Crowdfunding for Companies Best Left to EU Countries, Hill Says

  • European Commission publishes report on EU crowdfunding sector
  • Says sector is crucial to improving growth, jobs in the bloc

The best way to promote crowdfunding as a source of financing for companies is to leave regulation to the bloc’s 28 countries for now, European Union policy makers decided.

Given the fast pace of change and local focus of crowdfunding, “there is no strong case for an EU level framework at this juncture,” the European Commission, the EU’s executive arm, said on Tuesday.

“As part of our work to improve the funding conveyor belt for businesses, we are keen to support the development of crowdfunding models as a source of financing for entrepreneurs with bright ideas, start-ups and other SMEs,” Jonathan Hill, the EU’s financial-services commissioner, said in a statement. “Our focus is on promoting best practice, appropriate investor protection and consistency of national regimes. We will continue to monitor market and regulatory developments closely.”

Crowdfunding, the practice of raising funds for a company or project from a large number of people, generated about 4.2 billion euros ($4.9 billion) last year, up from 1.6 billion euros in 2014, according to the commission. And it could prove especially useful for companies that are just getting started.

About 60 percent of start-ups survive for three years, “and those that do contribute disproportionately to job creation,” the commission said. While fledgling firms account for just 17 percent of employment, they create 42 percent of new jobs, according to a report.

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