Crowdfunding: beyond the hype

The concept of “crowdfunding” (using online platforms to enable large numbers of people to invest small amounts in new ventures) has increasing drawn attention, most recently for its possible role in providing equity funding to start-ups. While there is a growing hype about crowdfunding, there are also many misperceptions. Crowdfunding initially started for philanthropic projects (in the form of donations) and then spread to consumer products (in the form of pre-funding orders) and lending. However, equity crowdfunding is relatively new.

According to industry estimates, crowdfunding almost doubled from USD 1.5 billion in 2011 to USD 2.7 billion and rose to an estimated USD 5.1bn in 2013. However, the majority of that funding is currently for donations, products or lending, not yet for equity. Proponents say that equity crowd funding will allow businesses to raise capital faster and more efficiently. However, this would require changes in securities laws, specifically those related to issuing securities. Equity crowdfunding will essentially allow unsophisticated investors to invest directly in young risky companies with the expectation of a financial return.

While there are many opportunities for the various types of crowdfunding to provide new and much needed sources of finance, there are also a number of challenges and potential pitfalls, particularly for equity crowdfunding.

In this session, we will hear from academics and policy makers as well as players involved in the crowdfunding market to better understand the current trends and possible responses for policy makers.

Speakers

• Guillaume Desclée, MyMicroInvest, Belgium
• Maria Teresa Fabregas Fernandez, Head of Unit, Securities Markets, DG Internal Market and Services, European Commission
• Armin Schwienbacher, University of Lille 2 & SKEMA Business School, France
• Chair: Karen Wilson, Senior Fellow, Bruegel

Event materials

Event summary Download

Practical details

• Venue: Bruegel, Rue de la Charité 33, 1210 Brussels
• Time: Friday 16 May 2014, 8.15-10.00 (Breakfast will be served at 8.15 after which the event begins at 8.30)
• Contact: Matilda Sevón, Events Manager - matilda.sevon[at]bruegel.org