Crowdfunding is a timeless concept and originates from the market of books and publications. Back then, books were only written and published if there was a sufficient amount of subscriptions that indicated a certain level of interest for that subject. This way, writing a book was ensured to be at least a bit profitable.
Crowdfunding could be translated as public financing. It is an alternative way to finance a project. Normally, an entrepreneur would go to the local bank for a credit application. The idea with crowdfunding is that a lot of people invest a small amount of money causing enough funding for the entire project. The group of people that invested in the project is called ‘the crowd’.
The start of online crowdfunding
The development of online crowdfunding started in 1997 by the British band Marillion. The band had a lack of resources to go on a tour through America and therefore started an online campaign. Their fans could register to buying the band’s new album, which lead to 12,000 pre-orders and raised an amount of 60,000 dollars in total. They used the money for their visit to America and recording their new album.
This campaign’s success has been a trigger and inspiration to multiple entrepreneurs who started a crowdfunding platform, a website where the crowd could find the projects to invest in. Through this website, investees can follow updates and information about repayments of the investments.
America’s market has increased so quickly due to fast developments in access to internet. Years later platforms were established like Artistshare (2003), Kiva (2005), IndieGoGo (2008) and Kickstarter (2009). The crowdfunding market has become a serious, mature industry by now.
The origin and growth of the Dutch crowdfunding market
Halfway through 2010 crowdfunding emerged in the Netherlands. The first platforms that were available to the Dutch were foreign ones that had just penetrated the Dutch market. This start led to development of the Dutch crowdfunding market. Now, platforms like Lendahand, Collin Crowdfund, GvE and Horeca Crowdfunding are major players on the national market.
From 2011 to 2016 the market in the Netherlands has continuously doubled and experienced a slight stagnation of growth in 2016. However, growth has increased again in 2017.
The Duch crowdfunding market created the industry association “Nederland crowdfunding” in 2014, to show a face to the world. Sustainable growth and professionality have been the most important pillars during establishment. In addition, a code of conduct was developed. They have been active in the area of informing and self-regulation, whereas the regulation around the market of the AFM is becomes more mature and complicated.
Steps to becoming a global player
In the last couple of years there some Dutch companies that have applied for a license from the AFM as a broker, which enables them to become a global player. It is European MiFID II license, which the company can passport to different European countries so that they can become active in that specific market and make offers to the residents of that specific country. Local legislation however makes the passporting a cumbersome process and slows down the growth opportunities for companies with such license.
Lendahand is one of the companies that actually has received this broker-license. This has resulted in Lendahand becoming a European-player, where the first steps are taken into countries like Belgium, Sweden and Finland and marketing efforts are being scaled up. In the UK, Lendahand has partnered with British social enterprise and crowdfunding platform, Ethex. Together, the .co.uk-website is ran with a focus on solar initiatives in rural Africa, under the name of Energise Africa.
These steps are the first ones to becoming an active global player in the future. In the meantime, the website of Lendahand is open to a global audience. You can read more on who the restrictions on who can and cannot invest in the projects on our website in the FAQ.