Crowdfunding is on the rise in Switzerland. Both the number of successfully funded campaigns and the volume of funds raised have experienced strong growth in recent years.
In 2016, CHF 128.2 million was raised through 3,098 campaigns. That’s a 362% increase from 2015, according to the Crowdfunding Monitoring Switzerland 2017 report by the Institute of Financial Services Zug IFZ of the Lucerne School of Business. The volume has risen more than tenfold in comparison to 2013.
The highest growth between 2015 and 2016 was posted by crowdlending with 597% to CHF 55.1 million, followed by crowdinvesting with 453% to CHF 39.2 million, reward-based crowdfunding and crowddonating with 37% to CHF 17 million as well as invoice trading at CHF 17 million.
The Swiss crowdfunding market
Since Cashare launched the first crowdlending platform in Switzerland in 2008, a lot of companies have entered the market.
New entrants in 2016 included creditworld, Funders, Hyposcout, Hypotheko, ideenkicker.ch, Lend, Lendico, letshelp.ch, Swisslending and swisspeers.
The first three months of 2017 witnessed the entry of real estate crowdinvesting platforms Crowdli and Foxstone, and crowdlending platforms Crowd4Cash and Lendora.
But several startups have also exited the market including Starter and Masspurse. In March 2017, the platform Gemeinsam unterwegs, run by an individual Raiffeisenbank branch, closed down to make way for the Raiffeisen Group’s Lokalhelden.
Overall, the number of crowdfunding platforms in Switzerland at the end of 2016 had risen by nine compared to 2015, and as of early 2017, around 50 crowdfunding platforms were operating in Switzerland.
Crowdfunding is a broad term which covers various different activities.
Reward-based crowdfunding includes creative, cultural or commercial projects as well as sport projects. With this type of funding, those providing funds usually receive one-off consideration in the form of products, works of art or services.
In a crowddonating campaign, the contributions made are simple donations that are usually not associated with any consideration. Examples include social, charitable and cultural projects. Crowddonating can also be used to raise funds for political campaigns.
Crowdlending refers to the financing of businesses or private individuals by means of loans. It is also known as peer-to-peer or marketplace lending. Lenders receive interest payments in return for their loan.
Crowdinvesting focuses on acquiring a stake in a business or property via equity or mixed forms of equity and mezzanine (borrowed) capital. Crowdinvesting provides small investors with the opportunity to support startups in their growth phase. In return, these investors typically receive shares in the business and/or a share in the profit it generates.
Real estate crowdinvesting is also part of the crowdinvesting segment. Such platforms allow investors to become co-owners of a property. As a result, the investors take a stake in the rental income and in any rise in value of the property itself.
Invoice trading helps SMEs in need of liquidity at short notice by allowing investors to purchase unsettled business invoices at a discount. This direct linking of lender and investor creates a new investment class.
There is only one invoice trading platform in Switzerland, which is Advanon.
Featured image: Switzerland flag, Pixabay.