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The Perfect Regulation of Crowdfunding: What Should the European Regulator Do?

In: Crowdfunding in Europe

Author

Listed:
  • Sebastiaan N. Hooghiemstra

    (University of Liechtenstein)

  • Kristof Buysere

    (Tilburg Law School)

Abstract

More and more SMEs use crowdfunding to raise funds from a large audience by means of a cost-effective effort. Crowdfunding helps SMEs to overcome the demand for capital for early-stage (equity) financing. The traditional availability of financing, such as bank lending, venture capital and angel investments, are not available to most start-ups and other SMEs. Offerings are, thus, more and more promoted through crowdfunding portals. Funds through this channel of financing are typically raised from a larger number of contributors in the form of relatively small contributions. It is therefore very obvious that more and more firms have started to use this medium for this goal. Regulations on the national and European level, however, heavily limit mechanisms to promote offers and campaigns to a wide range of potential investors. In addition, company laws and banking and securities regulations hinder the emergence of an ecosystem with platforms that can offer the infrastructure for internet-based campaigns. This paper particularly explores these (mainly European) obstacles, and proposes remedies.

Suggested Citation

  • Sebastiaan N. Hooghiemstra & Kristof Buysere, 2016. "The Perfect Regulation of Crowdfunding: What Should the European Regulator Do?," FGF Studies in Small Business and Entrepreneurship, in: Dennis Brüntje & Oliver Gajda (ed.), Crowdfunding in Europe, edition 1, pages 135-165, Springer.
    • Handle: RePEc:spr:fgfchp:978-3-319-18017-5_10
    DOI: 10.1007/978-3-319-18017-5_10
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    Cited by:

    1. Katarina Durdenic, 2017. "Crowdfunding - Croatian legal perspective and comparison to other sources of financing," Public Sector Economics, Institute of Public Finance, vol. 41(2), pages 259-287.

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