Equity crowdfunding in Spain is growing rapidly, with Spanish-based crowdfunding platforms already raising more than 60% of the total funds raised in 2016, in the first three months of 2017 alone.
Q1 2017 Summary in Spain
The Spanish equity crowdfunding market is shared among six platforms: Crowdcube, The Crowd Angel, Socios Inversores, La Bolsa Social, Capital Cell and StartupXplore. However, recently new players have emerged, such as Fellow Funders, eInicia or Adventureros, which we believe will start to ramp up their activity towards the end of this year.
According to statistics collected from 1 January to 31 March 2017, €5.6M has been invested in 19 companies, across the equity crowdfunding market in Spain, in the first quarter of the year. This figure, despite being still small compared to the UK market, exceeds the 60% of the total investment in 2016 (€ 9.2M), which is a clear sign that equity crowdfunding is now being recognised as a primary source of funding for Spanish startups.
The average raise to date in the sector is € 300,000. However, we’re also seeing the amounts being raised on some platforms increase. For example, Zank and LoanBook, both of which are P2P lending platforms, have recently raised €508,000 and €750,000 respectively on Crowdcube and a further €1.2M was raised by Bionure on Capital Cell, a niche platform that is focused on biotech companies. These larger funding rounds have been made possible thanks to co-investment from local institutional investors and business angels, which are now embracing crowdfunding and investing alongside retail investors.
So far this year, Spanish-based ECF platforms have already raised 60% of the total funds raised in 2016.
At Crowdcube Spain, we’re keeping our leading position both in terms of the amounts being raised (46% market share) and the number of business to fund on the platform.
Crowdcube’s dominance in a new country to the platform, such as Spain, is not just about opening a new office and hiring someone to oversee things in that country. At a minimum, you need a team of three experts covering the legal, finance and business development aspects of a crowdfunding raise. Understanding the environment, local Companies Act and building relationships with local VC’s is key. Last but not least, being regulated by the local Authority should be compulsory for any international platform that wants to give confidence to both companies and investors.
In Spain, Crowdcube, The Crowd Angel and Capital Cell are responsible for 85% of all equity crowdfunded deals. In the UK market, according to data from Beauhurst, Crowdcube and Seedrs held 86% of the market share in 2016. The reason is simple, startups turn to leading platforms, allowing them to choose the best deal-flow.
Why is the equity crowdfunding sector growing in Spain?
There are four factors driving the growth of the sector in Spain:
- The enactment of the Spanish Crowdfunding Law (Law 5/2015), which now regulates a private capital market for the first time ever in Spain.
- Support from public institutions, such as ACCIO, the agency for business competitiveness, which has helped provide visibility for the sector and equity crowdfunding platforms.
- Collaboration between platforms and traditional investors, which has helped facilitate larger funding rounds by enabling different types of investors, such as institutions, business angels, to invest alongside the crowd.
- An increase in follow-on rounds from companies that have used equity crowdfunding and returned for further funding.
As we look to the rest of the year, without a doubt, 2017 will be the year that equity crowdfunding establishes itself as a primary option for those seeking funds in Spain.
The approval and validation of larger and traditional investors will help to close bigger funding rounds, and companies will have the chance to pitch in front of international investors.