The crowdfunding market - Italy (2023)

1.2 The global market

The global crowdfunding market size has been estimated at $*.** billion in **** and is expected to expand at a compound annual growth rate(***) of **.* percent from **** to ****.

The rise of crowdfunding activities on social media are a significant factor driving market growth. Platforms such as Facebook, X, Reddit, Instagram, and Linkedln are increasingly gaining popularity pe rform crowdfunding activities aimed at raising funds through investor donations.

Additional drivers include growing technological innovations such as Artificial Intelligence (***).

Global Crowdfunding Market World, ****-****, in billions of dollars grandviewresearch.com

Territorial Insights

According to the report released by P*Pmarketdata, nearly half of the world's crowdinvesting platforms are located in Europe. Large, mature European economies tend to host most of them, including the United Kingdom (***).

However, standardizing the numbers by market size, Baltic states such asEstonia stand out, with about ** platforms per * million population, followed by Latvia and Lithuania.

By investment volume, the United States ranks first; with a ** percent market share. Europe lags behind on investment levels.

(***)

Sectoral insights

Globally, based on investment segments, equity platforms (***) account for nearly half of all platforms. While the peer-to-peer lending segment stands at about */* of platforms.

Also notable is the growth of the"other" segment, which ...

1.3 The Italian market

According toMIP's Crowdinvesting Observatory, the total capital raised by Italian companies through crowfunding platforms in the June ****-June **** period was €*.** billion.

Specifically, €*** million was capital raised through Equity-based platforms (***) raised in June ****-June ****.

Donation and Reward Crowdfunding

As of June **, ****, there were ** Italian portals active in Donation and Reward, two fewer than last year. As the chart below highlights, funding in **** was almost identical to that of ****, at € **.* million.

Regarding Donation-based crowdfunding, Italians have not been indifferent to many 'hot' issues both nationally and internationally. For example, there have been many initiatives to help the people of Emilia-Romagna cope with the consequences of the flood that hit the region last May. In order to fonrire a utlative figure, the fundraiser promoted by Legacoop on the Produzioni Dal Basso platform raised €***,*** from *** donors.

Fundraising Flow of Donation and Reward Crowfunding Campaigns Italy, ****-****, in millions of euros observatoriefi.it

Crowdinvesting

With regard to Crowdinvesting, platforms are distinguished into two categories, depending on theregulatory framework.

Online portals authorized by Consob for capital raising - can carry out * types of operations : Equity crowfunding, minibonds (***) , placement of OICR shares investing in SMEs Social Lendingonline portals - coincides with Lending crowfunding.

For the first time there ...

1.4 Impact of covid-19 and the Russian-Ukrainian conflict

Impact of Covid-**

Looking at a longer time horizon, two main trends of the crowdfunding market can be seen: it shows itself as a dynamic sector subject to shocks.

Investment, in fact, plummeted during the first covid wave between February and April ****; the market contracted by about ** percent in **** compared to ****.

However, shocks such as the pandemic seem to be shaping and strengthening the emerging sector: in fact, the covid period seems to have shown the resilience of some platforms and pushed others to improve the quality of their resources.

Annual funding volumes from **** to **** are shown below in order to observe the above.

Annual funding volumes Europe, ****-****, in millions of euros p*pmarketdata.com

Impact of the Russian-Ukrainian conflict

In ****, P*PmarketData 's reported monthly financing volumes fell sharply in the first quarter, driven primarily by the invasion of Ukraine and the resulting decline in consumer lending in resale lending platforms with exposure to the Russian and Ukrainian markets.

Financing volumes in the second quarter and throughout the summer period were driven primarily by the largest lender-Mintos. It went from financing nearly *** million euros in **** to only ** million euros in July ****. Business lending also entered the usual summer slowdown ...

2.1 Demand in Italy

Crowdfunding Campaigns

Equity crowdfunding campaigns published on non-real estate platforms in the past ** months generated capital inflows of €**.** million, down ** percent from the previous period. The performance was particularly affected in the first half of ****.

Real estate platform projects, on the other hand, catalyzed resources of € **.** million, with good year-on-year growth (***), again with some difficulties since January. Portals authorized to place minibonds raised € **.** million, down **%. It can be assumed that the unfavorable trend in interest rates and the fact that only * platforms have been active in this area has unfavorably affected the situation.

For consumer lending there were recorded € **.** million disbursed in the past year.

Generalist business lending platforms raised € **.** million, an increase of **% over the year before. Excellent growth for lending platforms specializing in real estate, which bring € ***.** million in new loans to their assets, up well (***) thanks mainly to the proliferation of portals.

Looking at the breakdown between the different categories in the chart below, it emerges that at the level of capital raised the main category concerns real estate lending type crowdfunding platforms, followed by non-real estate equity platforms. Other sizable shares concern nonreal estate equity and real estate equity.

Crowdfunding campaign raising by category Italy, July ****-July ...

2.2 Demand drivers

The drivers of crowdfunding demand consist of several factors that stimulate both individuals and businesses to seek funding through this mode. The main ones are examined below.

Access to alternative funding sources: on the promoter side, crowdfunding offers an opportunity to raise funds for individuals or companies that may have difficulty in accessing traditional funding channels due to, for example, the very innovative nature of projects. In particular, equity crowdfunding platforms are mainly used by start-up companies and small and medium-sized enterprises with a strong propensity for technological innovation (***).

(***)

Investment portfolio diversification: investments in unlisted startups and SMEs, or real estate transactions themselves, can be considered decorrelated from traditional investments in stocks or bonds in financial markets. In this sense, crowdfunding can be considered an excellent means of diversifying one's portfolio. Moreover, it is also possible to have good diversification within crowdfunding itself: by investing in startups, SMEs, and real estate operations belonging to very different categories and then in different initiatives and sectors within these same categories.

(***)

Community validation and support: through crowdfundig, entrepreneurs can test the market and receive direct feddback from the public. This not only validates the business idea, but also provides moral support and ...

2.3 The geographical distribution of demand

The figure below shows the geographic distribution of companies involved in equity crowdfunding campaigns on Consob-authorized portals.

In first place is Lombardy, with *** firms (***).

Based on new broadcasters in the last ** months, Lombardy comes in at **.* percent, and in second place is Emilia Romagna (***).

2.4 New trends in demand

Crowdinvesting on the rise in Italy

The data reported by theObservatory of the School of Management of the Politecnico di Milano shows a positive trend, specifically with reference toequity and lending: the ** platforms recorded a +**% increase over ****, with more than *** million euros raised in ** months. All segments have seen encouraging signs, both venture capital raising, mini bonds, and also loans to businesses and individuals.

(***)

Regardingequity in particular, in a global overview, it shows a growing trend as spurred by regulatory changes that allow non-accredited investors to participate in raising campaigns, democratizing investment in the start-up sector.

(***)

Crowdfunding for Social Causes

Crowdfunding for social causes is becoming increasingly popular. Platforms such as GoFundMe have made it easy for individuals and organizations to raise money for a variety of causes, from medical expenses to community projects. This trend reflects the growing desire of individuals to contribute directly to causes they care about.

(***)

Growing popularity has led to increased demand for such platforms, which have been able to meet the needs of both small and large organizations. Their use can also help organizations gain more exposure and visibility, which can lead to more donations and funding.

(***)

3.1 The market structure

Equity Crowfunding - Sponsoring Firms

There are *,*** firms that were the protagonists of the *,*** campaigns considered by the Report on Crowfunding ****, as there are cases of issuers conducting multiple campaigns at successive times, either on the same portal or on different portals.

As can also be seen from the graph, the issuers are divided among:

*** innovative startups (***), of which *** Srls, ** agricultural companies, ** SpAs and * foreign companies that have registered their Italian branch in the appropriate register; *** innovative SMEs (***), including *** Srls, * agricultural company and ** SpAs; *** SMEs (***); ** investment vehicles in innovative startups, innovative SMEs or other SMEs(***).

In addition, there is an increase in the number of Benefit Societies in the sample: there are a total of ** and as many as ** of these have launched an equity campaign in the last ** months.

Breakdown by company type of companies involved in an equity crowdfunding campaign Italy, ****, % osservatoriefi.it

Equity Crowfunding - Portals authorized by Consob

As of June **, ****, ** equity crowdfunding portals in Italy were authorized by Consob, down from ** in ****.

The * platforms that are no longer operational are Thebestequity.com (***), X.azimutdirect.it, and Equitytrusters.it. There are no new platforms authorized by Consob for placing debt securities and opening banks for buying ...

3.2 The value chain

The crowdfunding value chain refers to the various stages and components that contribute to the success of a collective funding campaign. This chain can be broken down into several key stages:

3.3 The main players

The following are the main companies with equity crowdfunding platforms based in Italy.

MamaCrowd (***): an equity crowdfunding platform based in Italy, founded in ****, is headquartered in Milan. it is known for offering investment opportunities in startups and SMEs, allowing investors to become shareholders in the companies they invest in. The platform allows companies to obtain capital in exchange for shares in the company, thus bringing a new form of alternative financing to traditional channels.

Mamacrowd caters to a wide range of industries, including but not limited to technology, food and beverage, fashion, and many others. it is one of the leading crowdfunding platforms in Italy and stands out for its ability to select innovative projects and offer a user-friendly interface for both investors and project initiators. Mamacrowd has contributed to several fundraising successes, demonstrating the growing popularity and effectiveness of crowdfunding as a means of financing for growing Italian businesses.

Volume raised: €** million in H* ****, +**% compared to the same period in ****.

Crowdfundme s.p.a: an Italian equity crowdfunding platform that facilitates matching between investors and companies, both startups and SMEs, seeking funding. Founded in ****, it is headquartered in Milan. it is known for contributing significantly to the Italian equity crowdfunding ...

4.1 Supply analysis

Crowdfunding is a financing channel through which personal or professional projects by individuals and small businesses can be financed directly by a multitude of parties (***) takes place on online platforms that provide information about individual projects and manage the flow of money.

(***)

Crowdfunding is an alternative financing channel to that represented by banks or other financial intermediaries. The effective financing of a project, in fact, does not depend on the evaluation made by an individual intermediary according to its own financing strategies but on the ability of the proposers to convince a sufficient number of investors to risk their funds in the direct support of the initiative.

(***)

There are different types of crowdfunding, different ways in which you can apply for and obtain funding for a project. These methods vary from country to country because they must adapt to specific tax and economic legislation. Generally speaking, there are two types based on donations (***).

DonationCrowdfunding: used primarily in the nonprofit sector and for personal fundraising activities, it approaches the principles that guide fundraising campaigns. It consists of a donation with no purpose other than the willingness to donate itself, usually contributing to a worthy cause. Under this model, the donor, ...

4.2 The prices

Crowdfunding campaigns can involve a number of costs, which can be divided into * macro-categories:

Commissions Controlling Costs Interest Implementation Costs

The cost directly attributable to launching a campaign on one of the authorized platforms concerns fees, which constitute the platform's remuneration.

The average fee charged for equity crowdfunding campaigns is around * percent of the capital raised.

Moreover, it has been estimated that theaverage amount spent on launching a campgna ranges between €*,*** and €**,***, a sum that does not include the success fee charged by the portal operator. So, the average amount spent, not including the fee, is between *.*-*% of the entire capital raised.

Beyond the estimated average values, it should be noted that in some case histories companies spent lower amounts, even less than €*,***, and it is not possible to evdience any correlation between the amount spent and the amount actually raised, and thus, between costs incurred and success rate.

An additional cost item may be charges incurred foroutsourcing certain activities to external consultants, who, tavolta are the managers of the platforms themselves. The area of activity that is most often outsourced is that involving legal and corporate aspects. In addition, according to research conducted by Crowd Advisor et al, the ...

4.3 New supply trends

The main trends related toofferings in the crowdfundind sector, which is constantly evolving, are reported.

Integration of Blockchain Technology

Blockchain technology is finding increasing application in crowdfunding platforms, providing greater transparency, security and reducing the risk of fraud. Indeed, this technology ensures maximum traceability and immutability of transactions, originating from anywhere in the world and for varying amounts. The transparency factor in crowdfunding is crucial, especially for massive fundraising for charitable causes.

An explanatory example concerns Binance Charity 's realization of ** projects, with more than *,*** donations and an amount exceeding *,*** Bitcoins (***). The estimated countervalue exceeded ** mln euros. What differentiates Binance Charity from traditional platforms is the direct transmission of donations, ensuring that *** percent of the amount reaches the recipient with no hidden costs.

(***)

Growth of Niche Crowdfunding Platforms

There is an increase in specialized platforms that focus on specific sectors such as technology,, real estate (***), environmental projects or social causes. Such portals offer greater focusand can reach a more targeted audience, increasing the chances of successful funding campaigns.

For example, in the area of crowdfunding dedicated to real estate, dedicated platforms appear to be on the rise, increased from ** in **** to ** in **** in Italy and raised €***.** million in the period.

(***)

(***)

5.1 The legislation

Italian crowdfunding legislation has undergone several updates and innovations over the years. Moreover, Italy appears to be among the first countries and to have specific and organic legislation related, in particular, to equity crowdfunding.

The push also stemmed from the observation that in Italy, companies find it difficult to find adequate financial resources for their development. This is even more pronounced for newly established companies, i.e., start-ups.

A particular type of start-ups, the so-called"innovative" ones, was introduced into the Italian legal system by Decree Law No. *** of October **, ****, on further urgent measures for the growth of the country, also known as the Growth Decree BIS, in Articles **-**. In summary, the Decree has:

regulated the innovative start-up introduced into the Consolidated Law on Finance delegated to Consob the regulations applicable to the management of portals and offers to raise capital

(***)

Recently, an important update was made by Legislative Decree No. ** of March **, ****, which implemented Regulation (***) ****/****. This regulation covers European crowdfunding service providers for businesses and amended other European regulations and directives. It entered into force on April *, ****.

In addition, as of November **, ****, European Regulation **** on crowdfunding will officially come into force under which all equity and lending platforms ...

6.1 Segmentation

• Siamosoci s.r.l (MamaCrowd)
• Crowdfundme s.p.a
• Opstart s.r.l
• Backtowork24 s.r.l
• Wearestarting s.r.l
• The Ing Project s.r.l (200 Crowd)
• Starsup s.r.l