Equity Crowdfunding in Italy: the Impact of the EU ECSP Regulation

In 2024, the Italian equity crowdfunding market showed signs of growth and maturation, despite the difficulties encountered during the process of adapting to the new regulations.

According to data from CrowdfundingBuzz, the average collection per single campaign in 2024 was 593 thousand euros, an increase compared to 444 thousand euros in 2023. This indicates a lower number of equity crowdfunding campaigns, but with an overall collection in line with the previous year.

Impacts of ECSP Regulation on the Italian Equity Crowdfunding Market

The last quarter of 2023 and the first quarter of 2024 showed very positive signs of market recovery, with collections of 22.5 million and 21.8 million respectively, figures that had not been seen since the fourth quarter of 2021, the last golden period of the market, when the Italian market reached its peak with over 30 million collected.

These successes are partly due to some mega rounds made on Mamacrowd: in Q4 2023 the Out Of 2 campaign which reached the record of 7 million euros, the maximum limit of the old regulation, and the community funding of Birra Baladin in Q1 2024, which allowed the Piedmontese company to collect 5 million euros from over 2,000 small investors in its community.

However, the second quarter of 2024 did not confirm this growth trend in the equity crowdfunding sector, bringing the statistics back to the levels of the third quarter of 2023, with a collection of only 7 million euros. With respect to the data, Professor Giancarlo Giudici is expected to provide more details in the usual presentation of the 9th Report on Crowdinvesting of the Politecnico di Milano in July, offering a more complete picture of the current situation in light of the data recorded in the last 12 months.

Opstart Acquisition of BacktoWork

Another interesting aspect of the current trend of the Italian equity crowdfunding market concerns the recent acquisition of BacktoWork by Opstart , two of the 4 most important generalist Italian platforms that have been competing for the equity crowdfunding market for about a decade.

Opstart has in fact acquired 60% of BacktoWork, a portal owned by Banca Intesa Sanpaolo, effectively acquiring a strategic partnership with the bank in addition to the investor user base of the portal previously led by Alberto Bassi. This operation marked an important stage in the consolidation process of the sector, leading to the formation of a new player of substance, further strengthening the financial solidity and the ability to attract institutional investors.

The three active generalist platforms

Thanks to this consolidation, the current equity crowdfunding market situation, again according to CrowdfundingBuzz data, sees only three active generalist platforms : Mamacrowd, Crowdfundme and Opstart. Mamacrowd, with over 20 million euros raised in the first six months of 2024, has established itself as the market leader platform for startup and SME collections (and second behind Yeldo Crowd, for Real Estate equity collections), thanks also to the support of the Alicrowd fund of the Azimut group, which participates in some of the operations proposed by the group’s portal.

On the other hand, Crowdfundme and Opstart have recorded lower collection volumes, but have compensated for their results thanks to other types of services offered to entrepreneurs. Crowdfundme continues to churn out important numbers thanks to the real estate lending portal Trusters, of which it is the parent company, while Opstart, which has become a real fintech hub for startups but above all SMEs, has focused on lending collections and mini-bonds.

Looking at other active platforms, it is worth noting the work of Ener2Crowd, which has raised a few hundred thousand euros on green energy projects, and Wearestarting, which has launched three campaigns after obtaining the European license at the end of February, and in fact remained on hold for a few months.

The growing use of equity crowdfunding by SMEs

According to CrowdfundingBuzz data, a fact that is shaping this new era is the growing use of equity crowdfunding by SMEs to raise capital, while startups are resorting to this tool less and less. This change is partly due to the preferences of small investors, who are less and less inclined to risk on startups and believe more in more consolidated businesses, in fact leading the portals to select more and more companies of this type, which offer greater solidity, lower risk but also less exponential exit possibilities.

A further motivation, however, lies in the fact that currently the most innovative and disruptive startups have greater access to the dry powder of VC funds and the numerous syndicates and club deals that are consolidating throughout the peninsula, and for this reason they rely less on crowdfunding as a collection tool.

Real estate equity crowdfunding platforms

Taking a quick excursus on real estate equity platforms, the latter have suffered a halt in collection compared to 2022 and 2023, with Yeldo Crowd and Mamacrowd leading the way at the end of 2023 and in the first months of 2024, in terms of operations and greater capital raised.

It is interesting to note that the average collection in this segment is over 1.5 million euros, with an average number of investors per campaign greater than 500, almost three times more than that of campaigns for startups and SMEs. A distinctive sign that small crowd investors want to invest through the tool, but they do so in operations and businesses that they understand better and above all at lower risk.

The European equity crowdfunding market

Compared to the European market and the leading platforms Crowdcube and Seedrs, 2024 has already given us the first campaigns for some Italian startups. On Seedrs, the campaigns of the Roman Starcks and the Milanese Academia.tv , an edtech startup in the food sector, were launched. On Crowdcube, instead, the campaign of Contents, a generative artificial intelligence scaleup already funded by Alkemia Capital and Thomson Reuters Ventures, started.

This campaign, aimed at closing the Series B round of 18 million dollars, was launched within a broader marketing strategy at European level, to acquire new users and raise brand awareness, thanks to community funding.

All three campaigns share some peculiar characteristics that outline what these portals are looking for: they are created by startups in an advanced stage , although not all at the same stage of maturity; they are businesses with important user communities; and they have chosen international platforms not only to raise capital but also to expand their user base and their business throughout Europe. So they don’t just want to raise capital, they want to be noticed by a wider and more varied audience.

What to expect in the coming months in the equity crowdfunding market

What will happen in the coming months? More and more small equity crowdfunding portals could close or merge with larger ones to try to compete in a market where it will be increasingly important to differentiate the offer or specialize in a vertical (green, deeptech, fintech, etc.).

While on the one hand, startups and community-based companies with international positioning or expansion intentions could increasingly try the path of foreign platforms, SMEs, real estate or energy efficiency projects, as well as early-stage startups will return to adopting the crowdfunding tool both to accelerate the collection process and to better communicate their deals to a wider audience.

That is because 2024 is not an easy year for those who have to fundraise, as 2023 had already been, and for those who need capital in a short time, the tool is a game changer.

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(Featured image by RonaldCandonga via Pixabay)

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

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