Crowdfunding, investment barriers must be dropped: Dijsselbloem
Minister Jeroen Dijsselbloem of Finance wants to offer crowdfunding more space and make it easier for people to invest in businesses through crowdfunding. Dijsselbloem wrote a letter to the Tweede Kamer, lower house of parliament, on Tuesday stating that he wants to remove bottlenecks that hinder the growth of this public funding of enterprises.
Crowdfunding works through a platform where prospected business owners give information about a business or enterprise they want to start and where interested members of the public can invest in the proposed business. At the request of Minister Dijsselbloem, the Authority for the Financial Markets (AFM) researched crowdfunding late last year. The AFM estimates that 37 million euros were invested in up-and-coming businesses through crowd funding last year, double that of 2013.
The AFM also identified a number of problems that could hinder crowdfunding investments. One of these problems is the ban on commission. This means that the company looking for funding is not allowed to pay the platform, while that fee can be an important source of income for equity-based crowdfunding platforms. The commission ban is intended to prevent an adviser sending the client in a certain direction, but this is not possible in this form of funding. From next year Dijsselbloem will therefore make an exception to the commission ban for equity-based crowdfunding. Platforms that want to make use of the exception will have to register with the AFM. At the same time Dijsselbloem will also put increasing demands for the professionalization of crowdfunding platforms.
In his letter, Dijsselbloem calls crowdfunding "a valuable addition to the possibilities for small and medium sized enterprises to obtain financing."