The European Parliament has made an announcement today that will be welcomed by the crowdfunding industry.
At the moment, developers and other businesses looking to raise finance through investment crowdfunding sites like Abundance are limited to a maximum of €5 million under EU rules.
The announcement today is that the EU Parliament is looking to raise that level to €8 million.
Across this industry, and particularly here at Abundance, the news has been met with cheers. It means that for developers with larger projects, raising finance directly from investors may soon be open to them. It also raises the cap for popular projects, such as the Thrive Renewables Bond that sold out in a matter of weeks in November, leaving many potential investors disappointed.
In other words, this will benefit crowdfunding investment companies like Abundance because it makes us interesting to an even wider range of developers. But it is you, the investors, who truly benefit. Investment crowdfunding already offers small investors the chance to diversify their portfolio with small, individual investments in sectors and projects that they may not have access to through traditional avenues. Increasing the maximum that businesses can raise without a prospectus should lead to an even more varied mixture of opportunities for you to invest in, each with their own benefit and risk profile.
It is for these reasons that we here at Abundance wholeheartedly welcome the announcement by the EU Parliament today and we hope to see the recommendation implemented in the very near future.
Bruce Davis, co-founder of Abundance, had this to say:
Abundance has always seen Crowdfunding as about more than just start up companies and small projects. If the shift to the bigger exemption cap is accepted by the EU then we will see bigger and more varied deals being made available to our investors. We always argued that the prospectus rules were biased towards the needs of big institutional investors while crowdfunding offers were focused on the small investor and helping them properly understand the risks. Let’s hope that this comes to fruition and we will see some new types of projects coming to Abundance in the coming years.
We are, of course, aware that the UK will leave the European Union in the coming years and as such this legislation may not ever be relevant for our country. However, it would not be unreasonable to anticipate that to keep the UK competitive in this growing industry, and to retain its leading reputation for crowdfunding as a whole, that these limits would at the very least be introduced in the UK. They could in fact be even higher – the UK was arguing for a maximum level of €10 million in these talks. As with all things Brexit, this is no more than conjecture for the time being so it will be interesting to watch this space!
Part or all of your original capital may be at risk and any return on your loan or investment depends on the success of the project. Investments tend to be long term and may not be readily realisable. Estimated rates of return are variable and estimates are no guarantee of actual return. Consider all risks before investing.