There is a surprising disparity in activity between the UK and European alternative finance industries. Indeed, the dearth of significant platforms on the continent has led a number of UK-based operators (Seedrs, Thincats, etc.) to branch out across the channel.
That is not to say, however, that continental Europe is wholly devoid of serious platforms. The Netherlands-based Symbid has kept a relatively low profile up to now, but the equity crowdfunding site has been extremely busy. Through a global presence, a funds-raised figure comparable to the leading UK platforms, and the fact that it is one of just a handful of publicly listed platforms in the world – Symbid appears to be destined for great things.
We caught up with Korstiaan Zandvliet, CEO of Symbid, for an extensive inside look into the platform.
Korstiaan, could you tell us a bit about your background?
Well, after attending school in my hometown of Leiden – a beautiful but quiet city near Amsterdam with a classic small town mentality – I studied Sociology (BA) and then Entrepreneurship (MSc) at Rotterdam School of Management, Erasmus University. I graduated in the summer of 2008 at the height of the global “credit crunch”. At times of great crisis comes great opportunity, as they say! In any case, it became apparent during my masters program that many of my peers were unwilling or unable to pursue their business ideas because of a chronic lack of funding for start-ups, regardless of how original their ideas were, or how well they planned their business strategy. Of course, the financial crisis reduced the availability of capital for growing companies, but the underlying issues were far from new: lack of access to potential investors, hesitant banks, and restrictive lending terms.
Meanwhile, myself and a couple of my classmates – Symbid’s would-be co-founders – noticed that social media usage was becoming ubiquitous among our fellow students. More and more people were connecting via Facebook and Twitter, so why not investors and entrepreneurs? We began to conceive of a system which allowed investors, small and large, to invest in growing companies via social media in exchange for equity. The term “crowdfunding”, one of today’s buzzword, was applied to this process retrospectively – at the time it didn’t really exist! After two years as marketing director for a Dutch software start-up, I co-founded Symbid with a former classmate, Robin Slakhorst, and we’ve never looked back.
Can you briefly introduce Symbid for us?
Symbid is an equity crowdfunding platform. We enable non-accredited investors to invest in exciting, innovative start-ups and receive shares in those companies in return. One of the first of its kind worldwide, Symbid’s platform unites the “crowd” with visionary entrepreneurs and their ideas in a secure environment. Our mission is to digitalize and, ultimately, democratize the investment process: with Symbid, anyone with an internet connection can become an investor for as little as $27 (€20).
After going live in early 2011, Symbid has grown beyond our wildest expectations. Shortly after becoming the first publicly listed crowdfunding platform worldwide in early 2014, Dutch PM Mark Rutte officially opened our new headquarters in Rotterdam. It would be something of an understatement to say 2014 has been a busy year! As a company, we’re still evolving and diversifying. We are proud to operate a young, international, and ever-growing workforce who truly live and breathe crowdfunding. In addition to the Symbid platform, we’re constantly looking at other ways in which we can develop our crowdfunding ecosystem.
How much has the platform raised so far?
As of June 2014, Symbid has successfully funded 38 entrepreneurs and their start-ups for a total amount of approximately $4.5 million. All of our investors are based in Europe, with most living in the Netherlands.
What’s unique about the platform?
Let’s not forget that equity crowdfunding still isn’t widely available – only a handful of crowdfunding platforms offer this service and it’s still outlawed in the United States, subject to the political squabbling surrounding Obama’s JOBS Act. We differ from rewards-based crowdfunding platforms like Kickstarter or Indiegogo by allowing those who pledge money to actually receive returns on their investment, and there have been plenty examples of just that. This means we can help people avoid a situation like the Oculus Rift controversy earlier this year, when nearly 10,000 people pledged $2.4 million to help a small tech start-up develop their virtual reality headset, only for the company to be subsequently acquired by Facebook for $2 billion. In this scenario, none of the 10,000 Kickstarter backers benefitted from the Facebook sale, and many felt betrayed.
OK, so there are other equity crowdfunding platforms – some may even operate an appealing, user-friendly interface similar to ours – but none enjoy a legal-financial structure like Symbid, developed in conjunction with banking and accounting firms for several years before our platform went online. Crucially, this structure enables Symbid to safely receive investments from all around the world, including the eurozone countries, the UK, Russia, and beyond. Our competitors simply don’t have this mixture of security and flexibility, and are often limited to operating within one particular country’s legal or financial system.
In my opinion, however, what really sets us apart is our commitment to offering more than just a platform. We’re aiming to create a fully-integrated crowdfunding ecosystem; a one-stop solution for entrepreneurs seeking capital, investors looking for profit, and people simply wishing to participate in the growth of exciting ideas. It’s this confluence of knowledge, capital, and the “crowd” in one online investment community which gives Symbid the edge. Investors are encouraged to interact with the entrepreneur before, during, and after the funding process. This undoubtedly contributes to the success of our start-ups. In this way, the Symbid crowd not only acts as a launching customer group, but also as a market research tool and think-tank. We have ownership interests in several adjoining companies in order to help us build this crowdfunding ecosystem, including an online valuation tool for growing companies, Equidam.
What’s more, our start-ups go through a rigorous vetting process before going online, and the Symbid team actively coaches the entrepreneurs along every step of the way. Considering this, it’s little surprise that all our start-ups are still active, and many have rewarded their investors with dividends, rewards, and value growth. We want investors to be confident in the reliability of their investment with Symbid. We take crowdfunding seriously.
Tell us about Symbid’s global presence – you have offices all over the world don’t you?
We do indeed! We’re fully operational in three locations – Rotterdam, Amsterdam, and New York – but we’re also working out of Milan and Berlin on an unofficial basis. As we’re midway through a European roll-out of our crowdfunding platform, we expect to add these two cities and several others to the Symbid network in the coming months. Of course, London is an obvious destination for a company like Symbid, a fact that one of our British employees refuses to let me forget!
Which country do you think presents the biggest opportunity for Symbid?
The United States leads the way in terms of the sheer size of its crowdfunding market, but since the legalization of equity crowdfunding from non-accredited investors has stalled – this particular provision of the JOBS Act is still being debated in Congress – Symbid’s U.S. venture will have to wait. Perhaps surprisingly, we’re very optimistic about our prospects in Italy, a country where micro-enterprises are crucial to the national economy but face strict offline investment regulations and a complicated bureaucratic process. Access to capital for growing companies is an issue facing growing companies everywhere, but I believe Symbid’s crowdfunding technology can have a revolutionary impact upon the Italian investment system. Current legislation means that at least 5% of total capital raised via crowdfunding must come from accredited investors. This has discouraged a lot of equity crowdfunding platforms from taking the Italian market seriously, especially when other European countries permit 100% of funding to be raised from non-accredited investors. But we’re not one of them. Symbid is in discussions with a reputable Italian banking group over a potential joint venture which will allow us to effectively bypass these regulations and offer our full equity crowdfunding service. Ciao Italia!
Let’s talk about equity crowdfunding for investors. Obviously there’s tremendous potential upside but little in the way of guaranteed return. How should investors be approaching equity crowdfunding?
Risk is an intrinsic part of investment, whether you’re a trader on Wall Street or an occasional crowdfunder. Investors should treat equity crowdfunding as they would any form of investment, with caution and diligence. Needless to say, the types of investment opportunities featured on equity crowdfunding platforms – start-ups, small enterprises etc. – generally involve greater risk. However, they can also potentially yield a greater return on investment (ROI), as early investors in Google and Facebook will tell you. There’s no denying that equity crowdfunding requires considerable foresight. Perhaps individual judgment plays a more significant role than with other investment methods because of the open, democratic nature of crowdfunding itself; most of our users can’t rely on investment analysts or market researchers for help. Although Symbid is undoubtedly one of the more discerning platforms – we select only the most innovative propositions – ultimately it is the responsibility of each individual investor to anticipate a company’s growth path.
In a sense, of course, the entire crowdfunding process is a form of social due diligence. In order for a start-up to reach its full investment total on Symbid’s platform it must appeal to a wide audience. A successful crowdfunding campaign might be founded on a perceived market gap, a relatable product or brand, or simply appreciation for an original idea – crucially, the very fact of its success implies the underlying concept is relevant. In this way, the collaborative nature of equity crowdfunding increases the security of your investment: the crowd provides the necessary checks and balances by actively inspecting and monitoring the entrepreneur and their start-up. Investments can be withdrawn at any time before the full total is reached, and every individual share is trade-able, so the liquidity of your investment is always guaranteed in case you change your mind.
I do believe that equity crowdfunding involves utilizing your instincts and emotions to a greater extent than with traditional investing. There’s no optimal approach or strategy from a ROI perspective. Essentially, you’re investing in individuals and their ideas. If you’re enthusiastic about a particular concept – whether it’s a super-efficient wind turbine or a revolutionary hotel booking site – then it’s likely others are too. It’s not rocket science.
A lot of people are eagerly awaiting the Lending Club IPO – which obviously will be a huge moment for the alternative finance industry. But Symbid is already operating as a listed company. When did you list and why? How does it change how people view the platform?
Symbid became a publicly listed company back in December 2013 after being released to the OTC Markets’ OTCQB index [SBID]. The reasoning behind our listing was simple. We felt ourselves being restricted by the size of the Dutch crowdfunding market, and going public would produce the influx of capital necessary to implement our European roll-out. Essentially, it enabled us to unlock the next stage of our growth path. As you’re probably aware, the nature of equity crowdfunding as a highly competitive and rapidly emerging industry means constant growth and innovation are essential in order to maintain a competitive position. As one of the oldest and most sophisticated equity crowdfunding platforms worldwide, Symbid’s listing in the U.S. means we are well-placed to capitalize on the future growth of an industry which is experiencing a 100% growth rate year after year. If, as expected, the U.S. legalizes equity crowdfunding from non-accredited investors in the coming months then Symbid’s public listing may assume another purpose altogether – watch this space.
To be perfectly honest, I don’t think going public has led to a dramatic shift in perceptions of Symbid whatsoever, especially among those whose opinions we value most, our investors and entrepreneurs. We don’t have any experience with the issues of credibility or reliability that have sometimes been associated with equity crowdfunding platforms in typically American media outlets since Congress began debating Obama’s JOBS Act: there have been zero cases of fraud in our 4 years of operation. I’d like to think that our users would trust our service regardless of whether we’re a public company or not. Of course there’s a certain degree of prestige attached to a public listing, especially for a young company like ours. Crowdfunding, after all, is an industry at the forefront of financial innovation and contains a strong democratic, idealistic element – it’s very much à la mode in today’s society. We’re proud to be, as far as I’m aware, the first publicly listed crowdfunding platform worldwide. However, this all means very little unless we act upon it.
Where do you see Symbid a year from now?
As CEO and co-founder, I could wax lyrical about Symbid’s future prospects for hours, believe it or not. Briefly though, the coming months promise to be incredibly exciting and challenging. A year of rapid growth beckons: expect plenty of additions to our international workforce; new offices opening across Europe; and the launching of several original initiatives aimed at improving our crowdfunding ecosystem. The first step towards achieving this involves reducing our reliance on the Dutch crowdfunding market, where the majority of our investors are currently located. Following a successful redesign of our platform in early 2014, we’re confident that the foundations for this expansion have already been laid. Ultimately, I expect to see Symbid cementing its status as a global leader in equity crowdfunding and an ambassador for the industry generally.
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