Wednesday, May 21, 2014

Equity Crowdfunding in the International Space - Pt. 4 Italy

Italy is the first country in Europe to operate equity based crowdfunding laws and one of the few countries in the world that has passed specific regulations for EBCI platforms.

In 2012, the Italian Parliament passed a decree (2012 Decreto Crescita) which included the recognition and legalization of equity-based crowdfudning. The Commissione Nazionale per le Societa e la Borsa (CONSOB) issued regulatory provisions for the implementation of the decree.[1]

Under the Italian law and regulations, only high-tech businesses will be authorized to offer equity through crowdfunding platforms. In addition, companies in existence for more than 48 months will not be eligible and companies with total output of €5 million will not be eligible.[2]

The Italian crowdfunding market is not as active as in places like the United Kingdom or the United States. As of 2012, there were only 16 active crowdfunding platforms in Italy and most of them are concentrated in northern Italy. But activity in Italy is picking up. The number of platforms has tripled in 2013 totaling 41. Of the 41 platforms, 27 are active and 14 are in their launch phase. Among those launching, majority are equity based platforms triggered by the recent CONSOB regulations.

Twintangibles, an Anglo/Italian research and advisory firm, surveyed 30 platforms and recorded more than 52,000 projects submitted to various platforms in Italy. Most of these projects were submitted to lending-based platforms. Twintangibles warns that availability of platforms in Italy may be outstripping the availability of suitable projects and states that success rate is higher for projects in lending-based models than those projects in donation-based and reward-based models.

The Italian equity based crowdfunding platform worth mentioning is Siamosoci. It offers investors access to unlisted companies and provides rating service based on objective criteria to assess the information provided by companies. Siamosoci also monitors investments and facilitate communication between investors and companies soliciting funds. Some of the funded projects include: a trip advisor web application, patented plate metal for racing sailboats, sales analytics service based customer behavior recorded by cameras, route planning web application for small fleets of vehicles.

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[1] CONSOB, Regolamento (delibera n. 18592 del 26 giugno 2013) in material di “Raccolta di capitali di rischio da parte di imprese start-up innovative tramite portal on-line” (equity crowdfunding).

[2] Daniela Castrataro & Ivana Pais, Analysis of Italian Crowdfunding Platforms, (Nov. 2012) available at http://twintangibles.co.uk/wp-content/uploads/2012/12/CrowdfundingInItaly1.pdf.

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