Name
Global FinTech Guide
Country _ Name
Colombia
SectionTitle
Crowdfunding/crowdinvesting/crowdlending
Body
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.

Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).

Introduction

Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms

Colombian law is trying to catch up with these new financing tools that are innovative and far from the traditional tools of the financial system. In Colombia, we have a very robust regulatory structure because we have had precedents of illegal collection of money from the public (ponzi schemes) and money laundering which in practice makes it more difficult to carry out these activities because there are a large number of requirements, rules, limits that in the end are a barrier to entry for those who want to carry out this activity of crowdfunding in Colombia.

To date, there are multiple crowdfunding alternatives in Colombia, mostly centered in real state. These include Bicksave, Inverti and Lokl.


Legal affairs

Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above

Decree 1357 of 2018 regulates the services of collaborative financing or 'Crowdfunding' in Colombia. This collaborative financing can only be performed by companies authorized by the Superintendency of Finance.
The companies which intend to provide collaborative financing services must (i) be incorporated as limited liability companies in accordance with Organic Statute of the Financial System; (ii) they must be registered with the National Registry of Stock Market Agents (known for its initial in Spanish as RNAMV); (iii) they must have security controls; and (iv) they must have management procedures.

In addition, Decree 2105 of 2023 brought significant changes to Colombia's financial landscape:

  • Legal entities, including various financial entities, can access crowdfunding, marking a significant step forward for a market previously burdened by restrictions.
  • Foreign companies can now conduct crowdfunding projects in Colombia, eliminating previous barriers that hindered startups with headquarters abroad.
  • Debt acquired through crowdfunding must now be reported to credit bureaus, ensuring greater transparency and security in the financial sector.
  • The decree allows advertising on crowdfunding platforms for the buying and selling of Collaborative Financing Securities, enhancing visibility and accessibility to the general public.
If a company develops any kind of collaborative financing without the due permits of the Superintendency of Finance, it will be considered as a criminal activity.

According to the Colombian Criminal Code, if a person or entity collects money from the public in a massive and habitual way without the prior authorization of the competent authority, criminal sanctions such as the following would be imposed: (i) 120 months to 240 months of imprisonment, and (ii) fines of up to 50,000 Colombian legal monthly minimum wages.

Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

The entities that carry out the activity of collaborative financing may not:

  • Provide advice related to the productive projects financed through them, nor with respect to any situation that may generate conflicts of interest with respect to the activity.
  • Directly manage the resources of the productive projects financed, in accordance with the provisions of paragraphs 4 and 5 of Article 2.41.2.1.1.1. of this Decree.
  • Assure returns or yields on the investment made.
  • Grant loans, credits, or any other type of financing to the contributors or recipients, or act as a contributor in the projects promoted or financed through the same entity.
  • Assume the character of recipients of productive projects that are published or financed through the same entity for collaborative financing.

Economic conditions

Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area

Crowdfunding is an efficient financing alternative. It aids small and medium businesses with historical limit access to credit. Thus, the Colombian Government does not ignore the benefits of this new industry; it emphasizes its importance for the purpose of achieving greater financial inclusion and as a mechanism to facilitate rapid and low-cost financing.

Currently, in Colombia there is a leader in this market: A2censo, which is part of the Colombian Stock Exchange. In March 2022, a2censo completed 100 campaigns in 28 months amounting to $41.288 million COP (approximately 10.3 million USD). To that date A2censo had an average of 3.5 successful campaigns per month , In February 2023 Colombian Superintendency of Finance authorized Bloom Crowdfunding to operate in Colombia. This FinTech seeks to assist in the funding of Colombian small and medium enterprises.

Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

Colombia is highlighting the importance of crowdfunding to achieve greater financial inclusion and as a mechanism to facilitate fast and low-cost financing, among other sectors. It is a business that has a very accelerated dynamic, with risks different from the classic financial products, so the new regulations have higher objectives in terms of transparency, information, obligations, limits and in general are much more rigorous.

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