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Crowdfunding social innovation in Europe

Whether you kick things off with Kickstarter or go-go with Indiegogo, crowdfunding is a valuable tool to fund your social innovation. By asking a large amount of people for a small amount of money, crowdfunding is an effective way of generating revenue whilst also raising awareness of your project and engaging a committed and diverse audience.

Connecting fundraisers directly with funders, crowdfunding and other alternative finance sectors are growing exponentially. In fact according to a recent Forbes article by David Prosser, “Europe’s alternative finance sector grew by 144 per cent last year” and “a new study conducted jointly by Cambridge University and the consultancy EY suggests the alternative finance market across Europe as a whole raised €2.96bn over the whole of last year, up from €1.21bn in 2013”.

Whilst the UK is primarily viewed as the pioneer in crowdfunding, the market is emerging across Europe with many other countries taking up the baton to great success. According to the Forbes article at the end of 2014, the top five European alternative finance markets were:

  1. UK (industry worth €3.56bn)
  2. France (€253m)
  3. Germany (€236m)
  4. Netherlands (€155m)
  5. Spain (€101m)

​For full analysis of the European markets, please refer to the Forbes article ‘Europe's Five Biggest Crowdfunding Centres'. 

The European Commission is exploring the potential and the risks of this growing form of finance, as well as the national legal frameworks applicable to it, in order to identify whether there is value added in European level policy action in this field. In spring 2014, the Commission launched a roadmap to meet the long-term financing needs of the European economy including a communication on crowdfunding.

One focus of the communication on crowdfunding is to closely monitor the development of crowdfunding markets and national legal frameworks. The Commission has therefore launched a study on crowdfunding markets in the EU, in order to assess market trends, particularly changes before and after national legislative intervention on crowdfunding. The study is seeking data on crowdfunding, in all its forms, including loans, in all EU Member States and invites crowdfunding platforms to contribute their data.

In a recent report by Nesta, ‘Understanding Alternative Finance: The UK Alternative Finance Industry Report 2014’, it was shown that “64 per cent of those who raised money say it is ‘unlikely’ or ‘very unlikely’ they would have been able to access the funds they need if they could not have turned to alternative finance”. So whether you’re seeking to fund a small social innovation project or scale up your social enterprise, crowdfunding could be the answer!

10 Aug 2015