I am not a crowdfunding expert, but I was invited to give my views to the European Economic and Social Committee, as an entrepreneur and an investor at the European Crowdfunding Network last year in Paris. It must have been impressive as I have been invited to speak now at CrowdNexus, which I am really looking forward to giving as I have been working on several of the issues that came up at the Paris conference.
In my business life and in my work for the EESC I have come across investment models, business angels, crowdfunding and microcredit, but my greatest interest in the subject is entrepreneurship, social entrepreneurship and how crowdfunding supports growth, innovation and generates a drive for change. It is also interesting how crowdfunding can bring leverage for business development and jobs, innovation and sustainability, an impact Governments around the globe are still failing to achieve.
In today’s changing and challenging world, the solutions tend to come from the people and from communities instead of from politicians. The mechanism of crowdfunding allows for the leverage of funds, but additionally investment in the form of knowledge, networks, new markets, employment opportunities, regeneration, research, development and CSR. Thus the greatest advantage of such a mechanism is as the driver of change. Change is the only constant in our lives, and as Ghandi said “You must be the Change you want to see.” Here we refer to You as The Crowd; whatever the Crowd wants to see changed, the crowd needs to support – A simple but effective equation to make a difference.
Another attribute to crowdfunding is that it is democratic, inclusive and it engages citizens. As Candace Johnson Chair of EBAN, EU Business Angels Network and I concurred in Paris, “There are no social entrepreneurs. Entrepreneurs, by definition, do what is needed to bring about change, being freedom of choice or democratization of access to funding. The way they do it is by believing. And their ability to communicate and convince people that they can bring this change is what is important.”
The UK crowdfunding market is 17 times greater than the French market, which is approximately worth 1 million Euros. The UK has implemented an industry Code of Conduct with a positive result increasing trust in the market. The French, Italians, Finnish and many other nationalities have over regulated the market and caused possible restrictions on lending. Dis-intermediation is an important factor of disruption for established business models and the impulse crowdfunding gives today may well change the understanding of finance to the same degree that the internet search engine has changed the area of knowledge exchange. Which is the direction that the EU should take and furthermore, is it necessary or needed for the EU to take any action?
My recommendations to the EESC are:
1.To prepare an Own Initiative Opinion in the EESC on harmonisation across EU for a fully functioning EU crowdfunding network and to reduce over regulation in each country. Look at ways to prevent market fragmentation – EU commissions are currently looking at crowdfunding but unsure which direction to take
2.Consider an opinion to review crowdfunding in the context of entrepreneurship development and especially social entrepreneurship leverage.
I am looking forward to seeing you all at CrowdNexus and discussing the recommendations and benefits of crowdfunding further.
By Madi Sharma, Founder of Global Entrepreneur Envoy