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How To Reboot Europe’s Economy Through Crowdfunding

By Florian Bercault who is a contributor to the Cartes sur Table think tank in charge of economic affairs. Antoine Yeretzian who is a contributor to the same think tank.

For the original article in the Social Europe Journal go to

http://www.socialeurope.eu/2015/12/how-to-reboot-europes-economy-through-crowdfunding/

On June 5th, 1947, the US Secretary of State, George C. Marshall, said at Harvard University:

The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole.

Sixty-eight years later, the need for a European economic revival has re-emerged, but this time the cure can’t come from across the Atlantic but from European countries themselves, with the support of their 500m citizens.

Initiated in 2014, the European Fund for Strategic Investments (EFSI) – better known as the “Juncker Investment Plan” – is strong on ambition and range of key targets: infrastructure, energy, innovation, education and SMEs inter alia. But we believe there must be an equally ambitious, radical source of financing: crowdfunding.

Juncker “earmarked” almost €315bn to finance European sustainable growth through more than 2000 identified projects representing a total investment volume estimated at an eye-watering €1300bn. But this is mainly a statement of intent. In real terms, only €21bn from the EU budget and the European Investment Bank will go to replenish the EFSI as a financial guarantee, and the plan counts on a multiplier effect through borrowing and private investment to achieve its multi-billion target. However, the projects led by SMEs are not as numerous as expected, due among other things to the complexity of the project submission process. And there is no means of ensuring that private funds will produce the multiplier effect expected from the confidence boost.

Crowdfunding to the rescue of European investment

To achieve good allocation of resources, transparency and economic efficiency, a 3.0 cure exists: crowdfunding. Imagine a single European platform managed by the EFSI called www.invest-in-your-europe.eu. How would it work? Firstly, project owners would submit simplified proposals that are due-diligence checked by the EFSI. If the projects fulfil the eligibility criteria set by the Plan, they would then be published on the platform.

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