S.he European Commission has been resolutely pursuing the goal of a European capital markets union for five years now. Much is happening in new areas such as crowdfunding. The new regulation on the European Crowdfunding Service Provider (ECSP) could give this new impetus. This will apply from November 10, 2021 and brings some innovations. For example, crowdfunding platforms will in future be able to offer private investors securities and loans across Europe. Loans from private individuals to private individuals, the so-called peer-to-peer lending, or the more donation-oriented crowdfunding are not covered by the regulation.
All in all, it is primarily regulating crowd investing anew. Another important innovation is that in future issuers will be able to acquire up to five million euros without a prospectus over a period of twelve months. It has already been possible in some countries, including Germany, to collect up to eight million euros without a prospectus. But because this was only a European recommendation, it led to a patchwork quilt within the EU that has now been replaced. Instead of a prospectus, there will be a six-page information sheet in future.
Crowdlending even without a bank
The value of the new regulation cannot be overestimated, says Jamal El Mallouki, founder of the software provider Crowddesk and chairman of the board of the Federal Association for Crowdfunding. “This will change crowdlending in particular,” he says. Because so far you could only offer this in Germany through a bank. “That was the reason that it hardly played a role in Germany so far. The costs for the complex contracts were in the six-digit range. I expect possible savings of up to 90 percent. “
The most important change is the possibility of being able to offer investments across Europe in the future. This opened up further opportunities for small and medium-sized companies to obtain capital. “Crowdfunding is also the digitization of established financing channels. Business angels, venture capitalists, but also more and more issuing houses have discovered digital sales for themselves – not least in the Corona crisis. Crowdfunding has grown out of the start-up corner and has become more diverse, ”says El Mallouki. And the potential is great. The ordinance creates the basis for emissions with larger volumes than was previously the case.
All of this also has advantages for investors, for whom the investment opportunities have increased. Even now, they could not only invest specifically in tangible, meaningful projects such as cooking stoves for Zambia. Rather, the opportunities to diversify investments widely, even with low assets, are growing. “That was a weighty argument when the regulation was passed,” says El Mallouki. Crowddesk has high hopes anyway. They want to become nothing less than German market champion and have started a new round of financing for the necessary investments.