Comparison of Platforms and Countries Open to International Equity Crowdfunding
As of August 2023, several platforms and countries are known for their open policies towards international equity crowdfunding. These regions and platforms have established frameworks and regulations that facilitate global investment in startup companies. In this article, we will explore the most notable examples and provide insights into the regulatory environment and considerations for investors.
Countries Open to International Equity Crowdfunding
United States
The United States, particularly, has a well-established regulatory framework for equity crowdfunding through the Jumpstart Our Business Startups (JOBS) Act. This legislation enables non-accredited investors to participate in crowdfunding campaigns, providing a legal avenue for smaller companies to raise capital from a broader base of investors. Popular platforms like WeFunder, SeedInvest, and StartEngine cater to both domestic and international investors, making the U.S. one of the most attractive markets for international equity crowdfunding.
United Kingdom
The United Kingdom is another leader in equity crowdfunding, with platforms such as Crowdcube and Seedrs allowing investment from various countries. Despite these platforms being UK-based, they have established guidelines that promote a transparent crowdfunding environment, including the oversight of the Financial Conduct Authority (FCA). This creates a favorable climate for international investors to participate in UK-based crowdfunding campaigns.
European Union
The European Union (EU) has made significant strides towards harmonizing crowdfunding regulations across its member states, especially with the implementation of the European Crowdfunding Service Providers Regulation (ECSPR) in 2021. This regulation has facilitated cross-border investments within the EU. Platforms like Companisto in Germany and MyMicroInvest in Belgium are now supporting these cross-border investments, offering a more unified approach to equity crowdfunding within the region.
Australia
Australia has also introduced an equity crowdfunding framework in 2018, allowing retail investors to invest in startups through platforms such as Birchal and Equity Crowdfunding. This expansion has made it easier for international investors to access Australian startups, although specific regulations and investment limits still apply.
Canada
Canada has seen a growth in equity crowdfunding, with regulations varying by province. Platforms like FrontFundr and SeedUps facilitate investments across Canada and sometimes internationally. While there are some restrictions based on provincial regulations, these platforms continue to attract both domestic and international investors.
Key Platforms Supporting International Crowdfunding
International equity crowdfunding is supported by several key platforms that cater to both domestic and foreign investors. These platforms include:
Crowdcube and Seedrs (UK)
Both Crowdcube and Seedrs operate in the UK and allow international investors to participate, albeit with some restrictions based on the investor's country. These platforms provide a transparent and regulated environment that encourages cross-border investment.
WeFunder and StartEngine (US)
WeFunder and StartEngine are American platforms that focus primarily on U.S. startups but welcome international investors with certain limitations. These platforms leverage the established regulatory frameworks of the U.S. to facilitate international equity crowdfunding.
Considerations for International Equity Crowdfunding Investors
While the landscape for international equity crowdfunding is quite promising, there are several key considerations that investors should take into account:
Regulatory Environment
Always check the specific regulations in your country and the country of the platform or startup. The regulatory environment can significantly impact the success of your investment and the overall climate for crowdfunding.
Investment Limits
Many jurisdictions impose limits on how much individuals can invest in crowdfunding campaigns, especially for non-accredited investors. Investors should be aware of these limits to avoid legal issues and ensure compliance with local regulations.
Tax Implications
Be aware of potential tax obligations when investing internationally. Investment returns and capital gains might be subject to different tax rates depending on the country, so understanding the tax implications is crucial.
Overall, the U.S. and the U.K. currently offer some of the most robust environments for international equity crowdfunding, supported by a variety of platforms that attract global investors. As the industry continues to evolve, we can expect to see further advancements in international crowdfunding regulations and greater opportunities for cross-border investments.