B2 – Upper Intermediate
Crowdfunding Bizkaia is the first ever state-run crowdfunding platform. Now, business-minded individuals can invest in local start-ups that catch their interest.
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Authorities in Biscay in Spain’s Basque Country will allow its citizens to invest in state handpicked start-ups, the first local government to do so on the planet.
If you’re thinking of setting up a business in the Basque Country or looking for an alternative way to invest, this brand-new take on crowdfunding may be of interest to you.From March 15th 2018, the government of Biscay (Vizcaya in Spanish or Bizkaia in Basque) is calling on any business-savvy members of the public to invest in Basque start-ups they’ve cherry-picked for their potential for success.Crowdfunding Bizkaia’s founders say the advantage of having local government involved is its capacity to boost investor confidence by mitigating risk.“In general the illiquidity of equity-based crowdfunding creates financial uncertainty,” their press release reads.“You don’t see a payout until the company exits – that’s assuming the business doesn’t fail, and you also can’t offload shares into a secondary market if you decide it’s a poor investment.“Biscay’s government platform puts applying companies to the test with a rigorous financial and economic appraisal, which is meant to take the pressure off the shoulders of investors as they don’t’ have to check the viability and risk of the startup themselves.According to Bizkaia Crowdfunding, there are also many perks for the startups applying, not just access to ‘seed money’.Chosen startups can request to have the government match the level of funding raised by the public, with a limit of €30,000.Each venture will also receive a free year of business mentoring and support to help the businesses reach their growth targets, as opposed to mainstream crowdfunding platforms like Kickstart or Crowdcube who “pull out” once the money has been raised.Working as partners, the company and government jointly decide fundraising aims.Additionally, the government-run platform provides other financing streams and business support avenues when the year finishes.Crowdfunding Bizkaia also states that their commission fee is substantially lower than that of private crowdfunding platforms, 1 percent compared to an average 3 or 4 percent higher.So what are the prerequisites for applicants?All companies must be robust, in strong financial health– including four to five pre-existing shareholders– and occupy a unique market space.Start-ups seeking investment on the platform must be headquartered in Biscay with companies from outside the region encouraged to establish their headquarters in Biscay to qualify for the platform.Crowdfunding Bizkaia’s website will launch with four start –ups, another four in line, and the aim of managing between ten to twelve projects a year, which will be selected from around thirty that are expected to apply to join the platform.
Discussion Questions:
1. What are the advantages of having a government-run crowdfunding platform?
2. What do you think about this?
3. What are your thoughts on crowdfunding?
4 replies on “Government-Run Crowdfunding Platform”
What are the advantages of having a government-run crowdfunding platform?
To my mind, it gives you a bigger security since the start ups chosen would have gone through a thorough filter to ensure their capacity to perform. Additionally, as stated in the article, the fee required by the Government is 3-4% lower than in a private domain and the Government might match the fundraising by the public, up to 30K.
2. What do you think about this?
I think it is a very clever idea, which promotes investments and work for the citizens of the area, given the startup´s headquartes must be in the Pais Vasco.
3. What are your thoughts on crowdfunding?
We hear this term more and more these days…I am not too much into ´financial ´aspects yet I follow a bit the real estate market and I see this crowdfunding ´concept’ used in there more and more often…Whilst it might be difficult to invest in a property it might not be that difficult when using ´ crowdfunding´, thus an advantage, you just need to be sure you are working the with the ´right ´company. ..In the article´s case, being managed by the Government, it can give you the necessary ´peace of mind´.
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What are the advantages of having a government-run crowdfunding platform?
Government- run crowdfunding allows anyone with a compelling story and a clear vision to reach potential supporters. This inclusivity can lead to a diverse pool of backers who are genuinely passionate about the cause.
2. What do you think about this?
This type of crowdfunding is a valuable tool for startups and individuals aiming to launch new projects. It offers several advantages that make it an appealing choice for those seeking financial support and community engagement.
3. What are your thoughts on crowdfunding?
Choosing the fastest way do not means it is the easiest one.
Crowdfunding can be an alternative finance option if you have struggled to get bank loans or traditional funding.
However, it will not necessarily be an easier process to go through compared to the more traditional ways of raising finance. Not all projects that apply to crowdfunding platforms get onto them.
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