Financing via the internet saw a decline in volume for the second year in a row in 2023. Real estate financing in particular has decreased. These are the findings of a study by Lucerne University of Applied Sciences and Arts.
In 2021, the crowdfunding market recorded a record volume of CHF 791.8 million. Since then, however, it has been falling: in 2023, it amounted to CHF 558.7 million and thus shrank by 15.6% compared to the previous year. These are the findings of the latest Crowdfunding Monitor from Lucerne University of Applied Sciences and Arts (HSLU).
Sharp decline in real estate financing
The individual segments of crowdfunding (see definition in box) developed differently. Crowdinvesting fell by 2.9% to CHF 131.5 million. The most significant shift was in crowdlending, where the volume fell by 20% to CHF 398.1 million. According to the authors of the study, the reasons for these developments are complex. On the one hand, higher interest rates can have a rather inhibiting effect on the demand for credit. On the other hand, the growth of sub-sectors such as real estate financing always depends heavily on the development of individual platforms and the competitive situation.
Many platforms - but only a few are relevant
There were a total of 36 crowdfunding platforms in Switzerland at the end of 2023. However, only a few platforms are relevant for the individual sub-sectors of crowdfunding. In crowdsupporting/crowddonating, the four largest platforms achieved a market share of 86%. In crowdlending, the five largest platforms achieved a market share of 80 percent and in crowdinvesting, only three platforms were able to account for 85 percent of the market. In total, 23 of the 36 platforms financed crowdfunding projects. More than a third of all platforms therefore handled no (or in exceptional cases only very few) projects.
High success rate for financing sports and cultural projects
Crowdsupporting/crowddonating remained stable compared to the previous year (-0.4%). Since 2017, the annual volume has leveled off at between CHF 25 and 30 million. Exceptions were the years 2020 and 2021, which were characterized by Covid-19, in which numerous support projects were financed online and the volumes increased accordingly. Financing via online platforms has become a promising mainstay for sports and cultural projects, says co-author of the study Andreas Dietrich. The success rate in Switzerland is also very high in an international comparison. Last year, over 75 percent of the projects advertised were actually funded. The average amount invested per person in a project is also high at just under 180 francs. "Financing projects on Swiss platforms are very successful by international standards. We also attribute this to the professional support provided by the Swiss platforms for project financing," says the author of the study.
Four forms of crowdfunding
- Crowdsupporting: Mostly creative and cultural projects and campaigns from the sports sector. The investor receives a product, an artistic work or a service in return for their contribution. Anyone who finances a book, for example, receives a copy free of charge.
- Crowddonating: Mainly donations for social, charitable and cultural projects that are not linked to anything in return.
- Crowdinvesting: Investments of equity or debt capital in companies (start-ups) or real estate. In return, investors receive a share of the profits.
- Crowdlending: arranging loans to companies or private individuals. In return, the lenders receive interest payments, the amount of which depends on the risk of the borrower.
Crowdfunding Monitor 2024
The ’Crowdfunding Monitor Switzerland’ is conducted every year by the Institute of Financial Services Zug IFZ at Lucerne University of Applied Sciences and Arts with the support of Swiss crowdfunding platforms. This year’s study also includes a comprehensive analysis of the legal and tax aspects of crowdfunding. The following platforms supported the study with data: Acredius, Beedoo, Cashare, CG24 Group, Conda.ch, Creditworld, Crowd4Cash, Crowdify, Foxstone, Fundoo, I believe in you, Imvesters, Lend, Lokalhelden, Neocredit, OOMNIUM, Progettiamo, Raizers, SIG Impact, Swisslending, Swisspeers, There for you and Wemakeit.
The study can be downloaded here.
