Fintech's success raise questions about EU's crowdfunding limits
A fintech startup aimed at teaching children how to manage their pocket money has become the most highly funded crowdfunded fintech startup in Britain after raising just under £4m in a matter of weeks.
GoHenry, a prepaid debit card and app that comes with parental controls, launched a crowdfunding campaign earlier this year to raise extra revenue. It set an initial fundraising target of £2m which was reached in less than 48 hours. It has since gone on to secure £3.99m from more than 2000 investors.
Meanwhile in May another fintech venture, digital bank Tandem, surpassed its £1m target in less than 20 minutes through crowdfunding platform Seedrs. And in March another digital challenger bank Mondo managed to raise £1m in 1 minute and 36 seconds. In total, more than €4bn was raised in Europe through crowdfunding platforms.
The success of GoHenry and others has led to calls for the current limit on equity crowdfunding, which stands at $5m/£3.9m, to be raised. The chief executive and co-founder of Crowdcube, a crowdfunding platform that was used by GoHenry, believes that GoHenry would have been able to raise much more money if the $5m limit had been raised. "We are leading a charge to convince the EU to raise its limit on the amount of finance that any business can raise without a prospectus," said Darren Westlake.
The EU's limit on crowdfunding finance is being reviewed with a proposal to double it to €10m currently under discussion in Brussels. A European Commission paper published in May stressed its desire to support crowdfunding as an alternative source of finance for Europe's start-ups.