Wefunder’s equity crowdfunding platform has officially expanded to the EU • TechCrunch
After two years of seeking regulatory approval, Wefunder has officially been given the green light to operate its investment crowdfunding services within the European Union. This marks the first time Wefunder has expanded outside of the US, and according to the CEO and founder Nick TommarelloThis business is the first US investment platform approved to operate.
“It would be complacent not to do this,” said Tommarello, noting that the expansion is tied to significant policy changes that have removed some of the thorny financial rules that have affected the region.
Previously, Tommarello explained, crowdfunding platforms would have to be approved by each and every country in the EU to operate there, as each country is subject to a different set of regulations. Thanks to a law passed in 2021 by the European Union and the EEA, Wefunder can follow a set of laws that unify 30 countries into the same framework.
Katie’s strengthWefunder’s head of EU operations, said that before the law was passed, “there was no law that harmonized all countries – [crowdfunding platforms] can only function in a country-specific way.” Now, she said, all platforms need to be licensed by November 2023.
Powers said that between May and September, her team traveled to Lisbon, Madrid, Barcelona, Copenhagen, Amsterdam, Berlin, Tallinn and Munich to meet the founders and other partners.
Powers said much of that actual time was needed to help Wefunder make its name known. But she also notes that regulatory approval is an expensive, arduous process that takes more than two years and requires a lot of help from an attorney.
Wefunder is now positioned to launch strongly, it shows – it already has 12 EU startups raising funds for crowdfunding campaigns on the platform. However, the changing laws are creating a race between US and UK platforms, all of which are looking to penetrate the region immediately, the co-founder noted.
Furthermore, 10-year-old Wefunder has much less capital than some of its rivals. While it has raised more than $9 million in known funding from investors including Y Combinator and Visary Capital, this is still low compared to one of WeFunder’s closest competitors, Republic, has secured over $200 million in known funding since its launch in 2016.
Tommarello suggests that Wefunder feels comfortable doing more for less. For example, in 2021 Reg CF’s regulatory changes helped Wefunder grow to a point where it now holds more than 50% of the crowdfunding market share in the United States, according to the company.
The co-founder also says that Wefunder is taking a different, more modest approach to breaking into new markets than Republic acquires Seedrs for $100 million, a UK equity crowdfunding business that has been blocked by competition regulators from merging with a rival. Seedrs can only operate in the UK and many of its jurisdictions; According to a spokesman, the company is currently “securing the EU Crowdfunding license”.
crowdanother UK-based competitor, has received a crowdfunding license, Tommarello confirmed.
More players in the market is good news for both US and EU startups.
For one thing, Tommarello notes, US startups can now raise funds from crowdfunding rounds in both the US and EU, essentially doubling the total capital. which they are allowed to raise annually by this means. Increased competition also means businesses have more options on terms – and being able to crowdfund that will reach a new level that will eventually calm the criticism around. around the quality assurance of companies using this funding route.
Also, in the UK, finances are audited but not made public – this can save companies tens of thousands of euros. By comparison, for U.S. companies, the audited financial statements would be publicly available if they were pursuing an equity crowdfunding, Tommarello said.
