Speech by Prime Minister Mark Rutte for Crowdfunding Day Europe
Ladies and gentlemen,
In the short history of crowdfunding, the cloud project of American comedian Kurt Braunohler has become a classic.His aim was simple: to make people in Los Angeles smile. He decided to hire a man in a plane to write a funny message in the sky. Everyone who gave money could suggest a text. Four thousand dollars were raised, and the winning message was worth every penny. The pilot wrote: ‘How do I land?’
That was in 2013. It may seem like yesterday, but in the world of crowdfunding it’s ancient history. Because developments are moving at warp speed. Around the world, crowdfunding is growing astronomically.
- In the United States, the crowdfunding market grew from 4.4 billion dollars in 2013 to over 36 billion in 2015 – an average annual growth of nearly 190 per cent.
- In China it grew from 5.5 billion dollars in 2013 to 102 billion in 2015 – a growth of nearly 330 per cent a year.
- In the UK, the European leader, it grew from 666 million pounds in 2013 to 3.2 billion in 2015 – an average annual growth of over 120 per cent.
- In the Netherlands, it’s not growing quite as fast. But it’s still doubling every year, from 32 million euros in 2013 to 128 million in 2015.
So we’re talking serious money – though it only covers a tiny percentage of financing needs. The question is: where’s all this going? It’s tempting to draw conclusions from the growth figures. If the market continues to grow at the same pace, by 2020 crowdfunding will be worth over four billion euros in the Netherlands, and over a trillion dollars in the US. Of course these figures should be taken with a pinch of salt, but they still say something about crowdfunding’s potential.
This changes the financial playing field. For a long time, crowdfunding was only used for fun projects like Kurt Braunohler’s, and for cultural activities. For instance, in 2010 the fans of Dutch singer Hind raised 40,000 euros so she could make a new CD. That was big news at the time. But nowadays, small and medium-sized businesses increasingly see crowdfunding as a standard source of finance. Banks are getting in on the act, with all sorts of new financial arrangements. Financial supervision of the sector is increasing, too. More and more professional crowdfunding platforms are appearing, so arranging funding is as easy as applying for a bank loan. And there are meetings like this one, which help raise the profile of crowdfunding, and highlight the pitfalls and risks.
What’s behind this rapid expansion? First, the rules for corporate financing and bank supervision have been tightened since the 2008 financial crisis. So the banks are much more cautious about providing venture capital. Too cautious, many say. A new balance between risk and certainty has yet to be found. This creates room for alternative finance.
Another factor is the low interest rate. People are less and less keen to save money or invest it in safe bonds and treasury certificates. Crowdfunding offers a better return and an opportunity to spread risk, because the minimum contribution is often fairly small.
But besides these rational, financial arguments, I’m sure there’s something else at work: a new mentality among entrepreneurs and investors.
I’ve noticed it recently, whenever I’ve talked to people starting businesses in technology, online services and innovative manufacturing. A new type of enterprise is emerging. One that doesn’t fit the old business model, based on equity capital, steady growth and long-term financing. More and more start-ups are free-floating and international from day one. It’s all about acting quickly. Long-term continuity is not a goal in itself. These top-speed business operations want to cash in on today’s ideas and products tomorrow. Crowdfunding ties in with this because it’s flexible, the funds can often be raised in a few hours, and – very important – it immediately creates a large group of ambassadors. Because anyone who invests in a product or service tends to advertise it, if only out of self-interest. In other words, crowdfunding is also a marketing tool.
This direct involvement is very important for donors and investors, because it means they know what’s happening with their money. And they can support a good idea or plan directly, without any go-betweens. That’s another reason crowdfunding is so popular. These days, people want to be in control and contribute to society.
And maximum profit isn’t always their main goal. It’s no accident that for years now, certain charity events have attracted the most crowdfunders, both online and on social media. Take Amsterdam City Swim, an event in which thousands of people swim through the city’s canals to raise money for research into ALS. It was first held in 2012, and immediately turned into a mega-happening. Even our present Queen, then Princess Máxima, took part.
So crowdfunding has many positives. It’s new and energetic. It’s easily accessible. It’s a great new alternative form of finance. It’s a way of organising and manifesting social commitment. And, above all, it can give wings to enterprising people with good ideas. When the next Steve Jobs comes along, he or she may well owe their first success to crowdfunding. So to paraphrase Kurt Braunohler, the question is not ‘How do we land?’ but ‘How do we fly?’
To answer that, I’d like to invite three people to join me on stage. Three people who stand for what crowdfunding is, and what it can achieve in 2016.
The first is Daan Weddepohl from Peerby, a website and app for borrowing things from your neighbours. He recently raised two million euros in no time to expand his platform.
The second is Jonathan Leland from Kickstarter in the US, the world’s best-known crowdfunding platform. Since 2009 it has raised no less than 2.3 billion dollars for all sorts of projects.
Lastly, I’d like to ask Wilbert van de Kamp to step forward. Wilbert is the CEO of Omapost and raised twenty thousand euros via crowdfunding for a mobile app that helps elderly people escape their isolation.
Please give them a big round of applause.