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  • Cristina Lefter

Crowdfunding: a financing solution for start-ups and SMEs in Romania and in the EU

Updated: Sep 7, 2023

1. What is crowdfunding and where is it regulated?

As per EU Regulation 2020/1503 (the “Crowdfunding Regulation”)[1], crowdfunding is a form of alternative finance tool for start-ups and small and medium-sized enterprises (SMEs), typically relying on small investments.

Crowdfunding involves: (a) in the sense of the Crowdfunding Regulation, any natural or legal person who seeks funding through a crowdfunding platform is referred to as a “project owner”; (b) a crowdfunding service provider acting as intermediary; and (c) a crowdfunding platform meaning a publicly accessible internet-based information system platform operated by the crowdfunding service provider, open to the public to match or facilitate the matching of prospective investors or lenders with project owners. In other words, small or medium businesses wishing to draw funding to launch or expand their products or services may use a crowdfunding platform as a tool to reach out to investor to support their expansion plan.

Until recently, crowdfunding had not been regulated at all. However, the increasing need of start-ups and SMEs for financing and their constant struggle with traditional ways of obtaining it (bank loans, going public on the local stock exchange etc.) eventually brought this concept to the attention of national and, finally, European legislators.

Crowdfunding is now regulated at EU level by the Crowdfunding Regulation and the related legislation and, in Romania, by Law No. 244/2022.[2]

More information regarding the implementation of the Crowdfunding Regulation can be found here:

2. What are the conditions for a project owner to raise financing through crowdfunding?

The Crowdfunding Regulation requires crowdfunding service providers to conduct due diligence with respect to the prospective project owners prior to allowing funding through the platform. The minimum level of due diligence referred to in the Crowdfunding Regulation shall include ensuring (a) that the project owner has no criminal record in respect of infringements of national rules in fields of commercial law, insolvency law, financial services law, anti-money laundering law, fraud law or professional liability obligations; and (b) that the project owner is not established in a non-cooperative jurisdiction, as recognised by the relevant Union policy, or in a high-risk third country.[3]

3. Has crowdfunding actually been tried and tested in Romania?

To the date of this discussion and only very recently, one entity has acquired the authorization from the Romanian Financial Supervisory Authority (Autoritatea de Supraveghere Financiară or ASF) to provide crowdfunding services in Romania.

However, several other crowdfunding platforms incorporated within other EU member states have been authorized to provide such services in Romania as well.

4. Where to start for crowdfunding if you’re a start-up or SME?

The first question to ask would probably be: what crowdfunding platform to use? The research needed to answer this question should probably start by accessing the public register of all crowdfunding services providers authorised in accordance with the Crowdfunding Regulation i.e. the Register of Crowdfunding Services Providers (the “Register”).

The Register is kept by ESMA – The European Securities and Markets Authority and is accessible here:

Selecting a crowdfunding platform is a task involving looking at the jurisdiction where the platform is established, the number and quality of investors acting on the platform, the strategy adopted by the crowdfunding platform to draw funding as well as other commercial conditions.

We would be happy to continue this discussion further. Please get in touch.

[1] Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937. [2] Law No. 244/2022 on establishing measures to implement Regulation (EU) 2020/1.503 of the European Parliament and the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) [3] Pursuant to Article 9(2) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC

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