It’s been a year since Italian policymakers loosened bureaucratic control over the start-up world. How have things gone during the first year of Italy’s crowdfunding?
Background of Italy’s Crowdfunding
As some history, Italian politicians are the first in the world to allow retail equity crowdfunding, with “no” limits on investment options. The “no” limits statement has, unsurprisingly, caveats.
So-called “big” investments require some paternalistic oversight. The thresholds for “big” investments are 500 euro per investment and 1,000 euro per year, for individuals and ten times these amounts for corporations. Once investments exceed these thresholds, investments are compulsorily reviewed by broker-dealers under the MiFID procedure.
Another requirement is that only “innovative” start-ups are allowed into the crowdfunding sphere. This requirement identifies over 3,000 companies as innovative. Additionally, any start-up in Europe may take part in the crowdfunding arena as long as it has a place of business in Italy, regardless of shareholders’ or directors’ nationalities.
The uniqueness of the Italian crowdfunding situation also has some tax implications. For instance, any individual investing in a start-up with a “social impact” may write-off 27 percent of their investment from their taxes.
The Numbers
Overall, the number of successful projects has now passed the first 1 million euro, with three platforms being the largest beneficiaries of the new business. In total, although three platforms have garnered the lion’s share of the business, nine platforms have received regulatory approval, with many others in the pipeline.
Based on investor volume, the initial leader of the new start-up platforms is StarsUp! As of writing, StarsUp! has helped Cantiere Savova raise 380,000 euro. The breakdown of the 380,000 euro is mostly small investors (31 of the 44). Only two of the investors are large investors (more than 50,000 euros) and four entities have invested between 15,000 and 50,000 euros.
In second place among the platforms is Unicaseed. To date, Unicaseed has raised 147,000 euro for Diaman Tech. Interestingly, 85 percent of the investors in the software for financial operators were clients before Unicaseed started business.
Rounding out the top three is Assiteca Crowd. In total, Assiteca Crowd is the leader in euro volume, reaching 520,000 euro as of writing. The main firm – Paulownia Social Project – received 9,000 euro per day and about 40,000 euro per investor. Paulownia was the first crowdfund start-up under the new regulations.
Perhaps surprisingly, most of the crowdfunding projects needed long time horizons (Paulownia was the exception at eight weeks). Apparently, word has not gotten out to as many people as originally thought.
Coming this fall are two new platforms started by universities, with some new platforms taking a more focused approach (such as focusing on energy or social consciousness).
As a note, most of the Italian operators have joined the European Equity Crowdfunding Association (EECA). EECA’s main goal is as a trade organization, uniting platforms and service providers. As of writing, EECA has about 50 members from 15 countries.
Conclusion
Overall, it appears things are going well in the world’s first equity crowdfunding arena of its type. Although the deal volume and companies funded got off to a slow start, investors are warming to the idea that profitable investments may be available in the Italian start-up universe.
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