Lucerne University published its annual report, for the third year in a row, on crowdfunding in Switzerland. The “Crowdfunding Monitoring Switzerland 2016" tracks the growth and trends in this sector of finance.
In the introduction, Prof. Dr. Andreas Dietrich, states: "In previous years, we have usually commented that the market had grown rapidly, but the absolute volumes of funding remained at a low level. This year, though, the market has grown markedly in percentage as well as in absolute terms. For the first time, crowdfunding has been instrumental in raising substantially more than CHF 100 million. This compares to just under CHF 28 million in the previous year. The structure of the market has also changed greatly: as expected, real estate crowdinvesting and the financing of SMEs via crowdfunding (business crowdlending) have made considerable contributions to this growth".
"The platforms in these two segments witnessed markedly higher transaction volumes. On the investor side, this has increasingly sparked the interest of professional investors capable of supplying the requisite volumes. Given these fundamental changes in 2016, we are expecting 2017 to again witness a substantial acceleration in growth", he added.
At the end of 2016, well above 40 platforms were operating in Switzerland,
a figure that had risen to around 50 by April 2017.
The report underlined that:
- Total sector activity included CHF 128.2 million and increase of +362% for 3,098 campaigns in Switzerland.
- “Crowdlending” grew by +597%, to CHF 55.1 million.
- “Crowdinvesting” increased by 453%, to CHF 39.2 million.
- Reward-based crowdfunding and donations grew by 37%, to CHF 17.0 million.
- Invoice trading registered CHF 17 million for the year.
- During the past sevent years, total crowdfunding in Switzerland has raised CHF 193.8 million.
- Over 100,000 individuals participated in crowdfunding during 2016
- Out of 2,042 campaigns, 1,338 were successful or 65.5% success rate
The growth of investment based crowdfunding and the slowdown of perk-based or reward based crowdfunding is a phenomenon that will be reflected in other regions. The Swiss online lending market has experienced the strongest year-on-year growth of all categories. The funds raised rose by almost 600% from CHF 7.9 million to CHF 55.1 million, while the number of successfully acquired loans increased from 266 to 840.
According to the researchers, "In terms of development, the Swiss crowdfunding market remains in the middle of the field on an international comparison basis. We find, however, that both the number of active platforms as well as the diversity and depth of their business models and business fields have increased markedly over the past almost two years. The domestic market is showing signs of strongly accelerated development. We are expecting the trends in the SME crowdlending and real estate crowdinvestingsegments in the Swiss market to contribute significantly to higher volumes."
Last week, for the first time in the country, journalism startup called Republik launched a campaign to raise 750,000 Swiss francs in 35 days for a one-year subscription to an online magazine that has yet to publish its first story.
In February 2017, Switzerland’s Federal Council opened a consultation process on proposed changes to the banking legislation and ordinance in the area of FinTech. The revision ought to ease the hurdles for FinTech businesses and thus also for crowdfunding platforms.
The Banking Ordinance will be amended to allow a prolonged period of 60 days for the acceptance of funds for settlement purposes without the need for a banking license. In this way, the measure will provide more room to maneuver, especially for crowdfunding platforms and similar service providers which will be exempt from the requirement to get a banking license for their services.
Only a little more than half a year is remaining until implementation of PRIIPs and MiFID II, and th
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