EC explores crowdfunding action

EC explores crowdfunding action

The European Commission is pondering the creation of a continent-wide framework for the fast growing crowdfunding market.

Crowdfunding has emerged as a serious alternative financing tool over the last couple of years. In 2012 the market's value in Europe rose by 65% to EUR735 million, compared to EUR3 billion for venture capital.

The EC says that crowdfunding addresses, or has the potential to address, the needs of small start-ups that struggle to get backing from banks and VCs and are not ready for IPOs.

The Commission has launched a consultation into the money-raising technique, arguing that, although many crowdfunding campaigns are local in nature, others "would benefit from easier access to financing within a single European market".

The consultation will focus on measures to promote crowdfunding and to tackle some of the risks - such as fraud, misleading advertising, and payments - associated with the industry which threaten to damage trust.

Michel Barnier, commissioner for internal market and services, says: "Considering the development of crowdfunding and the diversity of regulatory, supervisory, fiscal and social frameworks for it across the EU, do we need a single European framework to support both those who develop crowdfunding platforms and to reduce the risks to those who make use of such platforms to finance projects. That is what I am asking."

The consultation, covering all forms of crowdfunding, ranging from donations and rewards to financial investment, will run until the end of the year.

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