Equity crowdfunding

The social phenomenon of crowdfunding

Crowdfunding is a collaborative fundraising process that takes place online and takes advantage of the web's potential for outreach and contact.

There are various forms of crowdfunding. The most common are donation-based crowdfunding with a solidarity and social character and reward-based crowdfunding, which allows the owners of a project to "sell" the product or service before it is made, thus supporting its development, with the promise to deliver it to supporters, often on favorable terms, as soon as it is available

Equity crowdfunding

Equity crowdfunding is clearly different from the forms mentioned above: by investing your own money in a project you buy shares or quotas offered by the Offeror and you become to all intents and purposes partners of the company that is carrying out an entrepreneurial project or an investment project. This is because the company concerned, in order to cover its capital requirements, has decided to finance itself by offering the public to subscribe to a share of its capital

The Italian regulation of the equity crowdfunding institute

The relevance of equity crowdfunding to the world of investment and savings management of private individuals has made it necessary for the legislator to intervene in order to provide the appropriate levels of protection for the public

Italy was one of the first European nations to adopt organic legislation on equity crowdfunding which provides for a complete regulation of the legal institution and the subjection to supervision by Consob (National Commission for Companies and the Stock Exchange)

Consob, with resolution number 18592 of 26 June 2013, has issued its own Regulation on the collection of risk capital by innovative start-ups through online portals (subject to subsequent amendments and updates) effectively giving way to this new and very important channel for raising capital for small and medium-sized enterprises

Read the latest update of Consob Regulation 18592/2013

Investing with equity crowdfunding

Investing on equity crowdfunding portals has a high potential for returns but has an intrinsic and equally high level of risk: the investor must, therefore, be aware of the risks associated with investing in equity crowdfunding, which could also involve the risk of losing the entire capital invested

Register of managers of portals for the raising of venture capital by innovative start-ups

The raising of capital through equity crowdfunding takes place by means of portals specifically authorized by Consob which, after having evaluated the requirements of honorability and professionalism of the Managers and the organizational and technological structure, in the case of acceptance of the Manager's request, with its own resolution, provides for the registration in the Register of Managers of portals for the raising of risk capital by innovative start-ups

The Register is managed by Consob and foresees

  • an ordinary section in which are registered the managers of portals that (like Siamosoci S.r.L.) are authorized by Consob following the positive verification of the existence of the requirements of the Tuf and the Regulations adopted by Consob with resolution no. 18592 of 26 June 2013;
  • a special section in which are registered the banks and investment firms authorized to provide the relevant investment services which have communicated to Consob, prior to the start of operations, the carrying out of the activity of management of a portal for the collection of capital online.

Who can raise capital on online portals

The subject that raises capital through authorized online portals and registered in the registers managed by Consob is indicated as 'Offeror'. One of the following subjects can be an Offeror, i.e. raise capital through equity crowdfunding

  • small and medium-sized enterprises (SMEs), as defined in Article 2(1)(f), first introductory sentence, of Regulation (EU) No. 2017/1129 of June 14, 2017, organized as a company under the law of a Member State of the European Union or party to the agreements on the European Economic Area
  • the innovative start-up company, including the start-up with a social vocation, , which complies with the size limits provided for the definition of SME;
  • the small and medium-sized innovative enterprise ("innovative SME");
  • the Undertaking for Collective Investment ("OICR") that invests mainly in small and medium-sized enterprises;
  • corporations that invest primarily in small and medium-sized enterprises.

What the portal does and how equity crowdfunding works

The Portal acts as a showcase for the presentation of the Offeror's project, which through the Internet presents itself to the audience of potential investors on the network. The institution of equity crowdfunding allows to unite the contributions, even modest ones, of numerous small investors and to realize a significant collection of money that can be used for the development of the entrepreneurial or investment project for which the Offer of financial instruments has been conducted on the portal

The Portal has the primary and exclusive function of facilitating the widespread raising of risk capital by members of the public who access it.

The provisions of the Consob Regulations establish the set of requirements and procedures to be followed by the parties concerned (Investor/Offeror/Portal Manager) and which are necessary for the proper completion of the investment, in compliance with the system of safeguards provided by law in favor of the investor and the community of savers

For further information https://www.consob.it/web/investor-education/crowdfunding