Crowdfunding in Brazil consolidates and the equity modality gains security with its own regulation
More than R$ 180 million has already been donated in Brazil through main traditional crowdfunding platforms, with one-third of this total only in 2016. In that year, the three largest platforms received an average of almost R$ 18 million each.
In addition to social causes and cultural projects, many entrepreneurs who need a first contribution to product or service launch use crowdfunding – in return, they offer rewards. Even with strong growth last year, the main players in the sector expect to continue growing in 2017 showing the consolidation of the market.
The main crowdfunding platforms in Brazil and their numbers
Release: January 2011 Donations through the platform: R$ 64 million Donated in 2016: R$ 16.1 million
The largest platform in donations, Catarse grew 40% in 2016 and is projected to maintain the same growth rate in 2017.
To maintain and expand the platforms depend on the commission. Catarse currently charges 13% on donations from each project, but only gets 9% (4% goes to the payment partner), and studies changing the charge.
"We are studying entering a new phase of experiments with pricing to better match the platform to our current vision and the diverse uses and segments that inhabit the community that uses Catarse," said CEO Rodrigo Machado. "It is worth remembering that we still have specific operational, legal and tax challenges in Brazil that make the model even more difficult to operate than what is seen outside the country. Maybe that's why no big overseas platform has started operations here," he added.
Release: January 2009 Donations through the platform: R$ 58 million Donated in 2016: More than R$ 19.3 million
The highest percentage growth in 2016 was that of Vakinha. "We are forecast to run R$ 41 million this year. Last year, we ran almost R$ 19.4 million, growing 135% over 2015," said Luiz Felipe Gheller, Co-founder.
Vakinha intends to open for investors. "We have been in the air since 2009 and started with investments in the house of R $ 500 thousand. For the time being, investments were only made by the partners. We are structuring ourselves to seek more investments in the near future," said Luiz Felipe Gheller.
Release: October 2013 Donations through the platform: R$ 40 million Donated in 2016: R$ 18,417,144 Received: US $4 million in contributions from angel investors
For Kickante, which raised more than R$ 18 million in 2016, the forecast is to reach 20% higher this year, according to Candice Pascoal, CEO & Founder. Out of all these platforms, Kickante is the only one that has received support from third parties (R$ 4 million) until today.
Release: April 2011 Donations through the platform: R$ 19.4 million Donated in 2016: R$ 7 million Increased: 40% from 2015 to 2016
Regulated equity crowdfunding has higher chances of growth
Equity crowdfunding – although still much smaller than traditional crowdfunding in Brazil – celebrated the Securities and Exchange Commission of Brazil’s (CVM) regulation on July 13 last month. The view is positive for FinTechs, especially because among the 51 pages of the regulatory framework is the increase of funding limits.
"Instruction 588 is a great achievement of the ecosystem and an immense milestone for the financing of innovative organizations in Brazil. We hope that, with legal support, this dynamically growing market will gain even greater proportions," said Camila Nasser, Head of Marketing at Broota. The platform has already raised more than R$ 12.6 million in 44 investment rounds.
To StartMeUp, which has already raised R$ 2.5 million for five projects, the regulatory framework "improves the visibility and reputation of the modality towards institutional investors, increases the growth space of the modality with the rise of capturing and revenue limits of companies that can access crowdfunding platforms, among other advantages," commented the Co-founder Diego Perez.
In addition, the new instruction turns the process more simple, according to EqSeed, which has already raised R$ 1.5 million for five projects. Under the new rules, the CVM will approve the platforms to operate in the market by using a series of requirements (instead of approving each round of individual investment) as well as determines specific rules regarding the funding process. "The new standard increases transparency and reduces bureaucracy, which will generate more investment speed and market scale," commented Greg Kelly, one of the Founders of EqSeed.
This content was published in partnership with StartSe, a leading Brazilian website about startups. The portal contains the StartSe Base, the largest database of startups in the country, with more than 5,000 registered companies.