In the following we are reviewing licensed ECSPR service providers in 2023 reveals noteworthy insights into cross-border activity within the European crowdfunding landscape. While the regulatory framework aimed to boost cross-border operations, licensing data indicates a nuanced market response.
- Limited Cross-Border Authorization:
- 73% of licensed service providers operate exclusively within their home country, reflecting a strong domestic focus and a cautious approach to international expansion.
- Minimal Pan-European Coverage:
- Only 10% of licensed CSPs hold authorization to serve all 27 EU member states, highlighting perceived challenges or barriers to pan-European operations.
- Targeted Multi-Market Expansion:
- 17% of licensed CSPs operate in multiple member states, with coverage ranging from 2 to 9 countries. This suggests diverse strategies for incremental cross-border expansion.
- Cross-Border Transaction Discrepancies:
- Preliminary data reveals that some platforms actively engage in cross-border operations, demonstrating strategic use of regulatory status to facilitate transactions across multiple jurisdictions. However, discrepancies exist in cross-border activity levels based on platform location.
Regulatory Expectations vs. Market Realities
The divergence between regulatory objectives and market behavior underscores complexities in cross-border crowdfunding. Factors such as consumer protection laws, language barriers, marketing regulations, and taxation appear to influence service providers’ licensing and operational decisions.
Addressing barriers to cross-border operations can enhance the interconnectedness of the European crowdfunding ecosystem. Policy refinements, informed by CSPs’ experiences, could better align regulatory goals with market dynamics, fostering broader participation and collaboration across EU member states.
Conclusion
The ECSPR framework has already made a notable impact on the crowdfunding market, with nearly 30% of license holders pursuing cross-border business models. However, further data collection and analysis are essential to fully understand the underlying drivers and challenges. EUROCROWD remains committed to supporting CSPs in leveraging the opportunities presented by ECSPR while advocating for policy enhancements to address emerging issues.
The analysis relied on publicly available, self-reported data, which may be subject to inconsistencies. Limitations include incomplete information on transaction closure dates and varying data quality across CSPs. As a result, caution is advised in interpreting these preliminary findings. EUROCROWD encourages CSPs to enhance transparency and align with ECSPR’s consumer protection and reporting standards to improve data reliability.
The data underscores the early-stage nature of the ECSPR-regulated market, with room for growth and professionalization. Strengthening compliance with ECSPR’s transparency requirements will be crucial for building trust and fostering sector-wide scalability. EUROCROWD remains committed to supporting CSPs in navigating these challenges while promoting best practices across the industry.
Source: EUROCROWD, February 2024
