Update on crowdfunding user s awareness

Transcription

1 Update on crowdfunding user s awareness Nikos Daskalakis 4 th ECSF Meeting 17 February 2016

2 Overview Final results of the Oxera study "Crowdfunding from the user s perspective" - FSUG Preliminary results of the pan-european survey on crowdfunding from the user's perspective Plans for a second round of the pan- European survey

3 Oxera study Structure Literature review Market research (survey) Discussion with Platforms Market research (survey) Took place: February April 2015 Covered Germany, Poland and Spain Population: General public Key research questions: what is the level of consumer awareness of crowdfunding? what is the level of use of crowdfunding? how much awareness is there of the risks associated with crowdfunding?

4 Survey design Phase I objective: understanding awareness Germany, Poland, Spain sample: 1,000 individuals representative of the general population computer-assisted telephone interview (CATI) Phase II objective: understanding usage and risk perceptions Germany, Poland, Spain sample: 1,000 individuals representative of the population of Internet users 400 aware of crowdfunding computer-assisted web interview (CAWI) 4

5 Percentage of respondents Results: awareness (I) Awareness level by country and methodology Germany Poland Spain UK Oxera telephone survey Two Much Internet survey* Oxera Internet survey Nesta Internet survey**

6 Results: awareness (II) General tendency Gender Awareness higher among males Age Education Income (or social class for Spain) Awareness greater for the young: in Spain in Germany in Poland (weaker relationship) Awareness greater among respondents with high education level Awareness greater for the most welloff

7 7 8 June 2015 Results: crowdfunding as an investment (II) More than 50% Less than 50% Less than 25% P2P lending Equity crowdfunding Less than 10% Percentage of respondents around 60% of the respondents state that they invested less than 10% of their savings in equity crowdfunding or in P2P lending being particularly interested or excited about a specific company or project appears to be an important motivator for investing

8 Results: reasons not to invest and risk perception Reasons not to invest: the individuals aware of crowdfunding but who have never invested seem concerned about the reliability of this form of investment and the lack of regulation of crowdfunding platforms Assessment of risk: respondents seem concerned that the fundraiser may be fraudulent, or that the platform may be fraudulent for both types of crowdfunding

9 EU Survey 1 st round Market research (survey) Designed June 2014 February 2015 Took place during May 2015 January 2016 (95% of responses until September 2015) Covered the whole of EU Population: registered users in platforms Key research questions: What are users perceptions regarding the benefits and risks associated with crowdfunding with financial returns? What are the main reasons for not having invested yet How much is crowdfunding being used and is intended to be used in the future? How does regulation affect the usage of crowdfunding?

10 Responses 1% 2% 1% 2% 2% 2% 1% 1% 3% 3% 15% 4% 4% 7% 1% 1% 1% 1% 1% 1% 1% 15% 20% Equity 44% 1% 0% 0% 1% 0% 1% 0% 0% 0% 0% 3% 0% p2p Lending 59% Germany Finland Italy Other Αustria France Netherlands Romania United Kingdom United Kingdom Finland Italy Germany Estonia Denmark Other France EQUITY LENDING Germany 69 United Kingdom 377 Finland 32 Finland 99 Italy 26 Italy 45 Other 6 Germany 28 Αustria 6 Estonia 23 France 5 Denmark 18 United Kingdom 5 Other 8 Romania 4 France 6 Netherlands 3 Netherlands 4 Belgium 2 Slovenia 4 Denmark 2 Spain 4 Greece 2 Greece 3 Spain 2 Ireland 3 Cyprus 1 Αustria 2 Estonia 1 Belgium 2 Latvia 1 Czech Republic 2 Poland 1 Latvia 2 Slovenia 1 Lithuania 2 Luxembourg 2 Portugal 2 Romania 2 Cyprus 1 Sweden 1 TOTAL 169 TOTAL 640

11 Sample demographics Gender Education Equity Lending Equity Lending Male 85.80% 84.84% Secondary school 9.47% 16.25% Female 13.02% 13.91% Bachelor's degree 29.59% 36.88% No Answer 1.18% 1.25% Master's degree 47.93% 32.03% PhD 6.51% 5.47% Other 5.33% 8.44% Age Equity Lending No Answer 1.18% 0.94% % 3.75% % 20.31% % 18.91% Experienced investor % 15.78% Equity Lending % 23.91% YES 69.23% 71.41% % 16.88% NO 30.18% 28.12% No Answer 0.59% 0.47% No Answer 0.59% 0.47%

12 Used vs. registered (not used) Have you already lent money via one or more p2p lending platforms? Have you ever invested money in one or more projects via an equity crowdfunding platform? NO 13% NO 30% YES 87% YES 70%

13 Rating benefits How would you rate the following reasons for choosing to lend/invest on these platforms rather than invest your money elsewhere? Higher expected financial returns Interest excitement curiosity about specific companies or start-ups Disappointment mistrust of traditional finance Taking advantage of a new form of investment (increased diversification) 87.18% 69.68% 79.07% 51.16% 58.14% 48.31% 86.44% 80.51% 58.82% 74.51% 64.71% 39.53% 38.37% 34.30% 35.29% 19.49% Have invested Have NOT invested Have invested Have NOT invested Lending Equity

14 Rating risks How would you rate the following risks (if any) associated with p2p lending / equity crowdfunding? The borrower/fundraiser may prove to be fraudulent The platform may prove to be fraudulent Poor ongoing information about the borrower/fundraiser Poor returns or losses on the money lent/investment 59.83% 48.84% 52.94% 53.57% 44.07% 48.98% 45.83% 38.22% 34.61% 36.05% 27.92% 24.58% 28.00% 12.48% 11.86% 14.29% Have invested Have NOT invested Have invested Have NOT invested Lending Equity

15 Past returns in p2p lending So far, how is the money you have invested in P2P lending platforms performing (annual net return, after fees, taxes and bad debt)? My whole capital has been already repaid and I have received: No Answer; 1.99%...more than 10% of annual net return; 5.05%...7-9% of annual net return; 7.22% My investment is still ongoing; too early to say; 67.33%...4-6% of annual net return; 14.80%...1-3% of annual net return; 1.26% I have negative returns (bad debt has significantly impacted the return I am making to push me below 0 % net return); 2.35%

16 Past returns in equity crowdfunding So far, how is the money you have invested in equity crowdfunding platforms performing? I have clearly lost money 0% No Answer 2% I have started receiving dividends or similar returns 20% I haven't received any returns yet and suspect there will be problems with my investment 2% I haven't received any returns yet, but would have expected some by now 3% Too early to say 31% I haven't received any returns yet, but know it takes time 42%

17 Future returns in p2p lending(expectations) If you do/would invest, how would you expect your total ending portfolio to evolve over the year (12 months) after taxes or any potential bad debt? I expect to earn No Answer more than 10 % on 2% my investment 16% +1 to 3 % 8% I expect to lose more than half of my investment 0% I expect to lose some of my invested capital. 3% +7 to 9 % 23% +4 to 6 % 48%

18 Future returns in equity crowdfunding (expectations) If you do/would invest, how would you expect your portfolio evolve in the next three years or so? I expect to at least double my investment 5% No Answer 5% I expect to lose more than half of my investment 2% +50 to 100 % 7% I expect to lose some of my invested capital. 19% +15 to 50 % 23% +1 to 15 % 39%

19 Regarding regulation How are the platforms that you use regulated? Lending Equity Does this regulation increase your trust? Lending Equity 62.16% 49.70% 56.16% 40.16% 28.28% 15.98% 23.75% 28.99% 29.91% 21.62% 15.32% 12.79% 6.41% 2.96% 1.41% 2.37% 1.14% 0.90% They are regulated by law The market is self-regulated (code of conduct) There is no I do not know regulation at all No Answer YES, but it does not change my decision on how much to invest YES, and it encourages me to invest more than I would invest without this regulation NO No Answer

20 Main conclusions so far Investors in p2p lending care more about returns while those in equity crowdfunding invest driven by their interest and excitement Poor returns or losses are the most important risk factors Platforms seem to have gained investors trust Too early to say for past returns mainly in p2p lending; some investors have already started receiving dividends or similar returns in equity crowdfunding Future returns around 4% to 6% for p2p lending and around +1 to +15% for equity crowdfunding (although 1 in 5 afraid of losing money) Equity crowdfunding is relatively preferred by younger and higher educated

21 Additional questions contained in the survey Do you think you could earn lower interests than you anticipate? If you earned lower interest than you anticipate today, would you still reinvest in peer to peer lending / equity crowdfunding? (multiple answers available) Do you think you that you could lose part or all of the money lent/invested? What did you do previously with the money you currently invest through platforms? Would you invest with the same confidence in projects in another EU Member State if they were offered by the platform(s) you use? Does regulation restrict how much you could invest? If yes, do you find this restriction useful?

22 Limitations and concerns Main limitation: limited number of respondents Results may be biased especially in p2p lending where more than half of responses come from the UK. Initial concern regarding questionnaire length: not valid (very low numbers of missing values) Main concerns for future research: Relatively low response rates in general Relatively low level of dispersion in EU Member States

23 EU Survey 2 nd round A second round has been already designed Main changes from the 1 st round: Intending to go for the general public Minor changes regarding the existing questionnaires Included a section of questions measuring the investor s profile Current state of play: Have finalized discussions with the EC regarding the new questionnaires Next steps: translation and EU Survey encoding BIGGEST CHALLENGE: DISSEMINATE THE SURVEY AS BEST AS POSSIBLE We are counting in your help as well

24 Thank you for your attention