Polytechnic Report Shows Substantial Growth in Equity Crowdfunded Companies

CrowdFundMe has released a report produced in collaboration with students from the Milan Polytechnic, which analyzed the post-funding performance of startups and SMEs that have closed successful rounds on the portal (from founding through the end of 2021).

The study defined the most significant dynamics, from investment value trends to the quality of selection by the scouting team.

The very thorough analysis debunks a now rather widespread negative perception about Italian SMEs raising with equity crowdfunding.

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Financial performance according to the Polytechnic report

Among the main results, in fact, it shows that the compound annual growth rate (Cagr) of funded companies was 41 percent. Both SMEs and Startups grow significantly in the years following the campaign, with a slight advantage for Startups, which have a CAGR of +47% versus +34% for SMEs.

Looking at profitability, a much higher percentage of SMEs than Startups record positive EBITDA even before the campaign on CrowdFundMe. Symmetrically, more than half of the Startups have yet to break even in both EBITDA and Profit.

Instead, it appears that companies are not accurate in their growth forecasts. In fact, the deviation between expected business plan turnover and actual turnover is at median values of -67 percent for the first year, -85 percent for the second, and -91 percent for the third. This is true for all sectors with the exception of Fintech and E-Commerce, which show initially positive, then negative but smaller deviations.

Post-campaign media coverage

In the years following the campaigns, the analyzed broadcasters gained visibility in major newspapers with an average value of around 2 articles.

The two most successful cases are in the Food sector, where Winelivery and Cesarine collected 9 and 8 prominent articles, respectively.

Only 31 companies in the sample did not receive mentions in newspapers, while there were no substantial differences between the two types of companies considered, Innovative SMEs and Startups.

Current status and revaluation index

Out of the sample of 103 companies, the two extremes are equivalent: while 8 companies are in liquidation, 8 others have undergone exits (4 IPOs and 4 acquisitions).

Of the other 87 companies, 36 still went through an additional round of capital raising either privately or through crowdfunding, with an average revaluation multiple of 3.3. Among these companies, three distributed dividends in the years following the campaign.

The Polytechnic synthesizes this data into an “issuer revaluation index.” The “Net asset value” for those who had ideally invested in all campaigns on CrowdFundMe grew by an average of 3.81 times: 249 points (versus 170 points for the market average)

CrowdFundMe CEO Tommaso Baldissera Pacchetti commented, “I a grateful for the meticulous and detailed work of the team (Alessia Salvatori, Antonio Sciacca, Benedetta Tabarelli, Gaia Tiberi, Carlotta Tripodi, and Edoardo Votta) and their mentor, Prof. Giancarlo Giudici. Congratulations to Benedetto Pirro for the selection work carried out within CrowdFundMe, together with Luca Sellari Franceschini, Gianluca Brigatti, and Marco Iovine.”

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(Featured image by fototommy via Pixabay)

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