Alternative Finance: 2020 trends from the CrowdFundMe Day

Insights 20 January 2020
Mattia Ciprian

Good news for both investors and SMEs: 2020 will be the year of alternative finance.

In 2019 alternative finance instruments collected over € 3 billion, 63.3 million of which through equity crowdfunding. And the queue at the entrance at the CrowdFundMe Day – the first event organized by CrowdFundMe to discuss the future of alternative finance in Italy – shows the great interest for these instruments.

On January 15th we were invited to attend the CrowdFundMe Day to talk about the future of crowdfunding in Italy. 2019 has marked the entry into force of some amendments to Consob regulations which opened up the doors of the minibond market to crowdfunding platforms.

In a nutshell, the new regulation has allowed CrowdFundMe to enter the register of sponsors of the ExtraMOTPro3 list, supporting companies to issue minibonds and place them.

Minibonds are a rapidly expanding financing instrument. They allow companies to raise capital and offer investors higher interest rates than other securities. Looking at the numbers, from July 2018 to July 2019 more than € 756 million were raised through the issue of minibonds, with an average annual yield of 5.19%. Over the same time, the net yield on 5-year Italian BTPs has fallen from 1.77% to 1.05%.

The event was also an opportunity to announce our collaboration with CrowdFundMe. A credit rating is an important qualification for a good placement of minibonds on the stock market, as it both attests the soundness of the issuer and boosts investors’ trust. As a Rating Agency specialized in rating for SMEs, thanks to the MORE methodology, modefinance is able to provide time-saving, transparent and more flexible solutions.

According to Tommaso Baldissera Pacchetti, founder of CrowdfundMe, crowdfunding will be a major trend in 2020. Together with him also Barbara Lunghi, Head of Primary Markets of Borsa Italiana, and Corrado Passera, CEO of Illimity Bank, expressed their confidence in the growth prospects of this instrument. The effectiveness of equity crowdfunding as financing instruments has also been witnessed by some of the companies that, thanks to the platform, have raised - and in some cases even exceeded - the amount of capital envisaged.

And in 2020 the number of companies relying on alternative financial instruments is expected to be much higher.