Crowdfunding has become a vital alternative financing mechanism in Europe, bridging the gap between investors and businesses, especially small and medium-sized enterprises (SMEs). The European Securities and Markets Authority (ESMA), the main regulator of crowdfunding platforms in the European Union, has released its first Market Report on Crowdfunding, shedding light on market trends, key statistics, and the evolving regulatory framework. The report is based on data from 2023 reported by the national authorities.

The crowdfunding landscape at a glance

Over €1 billion was raised through crowdfunding in the EU in 2023, showcasing its growing prominence as a financing tool. There are 228 registered Crowdfunding Service Providers (CSPs) in Europe.

Loan-based crowdfunding emerged as the most prevalent funding model, representing 65% of the total funds raised. Debt-based crowdfunding accounted for 17%, while equity-based crowdfunding contributed 6%.

Loan-based projects raised approximately €15,000 on average—significantly smaller than debt-based (€53,000) and equity-based (€46,000) projects.

Key market insights

Retail investors accounted for a staggering 87% of market participants. They typically contributed smaller amounts compared to sophisticated (12%) and professional investors (1%).

Lithuania stood out with the largest number of investors (500,000), reflecting its well-established regulatory environment since 2017.

Professional, scientific, and technical services sector led the way, attracting 33% of the total investment. Construction projects followed, raising 21% of the funds. Agriculture comes in only 8^th by total investment amount, suggesting that there is still room for growth in this segment.

France and the Netherlands were the top crowdfunding hubs in terms of capital raised and number of platforms. Lithuania, with its high participation rate, also had a significant role on the market.

Cross-border investments accounted for 17% of the total funds raised, with notable variations across countries. Austria and Estonia saw over 80% of investments from foreign residents, indicating strong cross-border appeal.

Regulatory framework

Crowdfunding in the EU is governed by the European Crowdfunding Service Providers Regulation (ECSPR), implemented in 2021. This framework harmonizes rules for investment- and lending-based crowdfunding across Member States, enhancing cross-border activity and investor protection. Key aspects include clear operational and supervisory requirements for crowdfunding platforms as well as investor protection measures, such as disclosure obligations and marketing guidelines.

LANDE obtained its Crowdfunding Service Provider License in early 2024 – read more about it here.

Challenges and opportunities

While the report highlights significant growth, it also points to challenges such as:

·        Data quality issues: some countries struggled to provide consistent data, which impacted the analysis.

·        Market fragmentation: Despite the ECSPR, certain markets remain domestically focused, limiting the scope of cross-border expansion.

On the brighter side, the crowdfunding market continues to mature, with smaller platforms consolidating and investor confidence rising due to enhanced transparency and regulation.

The ESMA report emphasizes the importance of monitoring and refining the crowdfunding ecosystem as it evolves. As more data becomes available, future reports aim to delve deeper into trends and potential risks, ensuring a robust and investor-friendly crowdfunding environment.

This report underscores the transformative role of crowdfunding in democratizing access to finance while offering investors an innovative avenue for participation.

LANDE is proud to belong to this thriving ecosystem and we are excited to continue our contribution by bridging the gap between farmers seeking loans and investors looking for impactful opportunities.