a coordinated way, can be a significant competitive advantage for crowdfunding platforms. To this we can add the potential of the new capital raising opportunities that asset tokenization can offer companies.

Not only that, the potential of blockchain technology to connect European markets with those in other regions, such as North America and Asia-Pacific, was discussed at CrowdCon. This interconnection represents a great opportunity to increase the reach of European crowdfunding, but it requires a cautious approach and careful handling of international regulations to ensure investor protection and transaction security.

Crowdfunding and Social Impact

A session devoted to crowdfunding for social good highlighted how crowdfunding can be a powerful tool for financing projects with a positive impact on society. Even more important in social purpose campaigns are the importance of trust and public involvement for successful capital raising. Indeed, social crowdfunding is distinguished by direct community involvement and an emphasis on projects that aim to generate community benefits, often in areas such as the environment, culture, and social welfare.

This discussion highlighted that crowdfunding can be more than just a financing tool: it can become a catalyst for social change and a means of promoting sustainable entrepreneurship, an increasingly relevant issue for environmentally and socially conscious businesses and investors.

We have previously discussed crowdfunding for social and environmental sustainability purposes in a webinar with Andy Goodwin, CEO of the German platform Bettervest.

Turbo Crowd for European crowdfunding

Turbo Crowd's participation at CrowdCon resulted in, among other things, an interview of founder Claudio Grimoldi by Andrew Field, Executive Lead of GECA.

Turbo Crowd's perspective is distinctly European and, even further, international. Thinking about crowdfunding operations from a cross-border perspective is the best way to make crowdfunding as efficient a marketing and capital-raising tool as possible.

Currently, crowdfunding culture is very tightly knit within national borders in Southern Europe, while in Northern and Eastern Europe the opportunity for crowdfunding across borders is clearer and more widespread.

In order for Italy to catch up with the more developed European crowdfunding markets, within the new single European market, it is crucial to spread awareness about the new opportunities available to businesses, train them on the knowledge and skills-financial, linguistic, legal, commercial-that are needed to do crowdfunding abroad, and establish the standard process for a successful crowdfunding campaign, wherever it takes place.

This process has as pivotal elements the conception of crowdfunding as a marketing operation, precrowd as a key preliminary phase for the reward-based campaign, and the search for investors in the head of the company, with the preferential targeting of customers or potential customers.

Finally, it should be emphasized that the emergence of crowdfunding from a merely “provincial” context is also an opportunity to understand that this tool is not to be reduced to a gimmick for startups with no alternative for raising capital, but rather represents a resource - marketing, before financial - for any type of business, including large and solid ones. The possibility of crowdfunding in Europe implies the need to cope with broader competition, both for crowdfunding platforms and for businesses. This is where the key role of adequate training and appropriate marketing strategies that companies must implement even before they can launch a crowdfunding campaign comes in, in order to present themselves to platforms and then to investors as high-potential bidders.