The Italian Crowdfunding Job: Symbid Italia
It wasn’t always this way. Long before the hierarchical banking institutions we know today, with their ever-growing number of barriers to entry, there were benci. Dotted around the famous canal-side marketplaces of 13th century Venice, the benci were places – literally benches – where people could haggle over currency exchange rates. A century later in Florence, the Medici family devised a financial loophole whereby they could offer loans without fear of religious persecution and, that old chestnut, eternal damnation. By redefining interest as a fee for services provided, the Medici bank could support the up-and-coming families of northern Italy and lay the foundations of the Renaissance.
People could now walk up to the benci and prove themselves worthy of a loan. Shakespeare describes this practice in ‘The Merchant of Venice’. The entire transaction depended on how much the benchers (or bankers) trusted the individual: being a “good man” literally meant being good for the borrowed money. It’s no coincidence that ‘credit’ is derived from the Latin word credo, meaning to believe and to trust. Through human interaction and financial innovation, the banks of Renaissance Italy became nexuses of wealth, knowledge and entrepreneurship.
Renewing our financial markets
The days of the benci are firmly in the past. We’ve lost that human, emotional connection with our financiers – being bailed out by the taxpayer is never good for PR – and yet banks are as important to our national economies as ever. Over three-quarters of small businesses in the EU still rely on bank loans for growth. But getting a loan these days isn’t as simple as approaching a bench and proving your worth as an entrepreneur. It’s a costly, time-consuming and bureaucratic process that’s often doomed from the start. Recent financial crises and stricter banking regulations have created a funding vacuum in the life cycle of small businesses. Grounded in a traditional, offline, vertical way of operating, banks today seem ill-equipped to keep up with funding demand in this digital age of entrepreneurship.
Finance has remained resistant to the new, horizontal model sweeping its way through other major industries – think Airbnb, Uber, Spotify etc. – and it shows. In 2014 the availability of bank loans for EU start-ups decreased by 8%. Unsurprisingly, the more innovative, web-based start-ups struggle most when seeking finance. This ‘equity gap’ is felt across Europe. In the Netherlands, for example, banks rejected 39% of Dutch small businesses in 2014. Headquartered in Rotterdam, Symbid is working hard to provide a more efficient, online alternative to traditional finance. That’s why we recently launched The Funding Network™, expanding our crowdfunding platform to include all types of funding and capturing 10% of the total Dutch seed capital market in the process. We see financial technology as the solution to the current funding bottleneck, simplifying the way small businesses are funded. Symbid models itself on the benci, a neutral platform connecting investors and entrepreneurs, a level playing field with full transparency for both parties.
Going back to the benci
Italy, the birthplace of modern banking, has been slow to jump on the crowdfunding bandwagon. The legalization of equity crowdfunding in early 2014 could not come soon enough for a country in which small business contributes 68% of total added value (EU average is 57%) but, according to the European Commission, suffers from chronic below-par access to finance. The launch of Symbid Italia in March 2015 is our attempt at reversing this trend. By partnering with Gruppo Banca Sella, a 128 year-old banking group, Symbid enters the Italian market in synergy with a renowned financial institution. We don’t underestimate Banca Sella’s foresight in teaming up with us – we are, after all, one of the ‘new boys’ of alternative finance – and we’re excited about the combination of their expertise and investor clientele, our financial technology and the crowd. This is how we’re making efficient, online funding a reality for Italian investors and entrepreneurs. Symbid Italia is the first step towards a more efficient capital market for Italian small business.
Like Symbid, Banca Sella recognizes that the digital transformation of our financial markets is an undeniable long-term trend. As Italian Business Angel of the Year and Symbid Italia CEO Marco Bicocchi Pichi says, “The e-commerce generation will become an e-investing generation.” With 30,000 private investors and 40 institutional investors already connected to The Funding Network™, and our first international expansion now under our belt, Symbid aims to lead this movement by becoming the go-to European funding platform. And if, along the way, we can rediscover some of the emotional, human connection that once existed between our entrepreneurs and financiers, all the better.
Intrigued by our vision? Get in touch with us on social media or visit our website to see how The Funding Network™ is already taking shape.