Shoe Producer Fuels Crowdfunding Debate
Over the past month, many Austrians have been captivated by the case of shoe producer Heinrich “Heini” Staudinger. Striving for independence from bank loans and debt, he managed to collect three million euros since 1999 through friends, family and customers, offering good interest rates, reliable repayment and the security of two warehouses worth four millions, as well as two further building, he explains in Der Standard. The Austrian Financial Market Authority (FMA) was however not amused. According to the FMA, this needs to be categorised as professional loans and requires concessions. This October, Staudinger was supposed to pay back three millions, but refuses to give in to FMA pressures. While negotiations will continue in February, he may be facing a 50.000 euros fine.
It looks as though Staudinger’s unconventional financing model has kicked off an Austrian debate on crowdfunding, the financing of large sums through many people contributing small amounts, which is still highly underdeveloped in Austria. Christoph Leitl, president of the Austrian Economic Chamber (WKO), who, on Wednesday, invited Staudiger to a personal talk, explains that the young economy department of the economic chamber is developing models in this regard. Likewise, Volker Plass from the Austrian Green Party’s entrepreneurs’ association, Grüne Wirtschaft (green economy) deems legal models of crowdfunding for small businesses in Austria as very important. He argues that banks hardly give loans to small, innovative companies. At the same time, many people would like to skip the middleman, as in financial institutions, and invest directly into businesses they consider worthy.
Grüne Wirtschaft wants to legally support the politically green-leaning Staudinger in developing an unbureaucratic and low cost crowdfunding model within the Austrian Economic chamber, which doesn’t include deposit insurance buta maximum amount of investment and certain rules on transparency. Additionally, the involvement of third parties on provision and the bundeling of such microloan business into financial products should be prohibited. For some, Staudinger is somewhat of a hero who has helped to turn around a crisis ridden region, the Waldviertel in Lower Austria, by creating over a hundred jobs through his shoe production plants. Through his brand GEA, he has expanded from shoes to a wide range of ecologically sustainable furniture and has doubled his turnover to 21 million euros since 2008. It remains uncertain how Staudinger’s case will evolve and whether he will proceed to constitutional court or even go to prison, as he has announced. By all means, the instance has got Austria talking about crowdfunding models for small businesses.