Analysis of Crowdfunding in European Union: Performance and Perspectives

After the great economic crisis of 2008 the absolute outcome of which is still argued, the topic of alternative investment possibilities, such as business angels, crowdfunding, peer-to-peer investments, were broadly highlighted in the European Union member states. Few suggest that in spite of the floating understanding of the topic, alternative investments managed to significantly increase the access to finance for start-ups and small and medium enterprises (SMEs) providing the overall support to economic recovery. The positive effects of alternative investment market development is now a matter of fact – recent studies suggest European alternative finance market to reach 2,957 million of euro by 2014. On the other hand, the absence of overall awareness of entrepreneurs about the alternative investment possibilities, still weak legislative regulation, market specifics, and other challenges alike are hindrances that do persist. The main aim of this paper is, while acknowledging the key aspects of crowdfunding, to form a grounded understanding to what extent crowdfunding might support SMEs on their way to solve the challenges of access to finance. In order to reach the goal of the research an analysis of investment specifics, prior experience of the crowdfunding investments as well as core financial needs of SMEs will be acknowledged. The main finding of the paper suggests that crowdfunding while being an excellent tool for social or entertainment project financing can hardly be a significant financing tool for the European SMEs.