Feedback Paper on the Regulation of Crowdfunding in Ireland - Following on from public consultation - Finance.gov.ie
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Feedback Paper on the Regulation of Crowdfunding in Ireland Following on from public consultation January 2018
Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
INTRODUCTION
|3Department of Finance | Paper for Policy Committee on Crowdfunding
BACKGROUND TO THE
PUBLIC CONSULTATION
IFS 2020 ACTION PLAN
2017
The 2017 IFS 2020 Action Plan commits the Department of Finance to
conduct a public consultation on the potential regulation of crowdfunding in
Ireland, having regard to emerging international best practice and in the
context of the EU Commission Action Plan on Building a Capital Markets
Union.1 IFS 2020 is the Government’s five-year strategy for driving the
growth and development of the International Financial Services sector in
Ireland, aiming to create 10,000 new jobs. In this regard, the European
Commission has recognised that crowdfunding is part of the broader FinTech
universe and has potentially transformative implications for the financial
system.2
Crowdfunding is an innovative, technology-based form of finance that can be
a valuable source of funding for SMEs, either as a complement, or as an
alternative, to traditional bank finance. Crowdfunding can also provide
consumers and smaller investors with a higher rate of return, at a higher risk,
than is generally available from deposits or traditional investments.
Crowdfunding does not involve raising finance from one single source such
as a bank. Rather, crowdfunding involves obtaining small amounts of
individual funding from a large number of different sources through online
platforms. These online platforms match lenders and investors with
businesses or individuals seeking funding and arranges payments between
them.
Crowdfunding falls into two general categories, non-financial and financial.
Financial forms of crowdfunding involve the expectation of a financial return
on behalf of the lender or investor. Non-financial crowdfunding is not
considered to involve lending or investment type activity as there is no
expectation of financial return. Therefore, non-financial crowdfunding was
not considered as part of the public consultation on the regulation of
crowdfunding.
1
http://www.finance.gov.ie/sites/default/files/17-01-16%20IFS2020%20Action%20Plan%20FINAL%20for%20web_0.pdf
2
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0468&from=EN
4|Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Crowdfunding is not currently a regulated activity in Ireland. Given this, there
are no formal consumer protections available for those using crowdfunding
platforms to provide funds. Consequently, the Central Bank of Ireland has
issued an information notice alerting consumers to this fact, available at:
https://www.centralbank.ie/consumer-hub/consumer-notices/consumer-
notice-on-crowdfunding-including-peer-to-peer-lending/
The Department of Finance conducted a six-week public consultation process
on the regulation of crowdfunding that closed on 2nd June 2017.3
The European Commission recently proposed a pan-European regulatory
regime for crowdfunding in its 2018 work programme stating, “…we will make
proposals to tackle the interaction between finance and technology and we
will propose rules on crowd and peer-to-peer funding. 4
This will involve a proposal for an EU framework on crowd and peer to peer
financing, and will include a legislative proposal, under Article 114 TFEU in Q1
2018, including an impact assessment.5
The European Commission’s work programme was published after the
completion of the Department of Finance public consultation on the regulation
of crowdfunding.
3
http://www.finance.gov.ie/sites/default/files/200417%20Final%20Crowdfunding%20Consultation%20Paper.pdf
4
https://ec.europa.eu/info/sites/info/files/cwp_2018_en.pdf at page 5.
5
https://ec.europa.eu/info/sites/info/files/cwp_2018_annex_i_en.pdf at p.4, no.10.
|5Department of Finance | Paper for Policy Committee on Crowdfunding
CROWDFUNDING IN
IRELAND AND THE
INTERNATIONAL
CONTEXT
6|Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
CROWDFUNDING IN
IRELAND
Size of the crowdfunding market in Ireland
The crowdfunding market in Ireland is relatively small. There are currently
only three crowdfunding platforms operating in the market, all of which
provide peer-to-peer lending services. There are no equity crowdfunding
platforms operating in Ireland currently.6 Currently, crowdfunding
constitutes approximately 0.33% - 0.4% of the SME finance market; for
comparison, this is 12% in the UK.7
Additionally, the demand for alternative sources of financing, including
crowdfunding, from Irish SMES is quite muted, for example, in the latest wave
of the Department of Finance SME Credit Demand Survey, covering the
period October 2016 – March 2017, only 6% of the SMEs surveyed were
seeking non-bank finance.8 The average spend on or investment through
crowdfunding in Ireland is $1 per capita; for comparison, this is $75 per capita
in the UK.
As of 24th May 2017, Linked Finance had more than 15,650 registered users.
More than 880 loans have been provided to Irish SMEs and over €25.6 million
of business lending has been facilitated with €16 million in principle
outstanding. Linked Finance accounts for over 90% of the market share of
peer-to-peer lending in Ireland.
6
Linked Finance, GRID Finance and Flender.
7
Based on SME Credit Demand Survey & Linked Finance figures.
8
http://www.finance.gov.ie/sites/default/files/170703%20SME%20Credit%20Demand%20Survey%20Oct%202016%20to
%20Mar%202017.pdf
|7Department of Finance | Paper for Policy Committee on Crowdfunding
International Comparison and context
Regulatory regimes for crowdfunding in other jurisdictions
A number of European member states have introduced, or are planning to
introduce, bespoke national regulatory regimes for crowdfunding. These
include:
the United Kingdom,
France,
Italy,
Germany,
Spain,
Latvia,
Sweden,
the Netherlands,
Belgium,
Greece,
Finland,
Portugal,
Romania and
Austria.
Chart 1: Regulated Platforms by country in 2016 as compared to
2014.
Regulated Platforms by country in 2016 versus
2014
35 30
30 26
23
25
20 17
13 11
15
10 5 5 5 4
5 1 1 1 2 1 1
0
Number of platforms 2014 Number of platforms 2016
Source: ESMA
Chart 1 (above) indicates that the number of regulated platforms has
increased in the period 2014 – 2016 in a number of Member States.
8|Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Chart 2 (below) outlines the basis for the regulation of crowdfunding. The
majority of crowdfunding platforms in the EU operate under an Article 3
exemption from the MiFID legislation.
Chart 2: Basis for Regulation
Regulatory Status
19%
1% 34%
5%
41%
MiFID Article 3 exemption tied agent AIFMD other
Source: ESMA
It appears that comparatively, the European crowdfunding market is not as
well developed as the crowdfunding market in the United States.
In 2013-2014, the European crowdfunding market successfully raised €2.3
billion.9 The volume of funding raised through equity platforms grew by 167%
and the volume of funding raised through loan (peer-to-peer) crowdfunding
platforms grew by 112%.10 The total European online alternative finance
market, which includes crowdfunding, peer-to-peer lending and other
activities, grew by 92% to reach €5,431m in 2015.11
Peer-to-peer consumer lending is the largest market segment of alternative
finance, with €366m recorded for 2015 in Europe.12 Peer-to-peer business
lending is the second largest segment with €212m, with equity-based
crowdfunding in third with €159m and reward-based crowdfunding, fourth,
with €139m in 2015. 13
However, between European member states, there are significant differences
in terms of level of activity. The UK is the largest market for both loan and
equity crowdfunding projects with €1.6 billion of funding raised through loan
(peer-to-peer) crowdfunding projects and €89 million raised through equity
crowdfunding projects in 2013-2014.14
9
https://ec.europa.eu/info/system/files/crowdfunding-report-03052016_en.pdf
10
https://ec.europa.eu/info/system/files/crowdfunding-report-03052016_en.pdf
11
https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2016-
european-alternative-finance-report-sustaining-momentum.pdf
12
https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2016-
european-alternative-finance-report-sustaining-momentum.pdf
13
https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2016-
european-alternative-finance-report-sustaining-momentum.pdf
14
https://ec.europa.eu/info/system/files/crowdfunding-report-03052016_en.pdf
|9Department of Finance | Paper for Policy Committee on Crowdfunding
Excluding the United Kingdom, the largest market in Europe by a
considerable margin, the European online alternative finance industry grew
72% from €594m in 2014 to €1,019m in 2015.
Although the absolute year-on-year growth rate of the European online
alternative finance market slowed by 10%, the growth rate between 2013
and 2014 was 82%, the Second European Alternative Finance Industry Report
argues that the industry is sustaining momentum.15
15
https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2016-
european-alternative-finance-report-sustaining-momentum.pdf
10 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
PUBLIC
CONSULTATION
| 11Department of Finance | Paper for Policy Committee on Crowdfunding
Public Consultation
In total, there were nine submissions received to the Department’s public
consultation on the regulation of crowdfunding.16 The respondents included
two Irish crowdfunding platforms, a UK crowdfunding platform, solicitor’s
firms and the Irish Stock Exchange. All of the respondents were generally in
favour of regulation but were of the view that it should be proportionate and
were concerned that it should facilitate the development and growth of the
industry as opposed to stifling or hindering it.
Whether or not to regulate crowdfunding
In terms of the first question, on whether or not to regulate crowdfunding,
all of the participants were in favour of regulation in principle but also noted
that it should be proportionate and that it should not impact the
development and growth of the industry. In this regard, it was suggested that
regulation should take into account the varying levels of risks and complexity
of the different types of crowdfunding and should be tailored accordingly.
Respondents felt that regulation should distinguish between crowdfunding
involving lending to individuals, involving lending to businesses and
investment/equity crowdfunding.
Some of the reasons given for regulation included risks to those providing
funds through crowdfunding platforms and risk of fraud and misapplication
due to there not being a regulatory regime in place. Regulation was seen as
offering protections not only for those providing funds but also to businesses
receiving the funds. A lack of regulation was also viewed by some
respondents as resulting in inefficiencies and uncertainties as well as
discouraging the entry in to the market of new crowdfunding platforms.
It was felt that regulation would establish consistent and transparent
standards for crowdfunding and would promote confidence in the sector. A
number of respondents suggested that regulation should be introduced on a
phased basis. Some of the respondents were of the view that regulation had
the potential to attract international crowdfunding platforms and stated that
the regime should allow cross-border lending and investment and be MiFID
compatible as well as allowing domestic lending and investment.
Some of the respondents raised the issue that certain domestic legislation
might need to be reviewed in order to examine its application to
crowdfunding platforms. For example, with regards to possibly allowing
private companies to offer securities to the public, in terms of the prospectus
thresholds and in relation to dual authorisation for platforms that could also
be considered other types of regulated entities.
16
http://www.finance.gov.ie/news-centre/press-releases/submissions-regulation-crowdfunding-public-consultation
12 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Risks that should be addressed through crowdfunding
In terms of the question of what risks should be addressed, there was
consensus surrounding the main risks posed by crowdfunding, which were
identified in the consultation paper, outlined below.
Lack of understanding of the level of risk on the part of consumers.
Identity theft, money laundering, terrorism financing, data protection
and fraud.
Misleading and insufficient disclosure of information by businesses
on crowdfunding platforms.
Risk of unfair contract terms or misleading commercial practices
resulting from information asymmetry.
If the business fails or the crowdfunding platform itself fails, there is
a risk that lenders or investors will lose all of their money.
Risk that the return on the investment is less than expected.
The lack of a secondary market for equity stakes means that it is
difficult to value them and they can be diluted by further equity sales.
Absence of dispute resolution mechanism.
Risk arising from conflict of interest.
Risks to businesses seeking funding through crowdfunding platforms.
None of the respondents suggested other risks that had not been mentioned.
Rather, they focused on how these risks could be dealt with by regulation. The
main elements that were put forward by respondents that should form part of
a regulatory regime included risk warnings, minimum information
requirements, a client money process, identity verification and a contingency
process in the event of platform failure. It was noted that crowdfunding did not
pose a systemic risk at present, given the current size of the market. However,
this risk may potentially occur as the size and scale of industry increases.
Respondents felt that consumer awareness and understanding of the risks
associated with crowdfunding could be adequately addressed through a
regulatory requirement to display a risk warning before proceeding to use a
crowdfunding platform. Some respondents suggested that positive action
confirming and acknowledging the risks should be required on the part of
users.
Additionally, respondents felt that encouraging lenders/investors to do their
own due diligence and diversify their lending and investment would ameliorate
both a potential lack of awareness and understanding of the risks on the part
of lenders/investors as well as the risk of business failure.
It was noted that, in the event of platform failure, client asset rules that
required separation of client funds from those of the platform, were critical, as
well as a contingency plan, such as a backup service provider. Indemnity
insurance was another means raised by the respondents of addressing this risk.
In terms of the risk of money laundering, there was general recognition from
respondents that there should be procedures in place for verifying the identity
of those using crowdfunding platforms, such as know your customer rules and
client due diligence.
Most of the respondents seemed of the view that the Criminal Justice (Money
Laundering and Terrorist Financing) Act 2010 was applicable. Some of the
respondents noted that it was their view that money-laundering risks were not
enhanced in the case of crowdfunding and that regulation should not provide
additional scrutiny or requirements in this respect.
| 13Department of Finance | Paper for Policy Committee on Crowdfunding
It was noted that general data protection laws also apply to crowdfunding
platforms irrespective of regulation.
In respect of liquidation of investment, a possible lack of a secondary market
and unfair contract terms, respondents highlighted that these were all issues
that were more relevant to equity/investment based crowdfunding.
Respondents were of the view that information about the ability to liquidate
and redeem an investment as part of standard risk warnings would be
sufficient to address this as well as clearly setting this out in the terms of the
arrangement. In relation to the fairness of the contract terms, respondents
considered that loan based crowdfunding/peer-to-peer lending was a more
straightforward model and it appeared that, generally platforms tend to use
standard loan agreement documentation.
It was suggested by one respondent that, in respect of the risk of a lack of
protection for intellectual property rights of those seeking funding through
crowdfunding platforms, this risk was less relevant for more established
businesses.
Minimum standards of due diligence, disclosure and process in
the event of default, insolvency or bankruptcy
Respondents were of the view that there should be minimum standards of
due diligence, disclosure and process in the event of default, insolvency or
bankruptcy and these should form part of any regulatory framework. Some
respondents stated that prescriptive due diligence requirements could result
in a situation where deal specific issues are missed out in the due diligence
process. Some respondents suggested that there should be minimum
professional standards, similar to the Central Bank’s Minimum Competency
Code and Fitness and Probity Regime.
Most of the respondents emphasised that crowdfunding platforms should
carry out their own due diligence. For example, this could include basic
checks on companies seeking funds through the platforms including financial
statements, a CRO check, restriction of directors searches and litigation
searches. It was suggested that those seeking to lend or invest through
crowdfunding platforms should be able to presume a minimum standard of
due diligence. It was also suggested that consumer loans should be reported
to the Central Credit Register and a credit score, either a bespoke score from
the platform, a standardised credit bureau score or a combination, could be
provided. Respondents were of the view that crowdfunding platforms should
not necessarily have to publish all of the information assessed during due
diligence; however, there should be transparency and clarity about any credit
assessment and financial advice provided by the crowdfunding platform.
Respondents stated that crowdfunding platforms should clearly set out
processes for dealing with late payments, arrears and defaults.
14 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Information Requirements
Some respondents were of the view that there should be different information
requirements for loan and equity based crowdfunding. Generally, this was to
account for the different levels of risk and complexity associated with these
different types of crowdfunding. However, others felt that there should not be
any material differentiation in terms of the information requirements.
Respondents stated that information provision requirements should be
balanced. Some respondents were not in favour of prescriptive information
requirements expressing a preference for a more principled approach.
In terms of the information that respondents felt should be provided, they
were of the view that it should be clear, consistent, comprehensive, accurate
and factually verifiable without imposing too onerous a burden on those
seeking funds. It was noted by some respondents that business plans, cashflow
projections and promotional material are not always easy to independently
verify and validate.
Conduct of business rules, client assets and prudential requirements
The main issue that was raised in terms of conduct of business rules was a
complaints process. All respondents agreed that there should be a clear
complaints process outlining the process for making a complaint and to whom
a complaint may be made. Some respondents felt that an external complaints
and redress process was not needed while others were of the view that an
independent, third party complaints and redress mechanism was necessary,
with some suggesting that this should be within the remit of the Financial
Services Ombudsman. Respondents felt that conduct of business rules were
important for the reputation of and trust in crowdfunding platforms but some
did not feel that they should be introduced just yet as part of a regulatory
regime.
In terms of client asset rules, respondents agreed that client funds should be
separate. Security of information and payments was also considered an
important part of the client asset rules.
Some of the respondents were of the view that capital requirements and
liquidity rules were not relevant to crowdfunding platforms on the basis that
they do not hold funds “on deposit” and consequently, there should not be the
same level of requirements imposed. Respondents also noted that high capital
requirements had the potential to stifle the industry.
Applicability of the SME Regulations
In general, respondents were in favour of applying the principles, such as
fairness and transparency, contained in the SME Regulations. However,
respondents were not generally in favour of simply applying the regulations
without adaptation for crowdfunding platforms. Some respondents felt that
they would create an extra burden on crowdfunding platforms without a
significant additional benefit to or protection for SMEs. Some respondents
suggested that further analysis on this matter was needed. Additionally, it was
pointed out that the SME Regulations are focused on the provision of credit
and lending and are not applicable to investment/equity based crowdfunding.
| 15Department of Finance | Paper for Policy Committee on Crowdfunding
Limit on the amount of funds that can be provided through
crowdfunding platforms
Overall, respondents were not in favour of imposing a limit on the maximum
level or amount of investment that could be made by individuals through
crowdfunding platforms in a year. It was suggested that limits could overly
restrict the industry. Respondents made the point that funding through
crowdfunding platforms is provided by both individuals as well as institutional
lenders and investors which promoted financial inclusion and was more
egalitarian in terms of the provision of opportunities. It was felt that there
was the potential for such limits to reduce the democratic and egalitarian
nature of crowdfunding.
It was recognised that there are such restrictions in other European Member
States with regulatory regimes in place for crowdfunding. Some of the
respondents suggested that any limits on the amount of funding that could
be provided through crowdfunding platforms should be seen as a guide,
rather than a mandatory requirement, and should take into account the
variety of profiles of lenders and investors. It was also noted that such limits
could potentially be difficult to enforce in practice.
The cost of a regulatory regime and compliance
In terms of the cost of regulation, the respondents felt that any regulatory
regime should be as low cost as possible, with many suggesting that a
regulatory regime and cost could be brought in on a phased basis. There was
a concern that the cost of regulation and compliance should not be
prohibitive to the industry and that the cost could be passed on to the
industry over the long term.
Conflicts of Interest
Respondents did not really consider conflict of interest to be a significant
concern. Some respondents suggested that existing regulations for financial
services firm that address conflicts of interest may be sufficient and
appropriate. Respondents recognised the need to treat all potential lenders
and investors using crowdfunding platforms in a fair and transparent manner
emphasising that what was important was that the same information should
be provided to all users.
However, respondents were generally of the view that people should not be
prevented from availing of an opportunity solely due to their employment
status or involvement with a crowdfunding platform. It was also noted by one
respondent that the similarity with “insider trading” and the issue of conflict
of interest did not apply in the case of peer-to-peer lending. Another
respondent noted that it could potentially be burdensome to regulate
conflicts of interest in practice.
Some respondents addressed the “auto bid” system that is sometimes used
by crowdfunding platforms. Their position was that once auto bidding is
optional, it has the potential to help reduce users’ risk exposure by
diversifying their lending and investment. Auto bidding can also be tailored
to users’ preferences, including risk appetite.
16 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Non-regulatory supports
The main non-regulatory supports sought by respondents for crowdfunding
included tax incentives and reliefs, including offsetting losses against interest
earned for the purposes of calculating net taxable income. Some respondents
also suggested that the Government could provide funding for business loans
through crowdfunding platforms as a policy measure, citing the example of the
British Business Bank.
One respondent also addressed the issue of crowdfunding for litigation.
Although it is an interesting point, the funding of litigation where the person
providing the funds is not directly party to the litigation in exchange for a share
in any proceeds from the outcome of the case is currently contrary to both
public policy and the law.
| 17Department of Finance | Paper for Policy Committee on Crowdfunding
CONCLUSIONS
18 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Conclusions
Crowdfunding is an emerging and innovative industry that is growing. The Irish
crowdfunding market in particular is nascent and comparatively small. Equally,
while the European crowdfunding market has been growing it is still relatively
small and growing at a relatively low rate.
Based on the findings of the public consultation carried out, there was general
support from the crowdfunding industry and stakeholders for the regulation of
crowdfunding in Ireland and it was felt that regulation would be beneficial to
both industry and consumers. The main concern was that regulation might be
overly burdensome or onerous and stifle or hinder the development of the
industry.
Next Steps
Subsequent to the Department of Finance holding a public consultation on the
potential regulation of crowdfunding, the European Commission proposed a
pan-European regulatory regime for crowdfunding in its 2018 work
programme. The European Commission is due to bring a proposal for an EU
framework on crowd and peer-to-peer finance for discussion in March 2018.
The Department of Finance will monitor the progress and developments on
this and implement European regulations as necessary.
It appears that this decision to regulate crowdfunding on a harmonised,
European level, which has been prompted by the European Commissions’
ongoing monitoring of the crowdfunding market and industry, will potentially
make the European crowdfunding market more competitive. This may also
allow for the possibility of Irish crowdfunding platforms passporting their
services to other European member states, thereby widening their prospective
market.
| 19Department of Finance | Paper for Policy Committee on Crowdfunding
SECTION 3 >
Appendix A
Appendix B
APPENDICES Appendix C
Appendix A: Consultation
document and submissions to
public consultation
Appendix B: Central Bank
Notice
20 |Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Appendices
Appendix A: consultation document and submissions to the
public consultation
Department of Finance 2017 Publications
| 21Appendices Appendix B: Central Bank Notice Department of Finance 2017 Publications
Department of Finance | Feedback Statement on Public Consultation on Crowdfunding
Consumer Notice on Crowdfunding, including
Peer-to-Peer Lending
Information Notice June 2014
The purpose of this notice is to alert consumers to the fact that crowdfunding,
including peer-to-peer lending, is currently not a regulated activity in Ireland.
As a result, certain protections do not apply to consumers of crowdfunding,
and consumers who engage in this activity should be aware of the following:
The Central Bank of Ireland’s codes of conduct and the protections which they
provide to consumers, do not apply to crowdfunding platforms;
Crowdfunding platforms are not required to comply with client asset rules;
Consumers of crowdfunding are not protected by the Deposit Guarantee
Scheme or the Investor Compensation Company Limited (ICCL) scheme; and
Complaints in relation to crowdfunding cannot be made to the Financial
Services Ombudsman (FSO) as the FSO only deals with complaints in relation
to a regulated firm.
While any investment, even through a regulated firm, carries with it an
element of risk, there are specific risks to consider when any consumers
consider participation in crowdfunding, including:
The risk of the crowdfunding platform failing with a potential loss of some or
all of their money;
The risk of losing some or all of their money, should the business receiving the
loan or investment fail, or the borrower default on loan repayments;
The risk that the return on their investment is less than expected; and
The risk of misleading or insufficient information disclosure, unfair contract
terms or misleading commercial practices, and the absence of dispute
resolution and redress mechanisms.
The Central Bank of Ireland is actively monitoring developments in this area
and will continue to work closely with other European authorities in this
regard. As this work progresses, the Central Bank may publish further
information on this topic.
What is crowdfunding?
Crowdfunding can be described as a way in which money can be raised from a
large number of individuals or organisations, to fund a business, project or
personal loan, and other needs through an online web-based platform. It is a
type of market-based finance that could help stimulate funding to small and
medium-sized enterprises (SMEs) as well as personal lending. In addition,
crowdfunding investments could potentially make up part of a diversified
investment portfolio, especially for sophisticated investors.
| 23Department of Finance | Paper for Policy Committee on Crowdfunding
How does crowdfunding work?
Crowdfunding can be structured in a number of ways. The most common
models are:
The Lending based Model where individuals lend money to a company,
project or consumer in return for repayment of the loan and interest on their
investment; this is also known as peer-to-peer lending. At this time, peer-to-
peer lending is the only form of crowdfunding to have an established
presence in Ireland.
The Equity based model where individuals make investments in return for a
share of the profits or revenue generated by the company/project.
The Donations or Rewards based model where individuals provide money to
a company or project for benevolent reasons or for a non-monetary reward.
24 |Government Buildings, T: 353 1 676 7571 Upper Merrion Street, F: 353 1 678 9936 Dublin 2, www.finance.gov.ie D02 R583 Ireland.
You can also read
