Bizplace and Italian Tech Alliance Publish the Report on the Performance of Equity Crowdfunding Issuers

BizPlace, the vertical Investment Bank on Early-Stage Venture Capital, with the support of the Italian Tech Alliance – the Italian association of venture capital, investors in innovation and innovative startups and SMEs have published the Report on the performance of Equity Crowdfunding in Italy.

The Report offers an overview of the Equity Crowdfunding market in Italy, its main operators and the over 900 issuers who have launched an equity crowdfunding campaign from 2014 to today, based on data from Crowdfunding Buzz.

But, moreover, for the first time, it analyses and compares the economic-financial performances of the broadcasters 3 years after the collection , with respect to the platform that selected them, their reference sector and their life phase.

The equity crowdfunding report includes for the first time an analysis of the performance of the broadcasters

The analysis offers new insights into the metrics and dynamics of one of the investment and collection tools on Venture Capital that has grown the most in recent years, reaching approximately 3% of the overall value of investments in 2024 in Italy.

Although growth forecasts are almost always overestimated, in 35% of cases the companies that raised through equity crowdfunding are still growing and, in several cases, listed on the stock exchange or part of more relevant groups at a national and international level.

Looking to the future, the Equity Crowdfunding market is entering a phase of consolidation, with a probable reduction in the number of operators in favor of more structured platforms capable of competing internationally, as already partly observed during 2024.

“We are proud of the research and analysis work carried out by our team to create the first report on the performance of Equity Crowdfunding in Italy. As BizPlace, we strongly believe that a more aware and transparent innovation ecosystem is the prerequisite for an acceleration of investments and interest, even international, towards our country,” commented Francesca Catalano, M&A & Strategy Manager of BizPlace.

“Especially in a complex phase like the current one, also due to the impact of macroeconomic phenomena that make the general economic picture more complex, it is essential to have tools available such as the report we have presented – explained Francesco Cerruti, General Manager of Italian Tech Alliance – In the specific case of Equity Crowdfunding, the new European regulation makes it even more central to provide the clearest possible picture of the phenomenon’s performance and prospects.”

The main findings of the equity crowdfunding report

An analysis of the year-on-year growth rates of ECF’s turnover and post-transaction margins shows that 21% of the broadcasters grew in terms of revenues and of these, 34% grew with growth rates greater than 20% per year and achieved profitability in the 3 years following the collection.

The remaining 66% is growing in terms of revenues albeit at lower rates and with still negative margins. Conversely, 15.2% of the total broadcasters appear to have put the company into liquidation between 2014 and 2021 and 13.5% appear to have decreasing revenues and negative EBITDA.

Most broadcasters are seeing a progressive decrease in turnover while maintaining positive margins

Aggregate analysis of equity crowdfudning collections

The sector that has historically channeled the most investments is Tech with over €56M, followed by the Food & Agriculture sector with over €50M, Digital with almost €46M and Fintech with over €44M.

Limiting the analysis to 2023 alone, a significant growth in funded projects in the Education and HR, Tech and Lifestyle sectors is highlighted.

On average, companies operating in the fintech sector are the ones raising the most capital – with an average of €749,000 per campaign), followed by startups operating in the Smart City sector (average of €513,000 per campaign), Media (average of €487,000 per campaign) and Tech (average of €464,000 per campaign).

Seed rounds account for 47% of the total investments made through ECF for an average of €432,000 per deal.

Those who raise a Seed round (on average between €200K and €1M) reach on average 84% of the maximum planned collection goal, compared to those who raise a Series A round (on average above €1M) who reach on average 90% of the maximum planned goal and those who raise a Pre-Seed round (on average below €200K) who reach on average only 44% of the maximum planned goal.

The expected performances

In terms of sectors, the forecasts for annual compound revenue growth vary between +64% for Education & HR to +194% for the Digital sector, with Tech and Smart City forecasting +184% and 177% respectively.

EBITDA forecasts are on average positive for all sectors starting from the second forecast year. The multiples on expected revenues one year after collection are between 2.8x (Food and Agriculture sector) and 9.3x (Fintech sector).

The multiples on expected EBITDA one year after the collection are between 11.9x (Digital sector) and 93.7x (Education sector).

Startups that raise a Pre-Seed or Seed through ECF estimate that they will triple their revenue levels compared to the first forecasted year and double between the second and third year after the launch of the campaign.

Startups that raise a Series A through equity crowdfunding, on the other hand, estimate an average three-year revenue growth with a CAGR of +93%.

Those who raise Seed and Series A rounds estimate on average that they will reach the BEP in the 2nd forecast year, while those who raise Pre-seed rounds estimate on average that they will reach the BEP in the 1st year.

Current performances

For companies operating in the Lifestyle, Life Sciences and Software sectors, a decrease in turnover is observed over the three years of analysis and a CAGR over the three years of -21%, -6% and -1% respectively.

The companies operating in the Fintech, Media and Digital sectors are growing the most in terms of revenues with a CAGR of 94%, 90% and 52% respectively.

The Break-Even-Point is, on average, reached in the third year only by companies operating in the Fintech and Media sectors.

Compared to the forecasts, the actual data three years after the equity crowdfunding show expected growth rates on turnover that are rather sustained, although far from the average forecasts (Pre-seed CAGR 20% vs 165% forecast; Seed CAGR 39% vs 153% forecast; Series A CAGR 22% vs 93% forecast).

One-year revenue multiples from collection range from 9x to 12x.

Broadcasters on the Two Hundred, We Are Starting and Backtowork platforms have the highest revenue CAGRs among the platforms considered, at 90%, 54% and 45%, respectively.

The median of observations on current EBITDA results three years after equity crowdfunding highlights how We Are Starting broadcasters reach the Break Even Point more frequently than broadcasters on other platforms.

The comparison between expected and actual performance

The comparison between expectations and reality reveals a general poor forecasting capacity on the part of broadcasters in any sector, with a median deviation from the three-year turnover projections from collection that varies between -41% of companies operating in the Digital sector and -95% of those operating in the Education and HR sector, even if a general improvement is evident compared to the previous analysis.

The comparison with the broadcasters’ rounds highlights how those who raise a Series A tend to be more accurate in their forecasts than those who are at their first round of funding. Furthermore, contrary to what was observed previously, even for those who raise a Series A the gap between their forecasts and the actual results increases between the first and third year of the collection.

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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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