Organised on 18th of October as an adjoint event to the FECIF’s Annual Conference, the ECN Crowdfunding Convention brought together around 120 representatives of European crowdfunding platforms, the European Commission, the European Parliament, the European Council, National Conduct Authorities, Banks and other interested parties to discuss the European Commission’s proposed regulation “European Crowdfunding Service Providers (ECSP) for business”.
The Convention demonstrated the past 10-year growth of the industry: from small initiatives crowdfunding became a serious alternative finance instrument seeking a harmonized approach which would allow crowdfunding service providers to establish their services on a fully cross-border basis within Europe which will increase the volumes, quality and professionalism of crowdfunding across the continent.
Matthias Klaes, Professor of Political Economy and Director of the Vinson Centre for Economics and Entrepreneurship at the University of Birmingham, opened the event by setting the context with a keynote “Market and Operation Barriers in European Crowdfunding” identifying the potential barriers that prevent crowdfunding from scaling. The key findings of the challenges of cross-border crowdfunding are based on results of a study conducted for the European Commission. He pointed out, that the current state of the art of cross-border crowdfunding covers more than 200 combinations of different regulatory regimes.
The biggest highlights of the event were the positions of the European Parliament, the European Council and the European Commission. Ashley Fox, Member of the Parliament, highlighted three controversial points: inclusion of the ICOs, the role of ESMA and 3rd country provisions. He closed his keynote very positively: “I am confident that we will be able to deliver a regulation at the end of this period”. Harald Steinwendter, Austrian Ministry of Finance, Chair of the Council Working Party on Crowdfunding, clarified the challenges the European Council and the will face in agreeing on harmonization. Therefore, there are a few questions to be answered: Which instruments should we use? How shall the regulation interact with the existing regulation? What are further potential requirements? Ugo Bassi, DG FISMA, European Commission, said that the Capital Markets Union is one of the priorities of the Commission to strengthen Europe’s economy and stimulate investments to create jobs. He transmitted to the audience that he was proud of having accompanied these plans in the last years and emphasized the achievements, inter alia the proposal for harmonization.
With the current regulatory proposal not specifying different types of crowdfunding, the 1st panel focused on highlighting the differences of investment- and loan-based crowdfunding and provided insights as to why future EU-level measures should be adapted. The discussion broke down the differences between loans and equity very clearly: “Lending-based crowdfunding provides loans and could be seen as a competitor to banks while equity-based crowdfunding competes more with Venture Capital.”
The 2nd panel on the post-investment matters, looked at the role crowdfunding platforms play after an investment has been completed. The panelists identified the issues, such as the role in structuring and administering investments through special purpose vehicles or nominee structures and their facilitation of secondary trading in those investments are key parts for the promotion of transparency in the industry and represent a necessary pillar for the harmonious development of crowdfunding in Europe.
Most speakers and participants fully agreed that the impact of the ECSP will not be achieved by limiting the threshold to 1 million. Several examples from different industries provided evidence, that a threshold with a limit of 8 million would be more appropriate.
The programme was filled with expert insights and discussions on topics such as transparency requirements, platform oversight and conduct, crowdfunding for real estate and renewable energy, ICOs inclusion in the proposal, marketing restrictions and GDPR.
We are happy that the discussion have found their way into the elaboration of the position on the ECSP of the European Parliament and the European Council. We believe that open discourse and inquiry will create a better basis for adequate political decision making.
Finally, a big thank you to all the speakers and participants who actively engaged in the discussion, the networking and the success of the event.
ECN would like to thank our amazing sponsors: Seedrs, Privanet, Kapilendo, Funding Circle, October and Crowdworks, as well as our partners: FECIF, KREAB and Invest Week for making the 7th ECN Crowdfunding Convention happen.