Januray 2017 – www.europarl.europa.eu

Crowdfunding in Europe. Introduction and state of play

Crowdfunding is a relatively ‘young’ form of financing – especially for SMEs and start- ups, but also for not-for-profit projects – that is developing fast in Europe. While researchers point out its benefits, among them the fact that project owners have greater control, and financial risk is spread among a larger number of people, they also note its drawbacks. The latter include a high cost of capital, occasional displays of a ‘herd mentality’, capable of depriving potentially worthier projects of adequate funding, and risks for investors from incompetence or fraud on the part of the project
owners, and unclear regulations.
The European Commission (through a communication and two reports) and the European Parliament (through three resolutions) have taken an active interest in this
form of financing. As a result, the Commission recently conducted a study on the state of the European crowdfunding market.

Read more: Crowdfunding in Europe. Introduction and state of play