In its various forms, Crowdfunding allows entrepreneurs and SMEs to solicit capital from funders, using social networks and crowdfunding platforms to finance their businesses and projects. It appears to be affording real opportunities in the area of alternative finance for SMEs. Use of the mechanism appears to have seen substantial growth globally in the recent past and it is seen by many sponsors as a means of “democratising” access to funds and supply of capital and moving the model away from venture capitalists and angel investors.
However, as an industry, crowdfunding is in its infancy and financial returns on capital will dictate its overall success. Data is not yet readily available with which to analyse its impact.
I have no immediate plans to introduce legislation. The industry needs time to “find itself” and should not be over burdened by regulation before the required platforms have been given the time to grow and develop. I will keep the matter under review. It is certainly too early to provide a specific regulatory mechanism for the concept, but my officials, along with the Department of Finance will continue to monitor the issue.
I am also fully aware that crowdfunding is being discussed seriously within the European institutions and the OECD as an alternative for SME financing. We will continue to actively engage with the relevant Institutions in these deliberations and are fully committed to providing an appropriate policy response with regard to the emerging need to establish a European framework and ecosystem for best practices.