The social phenomenon of crowdfunding
Crowdfunding is a collaborative fundraising process that takes place online and exploits the web’s potential for dissemination and reach.
There are various forms of crowdfunding. The most widespread is donation-based crowdfunding with a solidarity and social nature, and reward-based crowdfunding, which allows the owners of a project to "sell" the product or service even before it is created, thus supporting its development, based on the promise to deliver it to supporters as soon as available, often at favorable conditions.
Equity crowdfunding is clearly different from the above: investing money in a project to buy stocks, shares or other financial instruments offered by the Offeror, allows for effectively becoming shareholders of the company that is carrying out a business project or an investment project. This is because the company concerned, in order to cover its capital needs, has decided to finance itself by offering the public the subscription of a portion of its capital.
Italian regulation of the equity crowdfunding institution
The relevance of the institution of equity crowdfunding with the world of investment management and the savings of private subjects has made it necessary for legislators to intervene to prepare the appropriate levels of public protection.
Italy was among the first European nations to adopt organic legislation on equity crowdfunding that provides for a complete regulatory effect of the legal institution and making equity crowdfunding subject to the supervision of CONSOB (National Commission for Companies and Stock Exchange).
By virtue of the powers granted by Italian Decree 179/2012 (the so-called "Growth Decree"), by Resolution no. 18592 of June 26, 2013, Resolution no. 19520 of February 24, 2016 and subsequent amendments, CONSOB issued its own Regulations on the collection of risk capital by SMEs through online portals, effectively leading the way to this new and very important channel for raising capital for SMEs.
Investing with equity crowdfunding
Investing in equity crowdfunding portals has high potential for returns but has an intrinsic and equally high level of risk: the investor must therefore be aware of the risks associated with investing in equity crowdfunding, which could also involve the risk of losing the entire capital invested.
Register of portal managers for the collection of risk capital by innovative start-ups
Raising capital through the equity crowdfunding institution occurs through portals specifically authorized by CONSOB that, after evaluating the requirements of integrity and professionalism of the managers and the organizational and technological structure, in case of acceptance of the Operator's application with its own resolution, enters the registration in the registry of operators of portals for raising risk capital by SMEs.
The Registry is required by Art. 50-quinquies of Italian Legislative Decree no. 58/1998 (Consolidated Law on Finance), and contains:
an ordinary section in which portal operators are registered that are authorized by CONSOB following the successful verification of the existence of the requirements by the TUF and by the Regulation adopted by CONSOB with Resolution no. 18592 of June 26, 2013; a special section in which the banks and investment firms authorized to provide the relevant investment services have been noted, which have informed CONSOB, before the start of operations, of the management of a portal.
What the portal does and how equity crowdfunding works
The Walliance Portal basically acts as a showcase for the Offeror's project, which is presented to the audience of potential investors in the network through the internet. The establishment of Equity Crowdfunding makes it possible to combine even the most modest contributions of numerous small investors, and to realize a significant collection of money that can be used for the development of the entrepreneurial or investment project, for which the Offering of financial instruments was conducted on the portal.
The Portal has the primary and exclusive function of facilitating the widespread collection of risk capital by the public parties who access it.
In fact, the provisions of the CONSOB Regulations for the protection of investors establish all the obligations and procedures to be followed by the parties concerned (Investor/Offeror/Portal Operator), and that are necessary for the correct completion of the investment in compliance with the protection system provided by legislation to the benefit of the community of savers.