Video

Karen Wilson on equity crowdfunding

Crowdfunding has grown at an annual rate of 76 percent from 2009. Karen Wilson, Senior Fellow at Bruegel, explains this phenomenon. The concept of “crowdfunding” has increasingly drawn attention, most recently for its possible role in providing equity funding to start-ups. However, most of the growth has been in the area of reward crowdfunding, where […]

By: Date: June 11, 2014 Topic: Finance & Financial Regulation

Crowdfunding has grown at an annual rate of 76 percent from 2009. Karen Wilson, Senior Fellow at Bruegel, explains this phenomenon.

The concept of “crowdfunding” has increasingly drawn attention, most recently for its possible role in providing equity funding to start-ups. However, most of the growth has been in the area of reward crowdfunding, where people give money in return for something.

While there is a hype surrounding equity crowdfunding, there are also many misperceptions. “Actually, crowdfunding is the smallest part of the market – it comprises only 4 percent. And it is only growing at a 50 percent rate, compared to the 400 percent growth rate of reward crowdfunding,” Wilson explains.

The risks also vary. “With equity crowdfunding people actually expect to get a return from their investment. But investing through the internet is much more complicated and fraught with all sorts of difficulties.”

Following the crisis, access to financing has become a huge issue. As a result, policy makers are starting to look into crowdfunding. “There are, nevertheless, risks in terms of investor protection, because these are unsophisticated investors. In fact, equity crowdfunding is not allowed in many countries, for example in the United States,” Wilson points out.

“Most equity crowdfunding is happening in Europe, where people have been able to use exemptions. There is a patchwork of legislation across the continent, it is very ad hoc,” she continues. “One thing that would really help crowdfunding is to have consistent policies across countries, which protect consumers, but also facilitate the market.”


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read article

Parliamentary Testimony

European Parliament

The role of independent expertise in legislative process

Testimony before the European Parliament Committee on the Internal Market and Consumer Protection (IMCO).

By: Zsolt Darvas and J. Scott Marcus Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: July 18, 2018
Read about event More on this topic

Past Event

Past Event

Should we revisit the patent system for pharmaceutical products?

Analysis of the legal issues with the current IP system for regulated market authorisations for pharmaceutical products, as well as its economic effects.

Speakers: Arno Hartmann, Christian Jervelund, Margaret K. Kyle, Roberto Romandini, Bruno van Pottelsberghe, Amaryllis Verhoeven and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 9, 2018
Read article More on this topic More by this author

Blog Post

World Cup Economics

As we approach the final rounds of the tournament, here are some recent contributions about the economics and economic impact of the World Cup.

By: Silvia Merler Topic: Global Economics & Governance Date: July 9, 2018
Read about event More on this topic

Past Event

Past Event

Trade war trinity: analysis of global consequences

Analysis of the long-term impact of the trade war and its three key players: EU, US, and China.

Speakers: Alicia García-Herrero, Ignasi Guardans and Carl B Hamilton Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 28, 2018
Read about event More on this topic

Past Event

Past Event

Euro tragedy: a drama in nine acts

This event will feature a presentation by Ashoka Mody of his new book, which argues that the Euro is at the root of the problems the European Union faces today.

Speakers: Maria Demertzis, Ashoka Mody and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 27, 2018
Read about event More on this topic

Past Event

Past Event

EU-LAC Economic Forum 2018

The second edition of the EU-LAC Economic Forum, a high level gathering for in-depth research-based exchanges on economic issues between European, Latin American and Caribbean (LAC) policy makers and experts.

Speakers: Angel Badillo, Federico Bonaglia, Maria Demertzis, Sylvie Durán, Guillermo Fernández de Soto, Alicia García-Herrero, Elisa Grafulla, Gonzalo Gutiérrez, Bert Hoffmann, Juan Jung, Emilio Lamo de Espinosa, Carlos Malamud, J. Scott Marcus, Neven Mimica, Fabio Nasarre de Letosa, Detlef Nolte, Anne Sperschneider and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 26, 2018
Read about event More on this topic

Past Event

Past Event

For a stronger and more integrated Europe

This event will feature the presentation of the Economic Survey of the European Union 2018 and Economic Survey of the Euro Area 2018.

Speakers: Angel Gurría, Zsolt Darvas, Pierre Beynet and Aida Caldera-Sanchez Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 19, 2018
Read about event More on this topic

Past Event

Past Event

What next for banking union?

This event will discuss the future of Banking Union.

Speakers: Maria Demertzis, Philipp Hildebrand and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 8, 2018
Read about event More on this topic

Past Event

Past Event

News from the South. Proposal to strengthen the European Monetary Union: Combining fiscal discipline with risk sharing

On 4 June Bruegel, as in previous years, will host the presentation of the Euro Yearbook, a collection of experts’ insights on the construction of the European Monetary Union through 2017.

Speakers: Cristina Cabrera, Maria Demertzis, Fernando Fernandez, Massimo Giuliodori, Javier Méndez Llera and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 4, 2018
Read about event More on this topic

Past Event

Past Event

Making trade work for all – the Danish case

This event discussed how we can make trade work for all, focusing on the example of Denmark.

Speakers: Maria Åsenius, Sofia Bournou, Brian Mikkelsen, André Sapir, Eva Rytter Sunesen, Guntram B. Wolff and Casper Arnsbo Poulsen Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 28, 2018
Read about event

Past Event

Past Event

Where is China’s financial system heading? Implications for Europe

How ready is China for the transformation of its financial system and how will this effect Europe?

Speakers: Elena Flores, Alicia García-Herrero, Gene Ma, Hu Yuwei and Guntram B. Wolff Topic: Finance & Financial Regulation, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 25, 2018
Read about event More on this topic

Past Event

Past Event

Solving the productivity puzzle

This event featured the presentation of new research by the McKinsey Global Institute.

Speakers: Maria Demertzis, Janet Henry, Jan Mischke, Dirk Pilat and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 23, 2018
Load more posts