How Many Companies that Closed Equity Crowdfunding Rounds Grow in the 3 Years After Raising

Italian Tech Alliance and BizPlace have released the “Report Performance Issuers Equity Crowdfunding Italy,” which provides an overview of the equity crowdfunding market in Italy, its main players, and the more than 840 issuers that have carried out a campaign since 2014.

In addition, the report analyzes and compares the economic-financial performance of issuers 3 years after funding, with respect to the crowdfunding platform that selected them, their target sector, and their life stage.

The analysis thus offers new insights into the metrics and dynamics of one of the investment (and raising) instruments on Venture Capital that has grown the most in recent years and weighs about 10 percent of the total value of investments in 2023 in Italy.

Read more about the performance of companies in which raised money through crowdfunding in Italy, and find the most important business news of the day with the Born2Invest mobile app.

The results of the analysis

Some of the results that emerge from the analysis are particularly significant.

Companies that grow in terms of revenues as a result of raising were 14 percent (they had been 9 percent in the previous survey). While those liquidated or at risk of liquidation were 37 percent.

The analysis also notes evidence of the poor forecasting ability of issuers, which on average disregard growth forecasts by 62 percent from the first year of collection.

According to the report’s drafters, this figure, although an improvement over the previous analysis, highlights the need for more careful selection and due diligence of projects in the hands of licensed entities, operating alongside the platforms, as is the case for the stock market with the figures of the EGA and the Financial Advisor.

Although growth forecasts are almost always found to be overestimated, in 27 percent of cases, companies that have raised through ECFs are nonetheless found to be growing and, in several cases, listed on the Stock Exchange or part of more relevant groups nationally and internationally.

The issuing companies with the highest CAGR revenues 3 years after raising relate mainly to the fintech, media, and lifestyle sectors and have raised on the WeAreStarting, 200Crowd, and BacktoWork platforms.

Future challenges for the crowdfunding sector

The unification of the European market will be an important test for Italian operators and issuers and an opportunity for evolution and alignment with international best practices as well as for growth and consolidation of the ECF platform market, which will necessarily have to go through a broadening of the retail investor base.

The rise in interest rates and the consequent increase in the cost of debt offers an opportunity for alternative business financing solutions such as Equity Crowdfunding.

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(Featured image by 6689062 via Pixabay)

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First published in Crowdfunding buzz. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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