Wednesday, 10 July 2013

Questions (40)

John Browne

Question:

40. Deputy John Browne asked the Minister for Jobs, Enterprise and Innovation the way he believes crowd funding of enterprise can be supported and encouraged; and if he will make a statement on the matter. [33582/13]

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Written answers (Question to Jobs)

Crowdfunding, in respect of enterprise and other activities, is becoming an ever more popular alternative financial mechanism for businesses and promoters across the globe to access finance in a difficult financial market. In its various forms, crowdfunding allows individuals, businesses and promoters to solicit capital from funders, using social networks and crowdfunding platforms to finance 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, crowdfunding is in its infancy and financial returns on capital will dictate its overall success. Data is not yet readily available domestically, at EU level or internationally with which to analyse its impact to date, although moves are afoot at EU level to consider methods to address this data deficiency.

As 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 am keeping the issue under review as to how best to utilise its benefits to promote business development. It is certainly too early to provide a specific regulatory mechanism for the concept, but my officials will continue to monitor the issue in collaboration with all other key stakeholders in this matter. As set out in the Action Plan for Jobs 2013, we have committed to investigate the potential for alternative funding mechanisms including peer to peer lending, supply chain finance and crowdfunding.

I am also aware that crowdfunding is being discussed seriously within the European institutions and the OECD as an alternative source of SME financing. Ireland will continue to actively engage with the relevant Institutions in these deliberations and is fully committed to providing an appropriate policy response with regard to the emerging need to establish a European framework and ecosystem for best practices.

In view of the early stage of development of this concept, my Department would of course welcome any stakeholder views on how to optimise the potential of this developing phenomenon for securing additional finance for business growth and jobs.