Italy opens up equity crowdfunding to all kind of SMEs


Just before the Italian parliament found itself dealing with Mr. Renzi’s resignation as Prime Minister, it managed to pass a law which, as of 2017, will allow any SME to raise funds via equity crowdfunding.

Italy has been the first country to approve a crowdfunding regulation back in 2013. However, the rules resulted to be too restrictive and made it nearly impossible for the equity crowdfunding market to take off. In fact, its estimated value in 2015 was about €1,600,000, which is just a tiny amount compared, for instance, to neighboring France, where it was worth nearly €50 million in the same year.

One of the main elements suffocating the Italian sector from the start is an article which initially limited the possibility to raise funds via equity crowdfunding only to the so called “Innovative Startups”, that is young companies which complied to certain criteria (like R&D spending or number of researchers employed) that defined them as “innovative”. Luckily, this possibility was later expanded to all the “Innovative SMEs” (i.e. same concept, different company’s age) and again, in a third step, to investment funds. The latest edit to the crowdfunding law, approved at the end of November 2016, eventually allows any Italian SME to collect equity capital in this way.

This modification has been called for since a long time by many market players. Italy’s economy, just like most other European economies, is largely based on SMEs. Equity crowdfunding has long been touted as a useful fundraising tool and has already shown impact in markets such as the UK, France or Germany. ECN welcomes the latest change to Italy’s crowdfunding regulation, which is a clear further step to foster crowdfunding’s potential in southern Europe.

However, despite this change in the law – and its potential to become a game-changer for Italian crowdfunding – other requirements and rules remain unchanged, likely continuing to hinder the market to flourish. Among these, a rule which forces fundraisers to have at least 5% of the capital offered subscribed by a “qualified investor” – e.g.. business angels, investment funds – by the end of the campaign and the annual investment limit of €1,000 for retail investors.

Nonetheless, the latest change to the law is an important step for the crowdfunding market in Italy and indicates the clear support the sector is still receiving. ECN is confident more change will follow as the sector matures and become more professional.


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