According to a recent report by Cambridge University and EY, the alternative finance space is not as developed as in Italy as it is in other European countries. In the three-year period 2012-2014, the volume of alternative finance transactions was in the range of €5-25m, but in 2014 it was only €8.2m.
Summary of the main platforms
P2P lending platforms
Invoice finance platforms
Equity crowdfunding platforms
The Italian financial industry is regulated by the Bank of Italy and the CONSOB – a national commission for financial companies. Since the alternative finance platforms are considered investment providers, these two entities also control this space. Whoever intends to provide investment services in Italy requires a written licence from these authorities.
Equity crowdfunding and P2P lending are subject to different legal frameworks.
Equity crowdfunding is regulated by the Law 221/2012 and Italy was the first country in continental Europe to have introduced rules for equity crowdfunding. The Law permits the raising of money online to support the development of "innovative start-up companies", being companies that meet requirements specified under the same Law. Truly innovative is the introduction of the definition of “portal for the collection of capital for innovative start-ups”, intended as an online platform aiming to raise capital for innovative start-ups.
Each platform may raise a maximum of € 5 million per single offer (in a 12-month period) via equity crowdfunding, but there is no limit for traditional capital raising methods, which can be used alongside crowdfunding. €5 million is a remarkably high threshold when compared to the United States ($1 million) or other European countries (e.g. Germany and France, €100,000).
Retail and institutional investors have different limits. Retail investors may invest a maximum of €500 per deal, without exceeding the annual limit of €1000, whereas institutions might invest a maximum of €5,000 per deal, with the annual cap of €10,000.
P2P lending is subject to the Law 11/2010 that incorporates the European Directive 2009/110/CE. According to this Law, websites that offer loans are not dubbed P2P platforms, but are considered payment institutions, therefore subject to strict audits and reporting requirements, and to mandatory daily accounts reconciliation.
Equity crowdfunding and P2P lending are quite new sectors in Italy and it will take time for awareness of these fundraising methods to grow. However, the Italian alternative finance market has a great growth potential. The country is home to 60 million people, but only 60% of the population has access to the Internet. Countries with approximately the same amount of inhabitants – i.e.: France and UK – have 85% and 93% of people connected, respectively. With a higher penetration of the Internet and more awareness around this innovative market, Italy is likely to be able to compete with its European peers in the near future.