Crowdfunding in Switzerland at Record High CHF 375 Million - Study by Lucerne University of Applied Sciences and Arts
LUCERNE, Switzerland, May 28, 2018 /PRNewswire/ --
The Swiss crowdfunding market has reached a record high volume of CHF 374.5 million in 2017, almost three times more than in the previous year. This has been revealed by the latest Crowdfunding Monitoring report issued by the Lucerne University of Applied Sciences and Arts. The financing of SMEs and investments in real estate are key drivers of the strong growth. The authors of the report are expecting a further marked increase to about CHF 1 billion this year. Compared to the more advanced markets in the United Kingdom and the United States, Switzerland is two to three years behind, but catching up rapidly.
Published by the Lucerne University of Applied Sciences and Arts, the annual Crowdfunding Monitoring report is already into its fifth year. The current report features record figures: CHF 374.5 million was brokered via crowdfunding platforms in 2017, almost three times more than in 2016 (CHF 100 million, +192%). Over the past eight years, more than half a billion Swiss francs have been brokered via this form of financing.
The major growth drivers in terms of volumes in recent years have been finance for SMEs via crowdlending, and investing in property via crowdinvesting. "Professional investors increasingly perceive crowdfunding as an interesting investment," says report author Andreas Dietrich. "We expect the Swiss crowdfunding market to break the billion franc mark at the end of the year."
High growth in all areas
Some 160,000 people backed crowdfunding projects in Switzerland in 2017. The Swiss crowdfunding market can be divided into four segments: reward- and donation-based crowdfunding, crowdinvesting, invoice trading, and crowdlending (see box for details). Crowdlending recorded the largest volume (CHF 186.7 million, +239% over the previous year), followed by crowdinvesting (CHF 135.2 million, +245%). Invoice trading generated CHF 23.5 million (+38%), while reward- and donation-based crowdfunding achieved a volume of CHF 29.1 million (+72%) (see illustration).
Over 1500 cultural and creative projects successfully funded
"The lower volumes recorded for reward- and donation-based crowdfunding do not mean that this segment is unimportant," says report author Andreas Dietrich. Since the segment primarily involves creative and cultural projects, the volumes of the campaigns tend to be small compared, for example, to real estate projects. But with over 1500 successfully financed campaigns in 2017 (+15% over the previous year), reward-based crowdfunding/crowddonating has continued to grow as a relevant source of funding. Arguably the highest-profile campaign in this segment in 2017 was that run by Republik magazine (CHF 3.5 million).
International perspective: Switzerland two to three years behind - but catching up
The Swiss crowdfunding market has grown significantly more rapidly than those of neighbouring countries since 2015. With a per capita investment volume of CHF 45 (2016: CHF 15), Switzerland still lies two to three years behind leading crowdfunding markets such as the USA (2016: CHF 78) or the UK (2016: CHF 90) - but it is catching up fast: "The strong momentum provided by new platforms and alternative business models suggests that Switzerland is catching up with highly developed crowdfunding countries such as the USA and the UK," says Andreas Dietrich.
Hidden concentration in the crowdfunding market
43 crowdfunding platforms were maintaining a physical presence in Switzerland as of the end of April 2018. Also in the market are several nondomestic platforms without an office in Switzerland. Despite the large number, each crowdfunding segment is dominated by a handful of major platforms. In the crowd lending and reward-based crowdfunding segments, for example, the six largest platforms each have a market share of 96 percent and 97 percent respectively.
This concentration is expected to continue: "That said, small, innovative niche players will continue to survive in the market," says Andreas Dietrich.
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