Connect with us

Crowdfunding

The Italian Equity Crowdfunding Sector Registered Huge Growth in 2021

The Italian equity crowdfunding sector increased in the first six months of 2021. 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.

Published

on

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.

Read more on the subject and find the latest business headlines with the Born2Invest mobile app.

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)).

SEE ALSO  African Fund Managers: Governance at the heart of investment decisions

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).

SEE ALSO  Bitcoin holds firm as we approach the New Year

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.

__

(Featured image by stevepb via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

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.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Olivia McCall is passionate about education, women and children’s rights, and the environment. A long-time investor, she covers news about the latest stocks (lately marijuana and tech), IPOs and indices, and is always on the lookout for socially responsible startups. She also writes about the food sector, and has a keen interest on cryptocurrencies.