Broadening access to finance for innovative companies, start-ups and other unlisted firms, including small and medium sized enterprises (SMEs), is at the heart of the Capital Markets Union (CMU) Action Plan, which is a key focus for the European Commission at the moment. With that in mind, yesterday, the Commission published a working document on use of crowdfunding.
Access to funds for SMEs can be difficult and the Commission has identified that crowdfunding can complement traditional bank funding, as well as offering other benefits to firms. The Commission considers that crowdfunding can significantly contribute to the aims of the CMU to help mobilise capital.
The purpose of the report is to assess national regimes for crowdfunding, identify best practice, and present the results of the Commission's monitoring of the evolution of the crowdfunding sector. The report also identifies work done at the EU level on crowdfunding.
"In addition to providing an alternative source of financing directly, crowdfunding can offer other benefits to firms: it can give a proof of concept and idea validation to the project seeker; it can help attract other sources of funding, such as venture capital and business angels; it can give access to a large number of people providing the entrepreneur with insights and information; and it can be a marketing tool if a campaign is successful. "