Swiss crowdfunding market breaks through 100 million Swiss Francs barrier

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17.05.2017
Crowdfunding

Overall volumes in the Swiss crowdfung market rose from CHF 28 million to CHF 128 million in 2016. Real estate crowdfunding and business crowdlending provided much of the growth impetus. The authors of the Crowdfunding Monitoring Switzerland expect the market to reach transaction volumes of up to CHF 400 million in 2017.

The fourth Crowdfunding Monitoring Switzerland report published by the Institute of Financial Services Zug IFZ, an institution of the Lucerne University of Applied Sciences and Arts, shows that the Swiss crowdfunding market grew by leaps and bounds in 2016: the volume now stands at CHF 128.2 million, representing a rise of 362 percent compared to the previous year’s CHF 27.7 million. The market study was supported by the Swiss crowdfunding platforms.

Crowdfunding: an international comparison
The domestic market is still not keeping pace with the leading crowdfunding markets such as the USA, China, and the UK. In terms of overall volume and per capita volume, however, Switzerland is getting closer to the leading countries. Switzerland’s average per capita investment currently stands at CHF 15.50. “With regard to the number of active platforms and diversity of offerings, last year saw the Swiss market catching up with the leading countries,” says co-author and Finance Professor Andreas Dietrich.

Strong growth in volume
The number of campaigns and funding volumes across all five crowdfunding segments – reward-based crowdfunding, crowddonating, crowdinvesting, crowdlending, and invoice trading (see box for details) – rose markedly in 2016. The steepest rise was posted by the crowdlending segment (+597% to CHF 55.1 million), followed by crowdinvesting (+453% to CHF 39.2 million). In third place are reward-based crowdfunding / crowddonating (+37% to CHF 17.0 million) and invoice trading (CHF 17.0 million). For the first time since the report was first published in 2012, the reward-based crowdfunding / crowddonating segments (often used to fund creative and cultural projects) have been surpassed by the crowdlending and crowdinvesting segments in terms of volume.

Real estate crowdinvesting as growth driver
“The crowdlending and crowdinvesting segments have witnessed the emergence of new platforms and offerings which have provided a strong stimulus with regard to growth,” says Andreas Dietrich. The sub-segment real estate crowdinvesting, which only appeared in Switzerland in 2015, was already posting a volume of CHF 32.4 million in 2016. Real estate crowdinvesting allows investors to become co-owners of a property. The per-campaign volumes raised are correspondingly high, too: “With an average volume of CHF 2.7 million per campaign, these property investments are significantly higher than, say, projects in the area of culture and the creative industries, which raised on average CHF 13,000,” says Dietrich.

Similarly, volumes raised through business crowdlending (loans for SMEs) multiplied in 2016 to reach CHF 28.1 million (previous year: CHF 0.6 million). Growth was supported by the high average volumes raised per campaign (CHF 171,000).

The reward-based crowdfunding / crowddonating segments saw CHF 17 million raised for projects. The largest portions went to projects in the technology and start-up (CHF 5.0 million), sport and health (CHF 2.6 million), and music and concerts (CHF 1.9 million) categories.

Family, friends and, increasingly, professional investors
Alongside family and friends, the report’s authors note that crowdfunding is increasingly attracting the attention of professional investors: “We are expecting a growing number of larger companies to involve themselves in crowdfunding,” says Dietrich. On the one hand, well-known businesses will employ crowdfunding as a digital sponsorship channel and for marketing purposes. On the other hand, professional investors, such as pension funds, will increasingly provide funds for loans (business crowdlending) and invoices (invoice trading).

Further growth in 2017
On the back of the major changes in 2016, the report’s authors are expecting the crowdfunding market to post further growth in 2017 and to reach between CHF 300 and 400 million. “Funding providers in the areas of real estate crowdinvesting, business crowdlending, and mortgage crowdlending will provide above-average growth,” says Dietrich. He is also expecting high growth in the sports category of reward-based crowdfunding: “Sport clubs are increasingly seeing crowdfunding as a means of raising funds for items such as sports equipment and upgrading venues, pitches and courts.”

The Crowdfunding Monitoring Switzerland report is published on an annual basis by the Institute of Financial Services Zug IFZ (an institution of the Lucerne University of Applied Sciences and Arts) with the raw data supplied by crowdfunding platforms in Switzerland.

The report can be downloaded for free on the website of HSLU.

(Press release)

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