NEW Report: Crowdfunding and ESF opportunities: future perspectives for managing authorities (July 2020)

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Brussels, July 2020. The European Crowdfunding Network AISBL (ECN) and the European Investment Bank, Financial Instruments Advisory Division have co-authored a new guide for Managing Authorities: Crowdfunding and ESF opportunities: future perspectives for managing authorities (July 2020). The manual is published by fi-compass, an advisory and guidance platform set-up by the European Commission and the European Investment Bank to support Member States in understanding and making better use of financial instruments using ESI Funds.

Within the Fintech ecosystem, crowdfunding platforms are of particular interest to SMEs, microenterprises and socially oriented businesses. Crowdfunding represents a unique opportunity to test the market readiness for virtually all types of venture, from micro companies and self-employed, up to start-ups and established SMEs.

ESI Funds, and particularly ESF, can be a fertile ground in which to establish partnerships with crowdfunding platforms. It is not by chance that microfinance, another typical sector that is traditionally supported by ESF, shares with crowdfunding, some distinctive features, inter alia:

  • crowdfunding is relevant for businesses that face difficulties in accessing traditional credit, because of limited turnover, limited or no credit history of the entrepreneurs, lack of collateral, high-risk profile of the business concept and/or of the markets of reference;
  • crowdfunding addresses the needs of individuals underserved by the traditional credit supply, such as new entrepreneurs, people belonging to vulnerable groups and people at risk of social exclusion. These individuals usually resort to alternative and innovative finance – including crowdfunding – when they set up a new business.

Potential synergies between ESI Funds initiatives and crowdfunding could be drawn even more clearly in reference to community-led local development strategies, when strategies focus on the importance of the co-creation processes and on citizens’ engagement in order to foster joint local development, taking into account local peculiarities.

The European Crowdfunding Network is offering Technical Assistance to help Managing Authorities to proactively explore the synergies between ESI Funds and crowdfunding platforms  in taking a decisive leap forward. Crowdfunding can enable ESF resources to attract additional private resources, both through private contributions (non-financial models) and through private resources from retail investors (financial models).

This manual guides managing authorities to familiarise themselves with crowdfunding and its peculiarities and by showing how to design relevant financial instruments in this domain, to harness the potential contribution of crowdfunding to ESI Funds and ESF priorities.

Interested managing authorities may contact ECN’s Director of Public Affairs, Francesca Passeri, to develop a better understanding and experience of crowdfunding financial instruments. We and our professional network are ready to help attract a new set of potential beneficiaries to ESF resources.

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