The Italian Equity Crowdfunding Sector Registered Huge Growth in 2021

The pandemic has neither blocked nor slowed the growth of equity crowdfunding in Italy which, on the contrary, in the first 6 months of this year has seen an impressive acceleration. According to the data collected constantly by Crowdfunding Buzz, the collection, in fact, exceeded $103 million (€87 million), more than double the equivalent period of 2020 when, despite the pandemic, it had still reached a record of about $47 million (€40 million), compared to $32 million (€27 million) in 2019.

It’s good to say right away that this figure discounts an operation that can be defined as “out of the box”: the $30 million (€25 million) raised by Azimut‘s Eltif Alicrowd fund, the first OICR to raise through an equity crowdfunding platform (Mamacrowd). But even the net of this operation, the remaining $73 million (€62 million), raised by 89 projects, is an exceptional result (+59% compared to the first 6 months of 2020 when 67 projects were funded).

Equity crowdfunding does not only include businesses but also real estate projects and investment vehicles, i.e. UCITS or Holding Companies that raise to invest in startups and SMEs. It is therefore interesting to assess the dynamics of the first half of 2021 by considering each of these three sectors separately.

In general, it is certainly evident the weight of the UCITS (that of Alicrowd to which we add the Sicav 4AIM that raised $1.66 million (€1.4 million on Opstart), which, among other things, abundantly compensate the drop in Holding companies, but it is also evident the doubling of the collection from companies (startups and SMEs), especially in light of the drop suffered in 2020 vs. 2019 due to the first “lockdown”, and the “almost” doubling of the collection for real estate projects.

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Enterprises

The collection related to entrepreneurial projects of Startups and SMEs (innovative or not), increased from $21.3 million to $40 million (€18 to €34 million) in the first six months.

From the data reported, it would seem that the average quality of the offer is rising, considering that, to the doubling of the collection, both of startups and SMEs, corresponds a not so impetuous increase of the projects financed, with a consequent increase in the average collection, for both (from $364,000 to $605,000 (€308,000 to €511,000) per campaign for startups and from $560,000 to $674,000 (€473,000 to €570,000) for SMEs).

Startups attracted on average the same number of investors per campaign (102 in both semesters), who however individually invested more: $6,500 (€5,500) on average this year and $5,500 (€4,700) in the first half of 2020. The opposite discourse for SMEs, which attracted many more investors than last year (213 per campaign vs. 127), but with the same average investment.

Considering the platforms, in the first half of 2021 Opstart is the one with the most striking growth margin: if in the first 6 months of 2020 it had successfully closed 4 campaigns raising $1.5 million (€1.3 million), in 2021 there were 20 funded campaigns with a tenfold increase in funding. Mamacrowd and CrowdFundMe also presented important growth margins: the former went from 8 to 10 funded businesses while raising almost twice as much, from $6 million to $11.8 million (€5.1 to €10 million). CrowdFundMe reduced the number of financed companies (from 14 to 11), but increased funding (from $5.8 to $6.9 million (€4.9 to €5.8 million)). Also worthy of note are the performances of Backtowork (successful campaigns reduced from 15 to 13, but funding increased from $3 to $4 million (€2.5 to €3.5 million)) and WeAreStarting (from 2 to 6 companies funded for a tenfold increase in funding from $118,000 to $1.18 million (€100,000 to over €1 million)).

Startups have attracted on average the same number of investors per campaign (102 in both semesters), who however have individually invested more: $6,500 (€5,500) on average this year and $5,600 (€4,700) in the first half of 2020. The opposite is true for SMEs, which attracted many more investors than last year (213 per campaign vs. 127), but with the same average investment.

It should also be noted that the number of platforms that hosted successful campaigns of startups and SMEs has reduced in this semester: while in the first half of 2020 there were 12 platforms with at least one successful campaign, this year there were 9, including the “new entry” Idea Crowdfunding.

Investment vehicles

We have already analyzed above the breakdown between OICRs (Organismi d’investimento Collettivo del Risparmio) and Investment Holding Companies. While the former are vehicles approved by the Bank of Italy (typically, Eltif, Sicav or Sgr), the latter are common Srl or Spa that invest in stakes in various companies, typically startups or innovative SMEs.

The only two OICR collections occurred this year, while Holding Companies have more history. They raised less in the first half of 2021 than they did last year ($9.8 vs. $12.3 million (8.3 million vs. 10.4)), despite having twice as many vehicles funded (10 vs. 5). And, in fact, the average collection plummeted from $2.4 million to $988,000 (€2 million to 835,000). However, it should be considered that last year’s statistics are heavily weighted by Fin-Novia’s record collection of $8.9 million (€7.5 million).

There were 6 platforms that hosted this type of campaign, 3 more than the same six months of last year. In addition to the aforementioned operation of Mamacrowd, the other new entrants were WeAreStarting and Crowdinvest Italia. The three platforms that had already raised in 2020 were Crowdfundme $6.4 million (€5.4 million), Opstart $4 million (€3.4 million), and Backtowork $0.7 million (€0.6 million).

Real Estate

Regarding real estate equity crowdfunding in particular, we have already highlighted above the great growth in terms of funding compared to the first half of 2020: $21.5 million vs. $13 million (€18.2 million vs. €11 million). This increase is due both to the growth in the number of real estate transactions financed (12 vs. 9), and to the average ticket, which, if in the first 6 months of 2020 had been $1.4 million (€1.2 million), in the equivalent period this year exceeded $1.8 million (€1.5 million).

The platform that contributed most to the growth was industry leader Walliance with $15.4 million (€13 million) raised (vs. $6.7 million (€5.7 million)in the first half of 2020) and 6 projects funded. Concrete Investing, which had raised $5.3 million (€4.5 million) in 2020 with 2 projects, also funded two projects but with a reduced collection to $3.3 million (€2.8 million). Finally, it should be noted that the other 3 platforms that had proposed and financed real estate projects in 2020 were confirmed again this year, all increasing their respective fundraising: BackToWork with a $1.4 million (€1.2 million) project, CrowdFundMe, with 2 projects for $897,000 (€758,000) and Build Around with a project for $592,000 (€500,000).

Conclusions

It would seem that this year Italian equity crowdfunding is starting to enter a phase of maturity. The numbers highlighted show a general increase in the “quality” of the offer which, in turn, attracts investors who tend to be more sophisticated than in the past and therefore able to invest more and in a more conscious way, probably also diversifying their investments. The other side of the coin is that companies (and platforms) proposing themselves for collection are “clashing” with numerous offers, all of an increasingly high level and, therefore, it is increasingly important not only to present oneself in a convincing way but also to ask oneself whether it is the right moment to do so.

Despite the number of new platforms that have entered the market between last year and this year, we are seeing a certain concentration of collection, especially by platforms that have already been in the market for some time. But we also observe two other, seemingly opposing trends:

The “historic” platforms are increasingly expanding their offerings, now covering all asset classes (companies, vehicles, real estate). This is in fact the case of Crowdfundme, Mamacrowd, Backtowork, and Opstart and, in part, of WeAreStarting.

Although not as marked as the trend underlined above, it seems that the most recent platforms manage to propose themselves with some success only by specializing in more vertical segments Finally, it should be noted that real estate crowdfunding continues its unstoppable growth, involving generalist platforms as well, but mostly leveraging existing vertical platforms.

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(Featured image by stevepb 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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