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Italian Crowdfunding Platforms - An Overview (Updated Version - April 2013)

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Analysis of Italian Crowdfunding Platforms
Daniela Castrataro (twintangibles & crowdfuture) and Ivana Pais (Cattolica University)
with the support of the ICN – Italian Crowdfunding Network
April 2013
v 2.1
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 1
Table of Contents
Composition of the Italian crowdfunding market............................................................................3
Descriptive list of Italian crowdfunding platforms...........................................................................4
History and geography of Italian crowdfunding platforms.............................................................9
Genesis of Italian crowdfunding platforms: rationale and influences...........................................10
Crowdfunding models on the Italian market................................................................................10
Demography of Italian crowdfunding platforms...........................................................................10
Legal form, partners and personnel.............................................................................................10
Italian crowdfunding in numbers..................................................................................................11
Target market and target audience, competitors, collaboration networks...................................12
Main issues on the Italian crowdfunding scene...........................................................................13
The legal framework....................................................................................................................13
What is crowdfunding according to the players in the sector.......................................................16
Conclusions.................................................................................................................................17
Index of images and graphs
Fig. 1 Breakdown of Italian crowdfunding platforms' models.......................................................3
Graph n.1 Timeline showing the launch year of the main Italian crowdfunding platforms............9
Graph n. 2 Total value of successfully funded projects for each crowdfunding model................11
Fig. 2 Breakdown of the total value of funded projects for each crowdfunding model................12
[*cover image: tag cloud created with the definitions of crowdfunding given by the survey respondents]
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 2
Composition of the Italian crowdfunding market
As of April 10, 2013, there were 21 active Crowdfunding platforms in Italy, and two in their
launch phase.
Twelve platforms were reward-based and seven were donation-based. Only two platforms can
be included in the equity-based model and two in the Social Lending model.
In total, 12 platforms responded to our online questionnaire in November 2012.
Fig.1 Italian crowdfunding platform models
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 3
Descriptive list of Italian Crowdfunding platforms
Reward-based/Generalist
Boomstarter - www.boomstarter.com
BoomStarter is a generalist crowdfunding platform, founded in September 2011 as the first
project of the platform itself, raising 8000 Euro. It's an example of the reward-based platform
using the ‘take it all' model. It is uncertain whether the platform is still active.
Com-Unity - http://www.com-unity.it/
Com-Unity is a generalist crowdfunding platform, using a mixed donation-reward model. It's
owned by Banca Interprovinciale Spa and it was developed together with the consultancy firm
Studio SCOA. It was launched in March 2013. The platform publishes projects from many
different sectors, with a stronger interest towards humanitarian and scientific areas.
Crowdfunding Italia - www.crowdfunding-italia.com
Crowdfunding-Italia is a generalist crowdfunding platform, founded in October 2012. The
registration for Crowdfunding-Italia is free and no commissions are imposed on raised funds.
De Revolutione - www.derevolutione.com
DeRev is "a platform that allows you to turn your best ideas into revolutions in order to materially
improve the world we live in". On the platform it's possible to find crowdfunding campaigns as
well as petitions. Founded by Roberto Esposito, the platform was launched in November 2012.
Eppela - www.eppela.com
Eppela is a reward-based crowdfunding platform founded in the second half of 2011 by Nicola
Lencioni It allows for the funding of innovative and creative projects in the fields of art,
technology, film, design, music, comics, social innovation, writing, fashion, non-profit
organization.
Kapipal - www.kapipal.com
Kapipal was founded in 2009 by Alberto Falossi and defines itself as a site to raise money
online. This is a generic platform that provides funding for any project, particularly personal
projects, such as birthdays or wedding lists. Kapipal also defines itself as the first international
crowdfunding platform to support personal crowdfunding. It doesn’t impose any fees on projects.
Produzioni dal Basso - PdB - www.produzionidalbasso.com
PdB is believed to be the first crowdfunding platform in Italy, founded in 2005 by Angelo
Rindone, The purpose of the platform is to "provide a space for all those who want to propose
their own project through a bottom-up production system"
Produzioni Dal Basso is free and each project proposal is managed independently and without
intermediation.
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 4
Starteed - www.starteed.com
Starteed was founded in late 2011 by Claudio Bedino. The platform launched in September
2012, and is a crowdfunding site that helps people finance their ideas with the financial and
social support of the Starteed Community. The platform integrates the crowdfunding campaign
with all subsequent stages of the development and sale of the product, giving the creator the
opportunity to sell their product on the platform itself.
Reward-based/Regional-Local
Finanziami il tuo futuro - www.finanziamiiltuofuturo.it (Valle d'Itria - Puglia)
Finanziami il tuo futuro (lit. Fund my Future) is a local crowdfunding platform, operating in the
area of Valle d'Itria in the South-Italian region Puglia, aimed at the promotion and diffusion of
new projects for the development of the local community. The platform was born at the
beginning of 2013 to answer “the need to integrate and revive the productive sectors of the local
economy through innovation and creativity brought by the local youth”. It's targeted to 18-35 y.o.
living in the municipalities of Alberobello (Ba), Cisternino (Br), Locorotondo (Ba), Martina Franca
(Ta), Noci (Ba) and Putignano (Ba). Project holders can send an application to raise a fixed sum
(10.000E) in order to realise projects of a maximum duration of 12 months.
Kendoo - http://www.kendoo.it/ (Bergamo)
Kendoo is a crowdfunding platform operating in the North-Italian province of Bergamo,
promoted by Media on (a company owned by Gruppo Sesaab of Bergamo, who publishes
"L’Eco di Bergamo"). The platform's objective is to create and fund projects, using an all-or-
nothing model. The platform was launched at the beginning of 2013.
Reward-based/Niche
Cineama - www.cineama.it
Cineama is a platform and a community around cinema, open to professionals, creative
professionals and cinema lovers and beyond. The platform, founded by Tania Innamorati,
Federico Bo, Antonio Badalamenti, Fabrizio Mosca and Savina Neirotti in 2011, combines
crowdsourcing and crowdfunding, directly involving cinema lovers in the phases of creation,
production, promotion and distribution of films, documentaries, shorts, web series.
Musicraiser - www.musicraiser.com
Musicraiser is a reward-based crowdfunding platform dedicated exclusively to music. Founded
by Marta Sui Tubi singer, Giovanni Gulino, and his partner DJ and producer Tania Varuni, the
platform was launched in October 2012 and hosts fundraising projects for CDs, promotional
tours, music videos, concerts, festivals and all that has to do with music.
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 5
Reward-based/Do It Yourself (DIY) Crowdfunding
The so called DIY Crowdfunding (or Direct Crowdfunding) is a trend that started developing in
Italy too. This happens when campaign owners decide to run their campaigns independent of
platforms. You can find below some recent examples of DIY Crowdfunding.
Acquista con noi un pezzo di Storia (lit. Let's buy together a piece of history) - Palazzo
Madama (Turin) www.palazzomadamatorino.it/crowdfunding/
The project was launched by the museum Palazzo Madama in Turin. It raised 89.409,49E in 2
months, surpassing its 80.000E target, in order to bring a porcelain set that belonged to the
d'Azeglio's back to Turin. It was a reward-based crowdfunding campaign: backers, in return for
their pledges, will receive rewards such as entrance tickets to the museum, mentions in the
acknowledgements, etc.
Community – Il Film http://www.communityilfilm.com/home/
The project's objective is to finance the production of Community Il Film, a social story told
through a comedy film. The target is 200.000E, the deadline is September 2013, when the
shooting is set to start.
Un Indovino Ci Disse – Il Film (lit. A fortune-teller told us – The Movie)
http://www.unindovinocidisse.it/
The campaign's objective is to fund the production of the movie Un Indovino Ci Disse, by Mario
Zanot, adapted from the book Un Indovino Mi Disse (lit. A fortune-teller told me) by Tiziano
Terzani. The target is 500.000E to be reached by June 2013.
vice versa – Italia Pavilion at the 55th International Art Exhibition - la Biennale di Venezia
http://viceversa2013.org/it/crowdfunding-artisti-opere-arte
The initiative aims to support the production of artists works, cultural mediation, promotion and
communication; the organization of encounters with artists and opinion leaders and a final
conference on the themes of the Italian Pavilion. It's a reward-based campaign of a duration of
90 days. So far over 100.000E have been raised.
Donations
BuonaCausa - www.buonacausa.org
BuonaCausa is the "ethic network dedicated to good causes and projects that require support."
The platform allows associations, testimonials, companies, donors and activists to collaborate
on initiatives and projects of social value.
Fund For Culture - http://www.fundforculture.org/
Fund Culture is a system for collecting funds for culture, which want to "encourage dialogue
between those who want to spread culture in Italy and who are seeking support from small
donations." This project was founded in Naples in October 2010 from an idea of Adriana Scuotto
and Antonio Scarpati. The platform’s objective is "to fund cultural initiatives - such as exhibitions,
Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 6

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Italian Crowdfunding Platforms - An Overview (Updated Version - April 2013)

  • 1. Analysis of Italian Crowdfunding Platforms Daniela Castrataro (twintangibles & crowdfuture) and Ivana Pais (Cattolica University) with the support of the ICN – Italian Crowdfunding Network April 2013 v 2.1 This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 1
  • 2. Table of Contents Composition of the Italian crowdfunding market............................................................................3 Descriptive list of Italian crowdfunding platforms...........................................................................4 History and geography of Italian crowdfunding platforms.............................................................9 Genesis of Italian crowdfunding platforms: rationale and influences...........................................10 Crowdfunding models on the Italian market................................................................................10 Demography of Italian crowdfunding platforms...........................................................................10 Legal form, partners and personnel.............................................................................................10 Italian crowdfunding in numbers..................................................................................................11 Target market and target audience, competitors, collaboration networks...................................12 Main issues on the Italian crowdfunding scene...........................................................................13 The legal framework....................................................................................................................13 What is crowdfunding according to the players in the sector.......................................................16 Conclusions.................................................................................................................................17 Index of images and graphs Fig. 1 Breakdown of Italian crowdfunding platforms' models.......................................................3 Graph n.1 Timeline showing the launch year of the main Italian crowdfunding platforms............9 Graph n. 2 Total value of successfully funded projects for each crowdfunding model................11 Fig. 2 Breakdown of the total value of funded projects for each crowdfunding model................12 [*cover image: tag cloud created with the definitions of crowdfunding given by the survey respondents] Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 2
  • 3. Composition of the Italian crowdfunding market As of April 10, 2013, there were 21 active Crowdfunding platforms in Italy, and two in their launch phase. Twelve platforms were reward-based and seven were donation-based. Only two platforms can be included in the equity-based model and two in the Social Lending model. In total, 12 platforms responded to our online questionnaire in November 2012. Fig.1 Italian crowdfunding platform models Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 3
  • 4. Descriptive list of Italian Crowdfunding platforms Reward-based/Generalist Boomstarter - www.boomstarter.com BoomStarter is a generalist crowdfunding platform, founded in September 2011 as the first project of the platform itself, raising 8000 Euro. It's an example of the reward-based platform using the ‘take it all' model. It is uncertain whether the platform is still active. Com-Unity - http://www.com-unity.it/ Com-Unity is a generalist crowdfunding platform, using a mixed donation-reward model. It's owned by Banca Interprovinciale Spa and it was developed together with the consultancy firm Studio SCOA. It was launched in March 2013. The platform publishes projects from many different sectors, with a stronger interest towards humanitarian and scientific areas. Crowdfunding Italia - www.crowdfunding-italia.com Crowdfunding-Italia is a generalist crowdfunding platform, founded in October 2012. The registration for Crowdfunding-Italia is free and no commissions are imposed on raised funds. De Revolutione - www.derevolutione.com DeRev is "a platform that allows you to turn your best ideas into revolutions in order to materially improve the world we live in". On the platform it's possible to find crowdfunding campaigns as well as petitions. Founded by Roberto Esposito, the platform was launched in November 2012. Eppela - www.eppela.com Eppela is a reward-based crowdfunding platform founded in the second half of 2011 by Nicola Lencioni It allows for the funding of innovative and creative projects in the fields of art, technology, film, design, music, comics, social innovation, writing, fashion, non-profit organization. Kapipal - www.kapipal.com Kapipal was founded in 2009 by Alberto Falossi and defines itself as a site to raise money online. This is a generic platform that provides funding for any project, particularly personal projects, such as birthdays or wedding lists. Kapipal also defines itself as the first international crowdfunding platform to support personal crowdfunding. It doesn’t impose any fees on projects. Produzioni dal Basso - PdB - www.produzionidalbasso.com PdB is believed to be the first crowdfunding platform in Italy, founded in 2005 by Angelo Rindone, The purpose of the platform is to "provide a space for all those who want to propose their own project through a bottom-up production system" Produzioni Dal Basso is free and each project proposal is managed independently and without intermediation. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 4
  • 5. Starteed - www.starteed.com Starteed was founded in late 2011 by Claudio Bedino. The platform launched in September 2012, and is a crowdfunding site that helps people finance their ideas with the financial and social support of the Starteed Community. The platform integrates the crowdfunding campaign with all subsequent stages of the development and sale of the product, giving the creator the opportunity to sell their product on the platform itself. Reward-based/Regional-Local Finanziami il tuo futuro - www.finanziamiiltuofuturo.it (Valle d'Itria - Puglia) Finanziami il tuo futuro (lit. Fund my Future) is a local crowdfunding platform, operating in the area of Valle d'Itria in the South-Italian region Puglia, aimed at the promotion and diffusion of new projects for the development of the local community. The platform was born at the beginning of 2013 to answer “the need to integrate and revive the productive sectors of the local economy through innovation and creativity brought by the local youth”. It's targeted to 18-35 y.o. living in the municipalities of Alberobello (Ba), Cisternino (Br), Locorotondo (Ba), Martina Franca (Ta), Noci (Ba) and Putignano (Ba). Project holders can send an application to raise a fixed sum (10.000E) in order to realise projects of a maximum duration of 12 months. Kendoo - http://www.kendoo.it/ (Bergamo) Kendoo is a crowdfunding platform operating in the North-Italian province of Bergamo, promoted by Media on (a company owned by Gruppo Sesaab of Bergamo, who publishes "L’Eco di Bergamo"). The platform's objective is to create and fund projects, using an all-or- nothing model. The platform was launched at the beginning of 2013. Reward-based/Niche Cineama - www.cineama.it Cineama is a platform and a community around cinema, open to professionals, creative professionals and cinema lovers and beyond. The platform, founded by Tania Innamorati, Federico Bo, Antonio Badalamenti, Fabrizio Mosca and Savina Neirotti in 2011, combines crowdsourcing and crowdfunding, directly involving cinema lovers in the phases of creation, production, promotion and distribution of films, documentaries, shorts, web series. Musicraiser - www.musicraiser.com Musicraiser is a reward-based crowdfunding platform dedicated exclusively to music. Founded by Marta Sui Tubi singer, Giovanni Gulino, and his partner DJ and producer Tania Varuni, the platform was launched in October 2012 and hosts fundraising projects for CDs, promotional tours, music videos, concerts, festivals and all that has to do with music. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 5
  • 6. Reward-based/Do It Yourself (DIY) Crowdfunding The so called DIY Crowdfunding (or Direct Crowdfunding) is a trend that started developing in Italy too. This happens when campaign owners decide to run their campaigns independent of platforms. You can find below some recent examples of DIY Crowdfunding. Acquista con noi un pezzo di Storia (lit. Let's buy together a piece of history) - Palazzo Madama (Turin) www.palazzomadamatorino.it/crowdfunding/ The project was launched by the museum Palazzo Madama in Turin. It raised 89.409,49E in 2 months, surpassing its 80.000E target, in order to bring a porcelain set that belonged to the d'Azeglio's back to Turin. It was a reward-based crowdfunding campaign: backers, in return for their pledges, will receive rewards such as entrance tickets to the museum, mentions in the acknowledgements, etc. Community – Il Film http://www.communityilfilm.com/home/ The project's objective is to finance the production of Community Il Film, a social story told through a comedy film. The target is 200.000E, the deadline is September 2013, when the shooting is set to start. Un Indovino Ci Disse – Il Film (lit. A fortune-teller told us – The Movie) http://www.unindovinocidisse.it/ The campaign's objective is to fund the production of the movie Un Indovino Ci Disse, by Mario Zanot, adapted from the book Un Indovino Mi Disse (lit. A fortune-teller told me) by Tiziano Terzani. The target is 500.000E to be reached by June 2013. vice versa – Italia Pavilion at the 55th International Art Exhibition - la Biennale di Venezia http://viceversa2013.org/it/crowdfunding-artisti-opere-arte The initiative aims to support the production of artists works, cultural mediation, promotion and communication; the organization of encounters with artists and opinion leaders and a final conference on the themes of the Italian Pavilion. It's a reward-based campaign of a duration of 90 days. So far over 100.000E have been raised. Donations BuonaCausa - www.buonacausa.org BuonaCausa is the "ethic network dedicated to good causes and projects that require support." The platform allows associations, testimonials, companies, donors and activists to collaborate on initiatives and projects of social value. Fund For Culture - http://www.fundforculture.org/ Fund Culture is a system for collecting funds for culture, which want to "encourage dialogue between those who want to spread culture in Italy and who are seeking support from small donations." This project was founded in Naples in October 2010 from an idea of Adriana Scuotto and Antonio Scarpati. The platform’s objective is "to fund cultural initiatives - such as exhibitions, Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 6
  • 7. restorations, archives, publications, shows and movies - promoted by artists, non-profit organizations, cultural foundations, public institutions." Iodono - www.iodono.com Iodono is a site for personal fundraising founded in the first part of 2010, a brainchild of DirectChannel, a Milan-based company leader in database management in the publishing and non profit industry. The goal is to allow people to donate online to raise money for nonprofit causes and other causes close to them. Pubblico Bene - www.pubblicobene.it Pubblico Bene is an experimental project of investigative journalism funded by readers and based on the participation of readers and journalists, made possible thanks to the contribution of the GECO project, funded by Emilia Romagna region. The platform, which promotes "a new model of independent information, on a local basis, is based on the model of community funded reporting". Rete Del Dono - www.retedeldono.it Rete del Dono is a web platform for the collection of donations for socially useful projects, managed by non profit organisations. It was born in 2011 from an idea of Anna Maria Siccardi and Valeria Vitali, and its objective is evangelising the culture and practice of personal fundraising in Italy. ShinyNote - www.shinynote.com ShinyNote was born in 2009 from an idea of Roberto Basso and Fabrizio Trentin, from Brescia. The platform officially started in March 2011. ShinyNote was born with the idea and the purpose of "meeting the needs of individuals to find a shared space for affective and emotional expression". The platform is a shared space between non-profit organizations and ordinary citizens, in which one can find more or less positive storytelling about ordinary people and finance solidarity projects. Terzo Valore - https://www.terzovalore.com Terzo Valore is a service offered by Banca Prossima of Gruppo Intesa Sanpaolo, dedicated to the Third Sector. It's a crowdfunding service through which people (living in Italy) and entities (with registered office in Italy) can lend or give money directly to no profit organisations who are clients of Banca Prossima. The bank selects the projects and funds a minimum of 33%, plus what is missing to reach the target. The project owner sets the interest rate and the lender can decide to reduce it or cancel it, or to give money instead. Equity-based/Angel Investing Platforms SiamoSoci - www.siamosoci.com SiamoSoci is a marketplace for startups, a "search engine that allows investors to find companies that understand their business." Through the platform, unlisted companies can raise Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 7
  • 8. capital from private investors to finance growth, facilitating the creation of "club deals" (investment group) between investors with different skills. We Are Starting - http://www.wearestarting.com/ It's an Equity-based Crowdfunding born March 2013 with "the objective of giving visibility to entrepreneurs with brilliant ideas". Social Lending Smartika - www.smartika.com Arrived in Italy in 2007 as Zopa Italy, after a period of inactivity due to problems with Banca d’Italia, Smartika was funded in the first half of 2012. Smartika, managed by Maurizio Sella and rest of the team that brought Zopa to Italy, offers the opportunity to do social lending in Italy, regulated and supervised by the Banca d’Italia in order to protect users. Prestiamoci - www.prestiamoci.com Prestiamoci, Italian platform for loans between people, was born in 2010, founded by Mariano Carozzi, Paolo Galvani and Giovanni Tarditi, entrepreneurs with significant national and international experience in the world of banking and finance. "Prestiamoci aims to promote as much as possible the exchange of money between individuals without the intermediation of banks or other lending institutions." Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 8
  • 9. History and Geography of Italian crowdfunding platforms The longest established platform is Produzioni dal Basso (launched in January 2005), followed by Smartika in 2008 (first called Zopa Italy), Kapipal in 2009 and Prestiamoci in 2010. However, the boom year for crowdfunding platform growth in Italy was 2011 with Shinynote, Eppela, Cineama.it, www.retedeldono.it and SiamoSoci all being founded, followed by Musicraiser, Starteed and Crowdfunding-Italia in 2012. On average, the time between the idea generation and the launch of the platform is one year. Graph n.1 Timeline showing the launch date of the main Italian crowdfunding platforms Platforms are concentrated in northern Italy, with only one platform located in the center of Italy (Rome) and two platforms in the South. One platform has its registered office abroad (London, GB). Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 9
  • 10. Genesis of Italian crowdfunding platforms: rationale and influences The idea of launching the platforms mainly came from contact with foreign initiatives (especially American) and from the desire to replicate those projects experiences in Italy:"From an idea of a collaborative platform around ideas and projects, I discovered American crowdfunding and I was fascinated by it. I immediately realized that it could be a revolution, made possible thanks to the evolution of social networks, and that could allow many developments also in Europe,""The Italian platforms are not popular and not free. [Our platform] was born exclusively for charitable purposes and it’s free","Experience of the first social lending to the world","studying a foreign platform." ProduzioniDalBasso is slightly different, since it was founded much earlier than the rest of the national and global platforms:"In 2005 the term crowdfunding wasn’t there yet, so I came up with the idea of a horizontal system to support self-productions. This idea originated from the Italian hacking environment”. Crowdfunding models on the Italian market Among the respondents, 80% are reward- or donation-based crowdfunding platforms. The predominant crowdfunding model is reward-based, followed by donation-based. Many platforms do not recognize themselves in the traditional models of crowdfunding and propose their own definition: Shinynote speaks of donations, ProduzioniDalBasso does "folkfunding", SiamoSoci is an "angel investing" platform, ReteDelDono.it does "personal fundraising" for the non-profit sector, and Cineama, at least for the moment, is essentially about crowdsourcing. Demographics of Italian crowdfunding platforms Founders and CEOs of platforms are between 30 and 50 year-old, although the average age is lower in the field of reward-based crowdfunding, where more than half of the respondents are less than 35 year-old. Founders have gained professional experience in the areas of specialization of the platforms or in the communication field. Over 70% have a qualification equivalent or higher to a degree. Among the staff and collaborators, 8% are women, and the age range is between 26 and 51 year-old, the average being 39 year-old. 85 % have a degree, 69% met in a professional context, only one is a relative, the rest were introduced through mutual friends. Legal form, partners and employees Only two platforms are not listed in the Company Register. The others are mainly Srl (Italian equivalent for Ltd), with the exception of Prestiamoci and Smartika (Spa, Italian equivalent for stock corporation), and Crowdfunding Italia (Ltd, based in the UK). Half of the respondents have only one partner or no partners at all, especially in the reward- based sector. The average is significantly higher when it comes to equity-based and social lending platforms, which have an average of 8 members. The platform with the highest number of partners has got 31. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 10
  • 11. Half of the platforms have between 2 and 4 employees, the other half does not have any. Employees (permanent and temporary) are typically few in number: the highest being 7 employees. Italian crowdfunding in numbers The number of projects received by all platforms since their launch is more than 30,000, of which more than 75% were received by Social Lending platforms; almost 9,000 of those were approved / published, of which 28% were successful. The total value of funded projects amounts to 13 million Euros, mainly raised by social lending (78 %) and equity-based (15%) platforms. Only 7% of the total value of the funded projects is attributable to reward-based/donation-based crowdfunding. Model Total Value of funded projects Published / Approved Projects Successfully funded projects Reward-based E 726,705 1522 242 Donations E 245,000 176 130 Equity-based E 2,000,000 110 8 Social Lending E 10,304,500 5313 1855 TOTAL E 13,274,205 8819 2477 Graph n.2 Total value of funded projects divided by models of crowdfunding The number of projects received by reward-based and donation-based platforms is almost 3,000. About 1,700 of these were accepted and 22% were successfully funded, for a total of nearly 1,000,000 Euros. The number of projects received by social lending platforms is over 26,000, with more than 5,000 accepted. Approximately 35% (1,855) of the loans were successfully funded, at a value of more than 10,000,000 Euros. Equity-based platforms raised 2,000,000 Euros. Reward-based/donation-based crowdfunding projects raised an average of 2,600 Euros. Numbers are higher in social lending (avg. E 4,150/project), while equity based/angel investing stands out with an average of E 250K per project, somehow following a global trend (according to Massolution's “Crowdfunding Industry Report” published in May 2012, 2/3 of reward/donation- Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 11
  • 12. based crowdfunding campaign raise less than 5000$, whereas over 80% of equity-based campaigns raise over 25.000$). Fig.3 Breakdown of the total value of funded projects for each crowdfunding model Target market and audience, competitors, collaboration networks The target market is mainly national with the exception of two platforms that place themselves on the European market. All platforms accept individuals proposing projects (with the exception of ReteDelDono, which is only aimed to associations and non profit organisations); however Cineama mainly targets companies, Musicraiser and Produzioni dal Basso associations, and SiamoSoci both; Shinynote targets associations and public administration bodies; Starteed, Eppela and Crowdfunding-Italia to all these categories of recipients. The competitors are primarily other crowdfunding platforms at a national level (50%) or an international level (30%) but also banks and financial institutions (20%). Collaborative networks are more diverse: in addition to other national (19%) or international (6%) platforms, and banks and financial institutions (16%), the platforms indicate other companies and professionals (in equal measure, equal to 26%) as collaborative partners, and also educational institutions and associations (both equal at 16%). Market information and technology is the main area identified for opportunities to collaborate. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 12
  • 13. Only three platforms have entered into formal cooperation agreements. In addition to the exchange of information (customer, market, technology and business management), these agreements are aimed at the acquisition of financial resources, technology and space. Main issues on the Italian crowdfunding market The main problems reported by the sector operators are focused on: - Unclear legislation, many believe that the current legislative framework is restrictive and unclear. They also express concern about reduced funding and high taxation (not valid for the donation based platforms, operating in the non-profit sector) - Difficulties in understanding the basic principles of crowdfunding by project-holders, lack of strategy underlying crowdfunding campaigns, myth of the 'just put it online', hence difficulties for crowdfunding platform to find quality projects - Lack of web culture. Suspicion and mistrust, digital divide, cultural differences, reluctance to online donations/payments among Italians - Difficulties in the promotion and dissemination of knowledge about the platform themselves and crowdfunding in general - Difficulties in networking with experts and operators in the sector - Technical difficulties (especially with payment systems) Some platforms admit to be doing very little to meet these challenges. However, it seems that there's a growing awareness of the need for promotion and education. Some platforms have reported being very active in this respect, organizing and participating in meetings and public events to promote their platform and the culture of crowdfunding in general, trying to get in direct contact with organizations that want to publish projects on their platform. A platform declared that they operate 'project-holders tutoring’. Many rely on advertisement and Viral Marketing, PR, Social Network. The Legal Framework The recently approved legislation on crowdfunding (included in the Law Decree 18/10/2012 n. 179, known as Decreto Crescita/Growth Decree 2.0) was seen, by some, as limiting and potentially harmful because it is too ahead of the market. In addition, the current legislation gives a lot of visibility to equity crowdfunding, leaving the reward-based model in the shadow. According to some respondents, reward-based crowdfunding needs at least guidelines in terms of legal and tax matters. The general wish was for clear rules, accessible to all, which at the same time protect the interests of the less competent. An interesting definition of 'competent person' came up too, Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 13
  • 14. which is not part of the traditional concept of professional investor, but is extended to all those who have gained the ability to assess a business plan and invest in it. On 29/03/2013, CONSOB, the Italian equivalent of the Securities and Exchange Commission, published the Consultation document on the Regulation implementing Article 30 of the Law Decree n. 179/2012 (Decreto Crescita), which introduced equity crowdfunding in the Italian Trattato Unico Finanziario (Financial Services Act). The document is now open for public consultation until 30 April. These are the key features: - Throughout the CONSOB Regulation emerges a strong will to reduce the administrative burden in equity crowdfunding, an important requirement if the incremental cost of collecting funds is to be kept low. So, for example, allowing much of the “paperwork” to be processed online through the use of certified electronic mail (PEC). - Individuals and institutions that wish to run equity crowdfunding operations must apply to be included in a special register that will list all the equity crowdfunding portals. A special section will be reserved for existing banks and financial institutions/intermediaries that inform the CONSOB an interest in becoming crowdfunding platforms. The register is published online and available to all. - In order to be included in the register, one must meet the integrity and professionalism requirements set by CONSOB, as normally required for intermediaries operating in the financial markets (banks, investment firms and other intermediaries). Only subjects who can prove fairness in business and financial dealings and adequate professional skills can in fact ensure the efficiency and the optimality of the business operations of a crowdfunding portal. Among the professional requirements, there is the ability of the platform owner to assess the business plans submitted by the startups, from an economic and financial point of view rather than a technological – innovation one. The CONSOB is required to decide within 60 days of receiving an application if a platform meets the necessary requirements to be admitted to the register. - The operator must provide the so-called retail investors (i.e. non professional investors) with a set of mandatory information in order to make them able to take informed decisions. This means that a crowdfunding portal must display the risks connected to investment in startups (eg. loss of capital, illiquidity, rarity of dividends, dilution, diversification); information and practical instructions about the right of withdrawal; the periodicity and the methods with which they will be provided with information on the status of pledged, the amount subscribed and the number of investors; fees and costs charged to investors; the applicable law and the competent court; the language or languages in which they are provided with the information concerning the offer. The retail investor must demonstrate that they understand the nature of the activity of the portal, the nature and specificity of the financial instruments issued by innovative start-ups and the relative risk of each offer. - Only innovative startups (currently just over 450) can raise money through a crowdfunding portal. This is probably the biggest limitation of the Italian crowdfunding regulation. To qualify as Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 14
  • 15. an innovative startup, the company has to meet the following requirements: the share/quota holders ( individuals and not entities) shall hold on the date of incorporation and for the following 24 months the majority of quotas/shares and majority of voting rights of the ordinary share/quota holders’ meeting; the company has been incorporated and has been active for a period no longer than 48 months; starting from the second year of activity, the total value of yearly turnover shall not exceed €5 million; the company does not distribute profits; the company shall not result from the merger, division or transfer of business from a going concern; and the exclusive or prevalent business scope of the company is the development and commercialization of innovative products or services with high technological value. The Start-Up Regulation also introduces the sub-category of the innovative start-up with social purposes. - Each innovative startup can collect shares up to EUR 5 million. - 5% of the totality of the share offer is required to be taken up by “professional investors”, bank foundations, financial institutions for innovation and development or innovative startups incubators, before the offer is published. - In order to protect retail investors, there is an obligation for innovative start-ups to include in their statutes or instruments of incorporation the so called tag-along right, thus guaranteeing investors a way out should the controlling shareholders sell their shares to a third party after the offer. The regulation should be implemented by the end of May-early June. For what concerns other regulatory issues, according to some, tax incentives for investments in startups for individuals and companies would help crowdfunding to grow, and it is important that deductions for donations are made possible. The response of the donation-based platforms was much more relaxed, since they work in the non profit sector therefore have no particular taxation problems. Social lending platforms are regulated by the Bank of Italy therefore have no particular legal issues to report. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 15
  • 16. What is crowdfunding according to the players in the sector We asked those who filled out the questionnaire to define crowdfunding in a few lines. This tag cloud was created with their answers. Progetti=Projects Finanziamento/Finanziare=Funding Basso=Bottom Rete=Network Folla=Crowd Idee=Ideas Raccolta=Collection Risorse=Resources Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 16
  • 17. Conclusions The questionnaire was sent in November 2012 and, after 5 months, this update of the analysis confirms the presence of a buzzing crowdfunding marketplace, which is growing and becoming more and more complex. The number of platforms is growing, but not in an uncontrolled way: the newly-born platforms further diversify the market and are not only mere copycats of the existing ones. We also observed a trend towards specialisation and localisation, as well as the entrance in the market of traditional financial actors such as the banks. Last November, the impression was that the market was still immature. After five months, things haven't changed a lot: there is not the necessary knowledge of the phenomenon among the crowd, as demonstrated by the fact that if it's true that the number of platforms keeps going up, on the other hand the sums raised via crowdfunding are still very low. This suggests a low participation of the crowd, which could be caused by the gap in expertise between crowdfunding platforms owners and the slow development of a web culture in Italy, prevented by a latent technological delay. Even if there are some isolated success cases, like the Palazzo Madama or Viceversa campaigns mentioned above, the overall number of projects and raised sums are still relatively low in comparison to the global average. Furthermore, a trend that was previously observed is confirmed: the initiatives of Do-It-Yourself crowdfunding are growing in number and with a certain success. In the past month, two projects have been funded with over 80.000E, a sum which is very high in comparison to the ones raised through Italian reward-based crowdfunding platforms. It's not possible yet to define the reasons behind this trend, but a diffidence of project holders towards Italian platforms is certainly emerging. Infact, when not DIY crowdfunding, the second preferred choice seems to be for foreign platforms, among which Kickstarter is the most popular one. The main motivation behind this is that italian platforms are not seen as enough international therefore they would limit the project to the national territory. On the other hand, the Italian crowdfunding market's sophistication highlights the expertise accumulated so far and represents a good premise for a dynamic and fast development. The recent publication of the regulation on equity crowdfunding will certainly give a big boost to the Italian market too. We recently registered another important development in Italy. In the last analysis we recommended the development of an educational activity on crowdfunding and the creation of an independent and impartial association with the objective of promoting crowdfunding culture. To this end, the Italian Crowdfunding Network (www.italiancrowdfunding.org) was born in March 2013. Analysis of Italian Crowdfunding Platforms – Castrataro, Pais – April 2013 17