The new crowdfunding law: Friend or Foe?
Crowdfunding platforms are not a new addition to a variety of financing means in Austria. With the passing of an amendment regarding the legal situation, founders may be able to witness a whole new crowdfunding culture in Austria. Martin Pansy, CEO and founder of NOKI, a startup with a sky-rocket campaign on Kickstarter (read more here), explains: “Startups will benefit from the new law due to the reduction of administrative expense and an acceleration of the whole process.”
Entrepreneurs will be able to target investors more easily. At the same time they might have difficulties finding and chossing the right platform.
Next to founders also well established crowdinvesting platforms such as CONDA are positive about the new developments: “We are convinced that startups and small businesses will benefit from the new law and that it will boost the startup scene in Austria,” said Daniel Horak and Paul Pöltner, CEOs at conda.at.
Brave new crowdfunding world
As early as one day after the passing of the new law, the platform Green Rocket launched Home Rocket, specialized on real estate projects. The segmentation of the crowdfunding culture into specialized platforms may just be the dawning of future impacts of the new law. Wolfgang Deutschmann, founder and CEO of Home Rocket explains: “With HomeRocket we count on real-estate because this industry is the most popular way of investment. Experts have approved every project and the need for properties is increasing. With the new law, we will see a rise of equity-based crowdfunding on our platform due to the changes of the full prospectus policy.”
By segmenting the crowdfunding culture in industry-specialized platforms future entrepreneurs will be able to target investors more easily. At the same time they might have difficulties finding and choosing the right platform. Expedient consulting and information will be necessary to gain access to the right platform and the right investors.
Before the new crowdfuding law, every campaign required a full “capital market prospectus” for investors at a volume of 250,000 euros. Since this “prospectus” implied very high costs for those who run the campaign, the issue volume has been raised to five million euros. This makes it easier for founders to raise small amounts of money in order to get their business stared or produce a first batch of products. Campaigns with a target sum of 100,000 euros now require a simple infosheet and there is a “prospectus light” for campaigns up to 1,5 million euros.
Small investors may invest up to 5,000 euros per year if monthly earnings do not exceed 2,500 euros net, or twice the number of his monthly net earnings. Alternatively 10% of the capital assets per investor can be invested if this sum exceeds 5,000 euros. Supporting innovative businesses has also become easier for investors: small money givers can make use of a two weeks right of withdrawal if formal requirements are not met. Moreover, future crowdfunding campaigns have to be operated through entitled platforms.
Brigitte Lemmerhofer, CMO at ab&cd innovations, has just stared a campaign on Green Rocket and is positive about the law: “It implies an optimization of the parameters for startups and young innovative companies. For us the new law poses an improvement of the founder culture in Austria. It’s a step in the right direction and will help transforming visionary ideas into viable enterprises.” Austria demonstrated a forward-looking step towards a new entrepreneurial future by facilitating the access to crowdfunding for both investors and founders.