Why the European Crowdfunding Market Is ‘Under Pressure’
Crowdfunding in Europe is feeling the heat. According to Eurocrowd, the group that helped shape the continent’s crowdfunding rules, the market is now “under pressure.” What was once seen as a game-changing shift for raising capital online has turned into a grind for many platforms.
Back when Eurocrowd helped roll out ECSPR—the European Crowdfunding Service Providers regulation—it looked like a win. One rulebook for all EU countries, one big market for platforms, startups, and investors.
The idea was simple: Allow companies to raise up to €5 million from investors across Europe without dealing with 27 different laws. But today, the hype has fizzled.
One Regulation, Many Interpretations
Eurocrowd says the regulation did achieve its goal of creating a single framework. The problem? That framework exposed cracks in the system. Instead of opening the door to easy cross-border deals, ECSPR made some parts of the process harder. It turns out that not every country plays by the same rules, even with the same rulebook.
RDNE / Pexels / To get approved under ECSPR, crowdfunding platforms need the green light from their home country’s financial regulator. But those regulators don’t all work the same way.
Some are fast. Some are slow. And some ask for more paperwork. Germany, for example, has been so tough that some platforms just gave up. They decided it was not worth the effort.
Platforms Are Pulling Back
And Germany is not the only one. Across Europe, platforms that used to comply with national rules now find ECSPR a steep hill to climb. Fit-and-proper checks, investor protection rules, and more red tape have added new headaches. For many, the cost of staying compliant is just too high.
So, now we are seeing platforms pull back. Some have exited certain countries, others have stopped doing cross-border deals altogether, and a few have shut down completely. And this is in a sector that was already fighting to stay profitable.
The Promised Boost Never Came
Here is another hit: The promised benefits of ECSPR, like broader investor participation and faster growth, have not fully landed. Instead, crowdfunding platforms are facing higher costs, more legal risk, and shrinking margins.
Eurocrowd points out that without tax incentives and government support, the system just doesn’t work.
RDNE / Pexels There is more pressure on the way. New EU anti-money laundering rules could stack even more compliance costs on platforms.
That might be fine for big financial firms, but it could be the last straw for small crowdfunding startups.
Confidence in the Market Is Slipping
Eurocrowd also says the mood behind the scenes is not great. Confidence is shaky. Partnerships between crowdfunding platforms and institutional investors are rare. Everyone is asking: Can this industry survive long-term? Germany’s decision to look for easier, unregulated paths is one sign that confidence is fading.
France has the most ECSPR-approved platforms in Europe, but even there, investment crowdfunding has slowed. That is worrying. France was supposed to be the success story. If it is struggling, what does that say about the rest of the market?
To be fair, it has not all been bad. Crowdfunding is still seen as a great tool for startups. It is flexible, fast, and a potential lifeline for new companies needing capital. But right now, the environment is not helping. The platforms are not profitable, the rules are tough, and investors are cautious.