Dark future for regional crowdfunding platforms ahead?

The viability of many small, regional crowdfunding platforms was questioned from the beginning, simply based on the economies of scale some of them will not be able to reach. In Germany, some platforms like Seedmatch also face image problems now, based on projects and companies, like in the case of Vibewrite, going terribly wrong. Vibewrite went insolvent, basically right after their crowdfunding campaign was completed, which made some people wonder how that even was possible. (The explanation that made it seem a little less strange was that part of the funds collected are already paid out during the course of the campaign, in several tranches.) Some startups seem to have problems getting traction for their campaigns on Seedmatch, which is one of the leading platforms in Germany, now and these cases – beyond Vibewrite there’s many more, an extensive list you can find on the Crowdstreet blog – might have something to do with it. Now there’s potentially even bigger problems coming up though, for all the (comparatively) small platforms.

Kickstarter, previously just directly available in the UK and the Netherlands in Europe, has announced that they will launch in Germany at the end of the month. Other countries such as Italy and Spain are supposed to follow soon after. If this goes well, eventually they might also go to developing markets. While this move, on first sight, mainly counters Indiegogo, as the main direct competitor of Kickstarter which operates with essentially the same model, it might create substantial problems not only for the platforms that work reward-based and therefore with a similar model (such as Startnext for Germany, or Zoomaal, for the Arab world).

So-called crowdinvesting might also be affected, as they compete for largely the same investors or funders disposable income or wealth and often also even have adopted reward-based elements (to a limited extent on Seedmatch and a larger extent on Companisto, the other main crowdfunding platform in Germany). This weakens differentiation and might turn out to be the wrong direction. What is called “crowdinvesting” in Germany has shown to be no real investment with rights attached either and therefore, at least for people with somewhat substantial funds to invest, it is also no competitive alternative to the investments options on Angellist. The question becomes crucial now, as the market starts to mature: Between Kickstarter and Indiegogo on the one side and Angellist on the other, what market position is there that is lucractive and big enough? Global platforms for specific verticals seem to work, too, but regional platforms might have a difficult time, whether they specialize or not.