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Early Impact of CoVid19 on the European Crowdfunding Sector

by EUROCROWD on 14.04.2020

In early April 2020 the European Crowdfunding Network conducted a survey amongst crowdfunding platforms operating in Europe in order to identify potential impact on and measures by platforms regarding CoVid19.

The European Commission is working on potential actions addressing the challenges that follow the CoVid19 pandemic. Some of these actions are already being published, such as the Digital finance outreach 2020, others are likely to come to light in the near future. This comes on top of many national response actions run and prepared by national governments. The European response will likely back Member States’ actions and create new and much needed impulses.

We believe that crowdfunding can and should play a key role in supporting relevant attempts aimed at helping European citizens, businesses and the economy at large during and in the aftermath of CoVid19. On national and regional basis this is already true in many places, but we also witness some crowdfunding platforms being subject to the same economic restrictions than other businesses.

In order to capture the market perceptions on the impact of CoVid19, the European Crowdfunding Network conducted a short and indicative survey amongst crowdfunding platforms operating in Europe. We aim to identify potential impact on and measures by crowdfunding platforms regarding CoVid19. The data presented in the report captures the sentiment of actors at the end beginning of April 2019.

The long-term economic impact remains still to be seen and we also asked respondents to provide input in this perspective. The data presented in the report does not claim to have scientific significance nor to represent the total ecosystem. It is supposed to provide an insight into trends which likely will intensify over time.

Some of the overlying results can be summarised as:

  • high negative impact on capital inflow from investors and note that some platforms have already taken measures to incentivize new investments, while similar relevant actions are still in preparation for the majority of respondents.
  • high negative impact on deal flow, with a reduced number of new projects being registered on crowdfunding platforms. Platforms have largely taken measures to counter act this trend, or are at least planning to do so. Still, a quarter of respondents does not yet feel the need to take counter measures.
  • moderate impact on existing projects, if compared to the previous two questions. However, crowdfunding platforms are still largely implementing mitigation measures to support and help the small and medium sized companies and projects they have helped get funded in the past.
  • visible impact on platforms own business operations, with a majority already having implemented relevant measures.

Of the respondents we found that some 70% represent ECN membership while the remaining 30% are not ECN members. Platforms involved in financial services transactions in general indicated that they operate under the supervision of the National Competent Authorities (financial market oversight), though two equity and one lending platform indicated they do not fall under relevant supervision.

The data presented in this report reflect all types of crowdfunding (donations, reward, equity and lending) and cover platforms active in 14 European countries.