Among the platforms that have already obtained EU authorization under the new regulation is the U.S. equity crowdfunding platform Wefunder, which officially received the green light to operate its equity crowdfunding services in the European Union, as early as last December.
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European authorization granted in the Netherlands
The authorization was granted in the Netherlands, where the authorization process started as early as 2022 and where, in fact, as many as nine platforms have already been authorized.
Previously, explained CEO and founder Nick Tommarello, “crowdfunding platforms would have to get approval from each EU country to operate, as each followed different regulations. Thanks to the European regulation approved in 2021 by the European Union, WeFunder can now operate in the 30 countries with the same framework.”
And already 12 European startups have launched crowdfunding campaigns on the platform.
Katie Powers, WeFunder’s EU operations manager, said that from May to September 2022, her team traveled to Lisbon, Madrid, Barcelona, Copenhagen, Amsterdam, Berlin, Tallinn, and Munich to meet with founders and other partners (but not in Italy, it would be worth asking why – Ed.).
“Much of the time was used to help Wefunder get its name out there,” Powers says, “But even regulatory approval was an expensive and arduous process that took more than two years and a lot of legal support.
Who is Wefunder
The platform was founded in the US, 10 years ago, and has raised more than $9 million in funding from prestigious investors including Y Combinator and Visary Capital. However, as Tommarello says, “the capital pales in comparison to Republic, Wefunder’s largest U.S. competitor, which has raised more than $200 million since its launch in 2016.”
However, thanks to the amendment of Regulation Reg CF (the one pertaining to the solicitation of retail investors in the United States) in 2021, Wefunder has grown to account for more than 50 percent of the market share in retail fundraising in the United States.
According to WeFunder’s co-founder, the new EU regulation is triggering a race between the U.S. and U.K. platforms
Unlike the other platforms, WeFunder has taken a “soft” approach compared to, for example, Republic’s $100 million acquisition of Seedrs, which had moreover taken advantage of the failed merger with Crowdcube that was blocked by antitrust. Seedrs, for now, can only operate in the UK, but it appears that the company “is currently obtaining an EU crowdfunding license.”
Crowdcube, another U.K.-based competitor, has obtained a European license in Spain through its local subsidiary.
According to Tommarello, U.S.-based startups can now raise with equity crowdfunding rounds in both the U.S. and the EU, essentially doubling the potential year-over-year raising.
The increased competition also means that companies have more opportunities to negotiate on the one hand and propose better terms on the other. And, perhaps, crowdfunding will thus reach a new dimension such that it will overcome the criticism, from which it suffers particularly in the U.S., about the quality assurance of proposing companies.
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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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