New crowdfunding rules to benefit businesses and investors

Businesses looking to raise equity and investors that want to back them via crowdfunding platforms are to benefit from better protection.

Crowdfunding is not currently regulated in the Republic but the European Parliament has agreed new rules to boost such platforms while also safeguarding backers.

The new rules are intended to provide a single set of rules on services, allowing platforms to apply for an EU passport based on a single set of rules and promote cross-border crowdfunding activity.

Ireland South MEP Deirdre Clune said the new rules offer a great opportunity for Irish companies to access capital from across the EU without having to deal with fragmented national rules and regulations.

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Crowdfunding is increasingly popular as an alternative financing tool for start-ups as well as for more established small and medium enterprises (SMEs). A crowdfunding service provider operates a digital platform open to the public to facilitate prospective investors or lenders to be matched with businesses that seek funding.

Christopher Burge, chief executive of Dublin-based Spark Crowdfunding, said the new rules were a "hugely positive development."

“Private investors will get access to a much wider portfolio of investment opportunities in European start-ups where the minimum investment size will only be €100 and investors pay no commission when buying shares in equity crowdfunding companies. It’s equally great news for Irish companies who will soon have a vast pool of European private investors to whom they can access for private funding,” he said.

“The timing of this is great because it’s very clear that private investors will play an increasing role in the fundraising of early stage businesses,” Mr Burge added.