Equity crowdfunding fundraising exceeded even the most optimistic forecasts in 2020: €100 million

During 2020, a substantial resilience in equity crowdfunding fundraising could be seen, and, indeed, a slight increase compared to 2019, despite the uncertainties due to the pandemic and the subsequent lockdown in Q2.

However, the last quarter of the year completely turned the tables: with a record collection of over $57.2 million (€47 million) and 61 successfully funded campaigns, Q4 brought the total 2020 collection to $125 million (€103 million). A striking result in itself, but even more remarkable when compared to last year: +57% compared to the $79 million (€65 million) raised in 2019.

On the other hand, the growth of funded campaigns was less vertical than that of the collection: 159 compared to 139 (+14%), while, as a result, the average collection of each campaign increased radically $788,000 vs. $574,000 (€648,000 vs. €472,000).

These results are due to the super-performance of the 4th quarter in which the best quarterly result ever, that, moreover, of the 1st quarter of 2020, equal to $29 million (€24 million) (and 35 successful campaigns), was doubled.

It is very likely that, among the reasons for the record collection of the last quarter, there is also the expiry on 31/12 of the 50% tax incentive, for which many companies have preferred either to define the expiry date before the end of the year or to bring forward to December the expiry date initially foreseen in January. In fact, 36 campaigns were closed in the month of December alone, generating total sales of $33.7 million (€27.7 million), equal to just under 60% of the entire fourth quarter.

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From a detailed analysis of the sector, significant dynamics emerge

Investment Vehicles and Real Estate soared, while SMEs and Startups grew little.

The bulk of the growth is primarily due to investment vehicles, holding companies that invest mainly in innovative startups and SMEs: $28.8 million (€23.7 million) in 2020 and $4.3 million (€3.5 million) in 2019. There are 12 successful campaigns (against 5) with an average collection that goes from $851,000 to almost $2.43 (€700,000 to almost €2 million). Evidently, investors, even the most sophisticated ones, prefer to rely on those who select companies at a professional level instead of investing directly in individual companies.

Real estate equity crowdfunding continues its growth by almost doubling its collection compared to 2019: from $20 million to $35.6 million (€16.5 million to €29.3 million), with the average collection rising from $1.34 million to $1.82 million (€1.1 million to €1.5 million). And, in fact, the number of real estate projects funded increased less than the collection from 15 to 19.

The collection of SMEs and Startups, on the other hand, grows but more marginally, from $55 million in 2019 to $60.8 million in 2020 (€45.5 million in 2019 to €50 million in 2020) (+10%), with 128 companies financed compared to 119 in 2019 and an average collection almost unchanged $475,500 in 2020 and $465,800 in 2019 (€391,000 in 2020 and €383,000 in 2019)

The weight of campaigns that raise more than €1 million increases

In 2020, there were 33 campaigns that raised more than $1.22 million (€1 million), compared to 22 in 2019. But the total raised doubled from $42.6 million to $85.2 million (€35 million to €70 million) and, in fact, the average raise went from $1.7 million to $2.3 million (€1.4 million to €1.9 million).

Million-dollar campaigns had a decisive weight on the total 2020 collection, making up as much as two-thirds of it, 67%. In 2019, their weight had been significantly more limited (55%)

Analyzing these campaigns by project type, those related to investment vehicles are 6 out of 12 $24.6 million raised (€20.2 million raised); those related to real estate projects are 14 out of 19 $33 million raised (€27.2 million raised); and those related to Startups and SMEs are 13 out of 128, $26.4 million raised (21.7 million raised)

Of the 33 millionaire campaigns, two (both investment vehicles) came close to the maximum threshold of $9.73 million (€8 million) allowed by Consob regulations, one with $9.24 million (€7.6 million) (Fin-Novia) and one with $7.42 million (€6.1 million) (RedFish Long Term Capital). While 10 have raised more than $2.43 million (€2 million), including 6 real estate projects, 3 startups (Forever Bambù, DeepSpeed and Soisy) and one investment vehicle.

The increasing concentration of crowdfunding platforms

The top seven platforms, i.e. those that have raised at least $12 million (€10 million) since their launch, accounted for 95% of the entire collection in 2020. The same platforms, in 2019, had collected 88% of the total. Of these seven platforms, five are generalist (Opstart with $26.7 million (€22 million) raised in 2020; Crowdfundme with $18.2 million (€15 million); Backtowork with $17 million (€14 million); Mamacrowd with $15.8 million (€13 million); Two Hundred with $8.2 million (€6.7million) and two real estate (Walliance with $15.8 million (€13 million); Concrete investing with $15.6 million (€12.8 million).

The other platforms that closed at least one successful campaign in 2020 are 11 (exactly the same as in 2019) and have raised a total of $4.62 million (€3.8 million).

Almost all platforms are growing: Exploit of Opstart and Backtowork

Among the top seven platforms, five (Opstart, Crowdfundme, Backtowork, Walliance and Concrete Investing) increased their fundraising compared to the previous year, while two (Mamacrowd and Two Hundred) raised slightly less.

For Opstart and Backtowork, 2020 was a particularly significant year. The former, which had raised $5.6 million (€4.6 million) in 2019, raised as much as $26.7 million (€22 million) in 2020. The latter doubled its collection, going from $8.6 million to $17.4 million (€7.1 million to €14.3 million).

Considering only projects related to Startups and SMEs, Crowdfundme is the platform that has raised the most $14.1 million (€11.6 million), followed by Opstart $13.87 million (€11.4 million), Mamacrowd $11.7 million (€9.6 million), Two Hundred $8.15 million (€6.7 million), Backtowork $7.9 million (€6.5 million) and Ecomill $1.7 million (€1.4 million).

Among the 11 platforms not included in the top seven, nine were also active in 2019, and of those, only three raised more than the previous year. These are platforms that launched just last year: Ecomill, Lita and Extrafunding. On the other hand, there are two platforms that launched their first successful campaign in 2020: Lifeseeder and Mybestinvest.

The number of investments is almost unchanged, while the average investment is growing

The total number of investments in 2020 grew only slightly compared to 2019: 18,900 vs. 18,000. On the other hand, the average investment grew considerably, from $4,400 to $6,700 (€3,600 to €5,500)Conversely, the average number of investors per campaign decreased, from 130 in 2019 to 119 in 2020

Campaigns launched by Investment Vehicles attracted more sophisticated investors

The average amount invested by each investor in Real Estate and Startup and SME projects is very similar: $6,300 (€5,200) for the former and $5,000 (€4,100) for the latter. While the average amount invested in Investment Vehicles is of a different order of magnitude: $27,500 (€22,600). It is therefore highly probable that this type of target has attracted more sophisticated investors, capable of allocating higher amounts and of appreciating more the investment “managed” by specialized entities than direct investment.

In terms of the number of investors per campaign, on the other hand, real estate projects involved a much higher number: 295 per campaign. While Startups and SMEs campaigns involved an average of 96 and investment vehicles 88.

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(Featured image by Pixabay via Pexels)

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