Crowdfunding / crowdinvesting / crowdlending
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).
Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms
Crowdfunding in general and crowdfunding platforms have become popular in recent years, and the number of crowdfunding platforms in Croatia has been steadily on the rise. Crowdfunding is becoming an acceptable method of funding for business development, innovations, projects etc. and is expected to grow further.
Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above
According to the Crowdfunding Regulation (EU) 2020/1503 Implementation Act (Crowdfunding Act) , a crowdfunding service provider is obliged to obtain a licence from HANFA (HANFA needs to decide on the application in three (3) months from the day of application).
Crowdfunding services providers licensed by HANFA and credit institutions authorised by the CNB to perform the crowdfunding activities based on prior consent of HANFA are permitted to provide such services.
If an existing credit institution extends the scope of its services to include crowdfunding activities, a prior consent of the CNB, with HANFA’s prior opinion is required for the provision of additional financial services.
Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
Considering that Croatia has only recently implemented the Crowdfunding Regulation (EU) 2020/1503, and although the Crowdfunding Act covers donation-based crowdfunding, crowdinvesting (if equity-based), and crowdlending (for which activities the licence mentioned under e.ii. needs to be obtained), it remains to be seen how it will be applied in general, as well as to certain specific types of money raising (such as reward-based crowdfunding).
Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area
The SEE region (Croatia, Serbia, Slovenia, Montenegro, Bosnia and Herzegovina, North Macedonia) experienced a rise in crowdfunding in recent years.
Pursuant to the publicly available data from 2011 to 2017, more than 270 crowdfunding campaigns were initiated, out of which 77 collected the required amount (USD 30 Mio in total).
Apart from global platforms such as Kickstarter or Indiegogo, some of the more popular Croatian crowdfunding platforms are Funderbeam SEE, Croinvest.eu, ZEZinvest, and Capital.hr.
Funderbeam SEE was one of the first Croatian crowdfunding platforms established by the Zagreb Stock Exchange in cooperation with Estonian company Funderbeam. On Funderbeam, in five (5) years, 10 companies conducted 11 campaigns raising EUR 5.5 Mio.
Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
The majority of currently funded projects through crowdfunding platforms are funded by a limited number of people and/or companies. Unfortunately, in Croatia, there is still little trust in online systems and online management. With time and positive examples, that stance is expected to change.