Crowdfunding in Switzerland — An Exponential Growth
Small and medium enterprises continue to dominate the entrepreneurial landscape in Switzerland. They constitute more than 90% of Swiss companies, creating a fertile field for crowdfunding to foster and grow.
The most recent report on crowdfunding in Switzerland was created by Prof Dr Andreas Dietrich and Simon Amrein from the Institute of Financial Services ZUG under the Hochschule Luzern. The institute observes crowdfunding performance in Switzerland and releases an annual study.
Like every year, Acredius is honoured to participate in this year’s study creation.
Along with other platforms, Acredius granted open access to its database of financial operations (borrowers, investors, loans, default rate, raised funds, etc.)
The Swiss crowdfunding sector continued its unrelenting pace of growth in 2021, raising a record high volume of CHF 791.8 million, representing a 30.5% increase compared to 2020.
On the crowdlending side, 14 crowdlending platforms generated CHF 607 million, driven primarily by real estate crowdlending, which grew by 40.9% to reach CHF 418 million in 2021.
Crowdlending continues to rise in Switzerland
Crowdlending is one of the segments of crowdfunding. It allows businesses to obtain loans from investors without the intermediation of a bank or a traditional financing institution.
As can be seen in the figure, this segment recorded the most significant volume and the highest growth from 2020 to 2021 (CHF 607 million, +35%), followed by crowd investing (CHF 147.2 million, +29%), while reward- and donation-based crowdfunding declined slightly compared to 2020 (CHF 37.6 million -16%).
To achieve such results, the number of successfully transacted loans rose from 2’323 to 3’055 and returned to the pre-Corona crisis levels of 2019.
The numbers mentioned above include the different subsegments of crowdlending: from the total of CHF 607 million, business crowdlending managed to raise CHF 110.4 million (compared to CHF 95.9 million in 2020). Consumer crowdlending or loans to private individuals achieved a growth of 43% compared to the numbers of 2020, as it reached CHF 78.7 million. As for real estate crowdlending, it grew by 40.9%, reaching CHF 418 million in 2021.
The study also covered the loans granted through crowdlending, which varies depending on the subsegment.
In business crowdlending (or loans to SMEs), the average amount of loans reached CHF 260'000 in 2021. As for consumer crowdlending, the numbers remained stable at CHF 34'000. The same was noticed for the average loan amount in the real estate crowdlending subsegment, reaching CHF 1.2 million in 2021, the same as in 2020.
From the investors’ side, the individual contributions in crowdlending also vary depending on the type of loans. For business loans, an investor contributed an average of CHF 14'000 in 2021. Consumer loans reached an average of CHF 8'000, while in real estate crowdlending, the average capital invested was around CHF 107'000.
Switzerland on the international scene
The crowdfunding market in Europe is still considered relatively small when compared to the Americas and the Asia-Pacific. The UK’s platforms could snatch number 2 with a market volume of CHF 11.3 billion, behind the USA (CHF 38 billion).
China, the once most significant player in crowdfunding, witnessed a major drop in the volumes achieved in 2017, and the numbers went from CHF 332.9 billion in 2017 to CHF 28.8 billion by 2020.
Many factors influenced China’s crowdfunding industry: the establishment of new regulations and the adjustment of monetary policies. Due to that, most crowdfunding platforms were waiting for the official regulatory policy before restarting to provide accurate data about their performances.
Continental Europe (ex UK) has achieved CHF 8.5 billion, including CHF 774.9 million raised by the Swiss crowdfunding market.
Looking forward to 2022
Entering Q3 of 2022, the global optimism for crowdfunding is unyielding, with new technologies, regulations, and platforms emerging regularly to ease crowdfunding applications.
The breaking of the barrier of CHF 1 billion is likely to happen by the end of 2022, leading to further growth of the Swiss crowdfunding market.
As for the crowdlending segment, the expected growth during the next three to five years will most likely draw greater attention from institutional investors, causing better performance and broader expansion of crowdlending services.