Crowd Investing in Italy Was Slightly Down in 2022

Setback for the crowd investing industry in Italy, which in the last 12 months, for the first time, has seen a slight contraction in the market, with €343.79 million raised (-1%).

However, since 2014, the cumulative historical value has risen to €1.21 billion, if we exclude the platforms that collect exclusively or mainly not from the internet, confirming crowd investing as an interesting alternative for both investors and companies that need to finance themselves.

These are some of the evidence contained in the eighth Italian Report on Crowdinvesting produced by the Observatory of the same name of the School of Management of the Milan Polytechnic, presented yesterday morning, which analyzed the last 12 months up to 30 June.

Read more about the report on the crowdfunding sector in Italy and find the latest financial news of the day with the Born2Invest mobile app.

The status of applications for European authorization

Before the presentation of the data by Prof. Giancarlo Giudici, Ronald Kleverlaan (CrowdfundingHub), Emma Iannaccone (Consob), and Alessandro Lerro (Assofintech) spoke and reported on the status of the authorizations pursuant to the new Regulation in Italy and in Europe.

In particular, Ronald Kleverlaan revealed that 47 platforms in Europe have obtained the authorization of 12 in Holland, 10 in France, and 9 in Spain. On the other hand, the absence of two large countries such as Italy and Germany stands out.

In Italy, the possibility of filing the authorization application has been open for about a month and Emma Iannaccone of Consob reported that to date there are 25 applications filed, adding that, also according to a comparison with the authorities of other countries, the approval times are approximately six months.

The lawyer Alessandro Lerro underlined how there are currently great differences between the authorities of the different countries on the granting of permits. For example, some platforms in Spain and the Netherlands were authorized when the RTS (the implementing regulations of ESMA) were still only in draft and, therefore, are not fully compliant with the actual rules.

In fact, even from our direct research, it seems that, for example, most of the authorized European platforms do not impose the prospectus (KIIS) on the proposers as per the regulation.

Lerro, therefore, hopes for greater harmonization between the various authorities so as not to generate competitive imbalances in the market. And, moreover, he also hopes that the Italian authority, in particular Banca D’Italia, takes into account the relatively small size of platform managers, which cannot be expected to have the organizational and control structures typical of large financial intermediaries.

The Crowd Investing report

Annual funding through equity crowdfunding reached 86.64 million euros (-11%) for non-real estate projects and €56.42 million (+28%) for real estate projects; the minibonds placed on the portals decreased sharply, amounting to €20.82 million; lending portals contributed with €24.76 million lent to natural persons and 155.15 to companies, of which 39.36 through generalist portals and another 115.79 (+39%) through specialized real estate portals, growing.

Finally, a specific analysis involved 358 equity campaigns that provided ESG data to potential investors aligned with the GRI standard, especially on greenhouse gas emissions, environmental assessment of suppliers, waste and waste management, energy consumption, and impact on local communities.

“ We are at a turning point in the panorama of the national equity and lending crowdfunding industry – commented Giancarlo Giudici , Scientific Director of the Crowdinvesting Observatory -. The first reason is that we are now on the eve of the full entry into force of the new European ECSP Regulation. The second reason is that for the first time, we have recorded a negative sign, albeit modest (-1%) in the industry’s annual collection. The equity crowdfunding of non-real estate portals and the placements of minibonds are suffering, especially in the first half of 2023. Instead, real estate projects have helped to support the market, particularly in the lending world ”.

Equity crowdfunding

As of June 30th, 2023, 48 portals for online capital raising were authorized by Consob, 3 fewer than last year. In the last 12 months, 23 minibond placement campaigns were concluded on 2 portals, for a total of €20.82 million (-45%), while risk capital raising campaigns totaled 207 in the same period, slightly down on the past. The trend success rate continues to remain high, around 90%. Cumulative risk capital raised over time stands at €571.68 million and in the last 12 months, the flow amounted to €143.06 million, of which €57.63 in the first half of 2023.

The average value of the funding target for non-real estate projects in the last 6 months is €180,126, for real estate projects it is €1.77 million. On average, for non-real estate projects, 5.91% of the capital is offered in exchange and the practice of offering non-voting shares below a certain investment threshold (and with voting rights above the threshold) is confirmed: in real estate campaigns, the offer of non-voting shares prevails.

Among broadcasters, SMEs continue to gain space, but the market is still dominated by innovative startups (50% of cases in the last year, to which must be added 13% of innovative SMEs). The vast majority, as for years now, operate in Lombardy (475 companies, 41.2% of the total), then Emilia Romagna (115, 10.3%) and Lazio (102, 9.2%), and are active in the information and communication services sector. In the South, Campania is always in the lead (36, 3.2%) while if we consider only the new entries of the last 12 months in third place after Lombardy and Emilia Romagna we find Veneto.

The platform that has finalized and raised the most capital is still Mamacrowd (€130.65 million effective as of June 30th, 2023, €45.87 million in the last year), followed by Walliance (€105.04 million, of which €36.61 in the last 12 months). The one that has published the most campaigns is CrowdFundMe, 227.

The average amount invested by subscribers has shown a growing trend in recent months compared to the past, but the gender gap among investors worsening, who are only 14% of cases being women.

After the collection campaign, some companies manage to grow in terms of turnover and margins, but others remain at a standstill. Few become immediately profitable and only a small minority manage to exceed the targets compared to the revenues foreseen in the initial business plan.

In the last 12 months, there have been new exits, through repayments of capital, listings on the stock exchange, or acquisitions, but also new write-offs, as well as several successive funding rounds. On this basis, as of July 1st, 2023, the Italian Equity Crowdfunding Index devised by the Crowdinvesting Observatory calculated an overall theoretical average appreciation of the invested portfolio value of +15.25% (+77.5% in the non-diluted version).

Lending crowdfunding

As regards lending, as of June 30th, 2023, 4 platforms were active in Italy intended to finance natural persons (consumers, 2 fewer than last year), 10 were dedicated to companies (business, no new entries), and 17 specialized in real estate, i.e. 31 in total.

Inflows in the last 12 months amounted to €24.76 million for consumer platforms, with a cumulative total over time of €213.58 million: with the exit of Smartika and the acquisition of Soisy, the podium was conquered by Prestiamoci, with an annual collection of €24 million.

The generalist platforms in the business sector add €39.36 million to assets, reaching a cumulative amount of €69.38 million. Market leaders in the last 12 months are Re-Lender, Ener2Crowd, and Evenfi. The average annual interest rate offered rose to 8.56% in the first half of 2023 against 7.71 in 2022.

The real estate platforms recorded an annual collection of €115.79 million, rising to €267.6 million: the first is Recrowd (€57.3 million in the last year, €86.7 in total), then Rendimento Etico (€20.5 million, €75.3 million in all).

Real estate crowdfunding

As predicted by the Observatory, the real estate crowdfunding industry continued to be particularly lively in Italy. Typically, these are short-medium term projects that aim at the redevelopment, or construction from scratch, of real estate properties, with subsequent sale.

Crowdfunding plays an important role in boosting initial financing thanks to the speed of collection and the absence of collateral.

The projects financed in the last year in this sector raised a good €178.67 million, around 40% more than in the previous period. The average annual yield offered rose in the first half of 2023 to 13.72% for equity offers and decreased slightly (9.69%) for lending ones.

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(Featured image by kschneider2991 via Pixabay)

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