“Finding funding from small businesses and people with innovative ideas will now be much easier. As rapporteur for the EPP Group on the regulation, I welcome the adoption of the new rules that will facilitate collective financing, the so-called crowdfunding, in the EU. This type of funding is a way to raise funds for projects and enterprises. It allows a large number of people to raise money through online platforms and is most often used by start-ups or growing companies as a way to access alternative means. The regulation harmonizes the rules for such platforms in the EU, which will ensure transparency, legal protection and low costs, “said Bulgarian MEP Eva Maydell (GERB / EPP).
“I have often talked to enterprising Bulgarians who say that they have a business idea, but do not have the finances to implement it, and without a credit history it is difficult to get support from a bank or other institution. Two years ago, a student from Veliko Tarnovo told about an innovative technology for charging an electric bicycle, which he had invented and almost developed. If he has not yet started his business, he will soon be able to register with any of the collective financing platforms in Europe and seek funding from consumers, who may be ordinary citizens looking for a meaningful investment of their savings. Once the amount has been collected and the business has started, investors can receive, depending on the conditions of the platform, a percentage of the business, the funds they have invested plus interest, or a product produced. This model works effectively in the United States, and I hope to unite Europe’s potential for innovative business development. But also to encourage more people to invest directly, even small amounts, in innovative ideas, products and services, “added Maydell, who is a member of the EP’s Committee on Economic and Monetary Affairs.
In addition to monetary resources, a successful collective financing campaign can highlight the potential and public confidence in the business, which will make it easier to find additional funding from other financial sources that will accept the project as less risky. Businesses often start successfully after such a campaign because they have already garnered popularity and support from potential customers during the fundraising campaign.
There are a number of types of collective financing. The best known are collective financing through partner lending, equity and compensation, most often in the form of a product or service voucher when they are ready.
