­Equity Crowdfunding in Denmark ­

Isabella Wichmann & Josephine Worm Andersson

Student thesis: Master thesis


This thesis explores the mechanisms and regulations of equity crowdfunding from a SME, investor and provider perspective and thus the obstacles for this tool for capital on the Danish market. Equity crowdfunding gives a company the opportunity to raise capital by offering shares through an Internet¬based platform towards a public crowd. Theoretically there is a huge potential for equity crowdfunding to become a significant alternative source of finance for start-ups and SMEs. This thesis explains and analyzes the regulatory obstacles to equity crowdfunding by describing the current legislative state of equity crowdfunding in Denmark. Furthermore it researches the incentives and disincentives for the actors to participate in crowdfunding. First of all, the traditional capital market legislation became very strict due to the financial crisis as the financial institutions were forced to implement and follow even more regulations and became cautious to fund high¬risk enterprises. This is why crowdfunding became one of the fastest growing sources of alternative financing for SMEs outside Denmark. However, the Danish lawmakers, among others, find it difficult to adjust the regulation to enable it to support the specific needs of equity crowdfunding. The primary difficulty is achieving a balance between investor protection and risk willing capital for stimulating economic growth and job creation. The thesis suggests how to enable equity crowdfunding and embrace the economic possibilities. The thesis concludes that it is possible for SME’s to create a campaign and states that it is possible to establish a platform, which facilitates stock exchange between a company and a crowd. Regarding this, the thesis discusses whether regulation for security dealers should be more or less restrictive. The retail investors should experience a very high degree of protection since they are not necessarily able to understand the high risks that come with unlisted stocks. This factor is important within the discussion regarding the regulation for security dealers. The possibilities for market failure must also be taken into consideration, but this might be reduced if the actors, and especially the platform, succeed in downscaling the asymmetric information. The EU Commission must make a final statement that MiFID regulates crowdfunding within EU, which will lead to the member states following a common set of rules while having the opportunity to adjust in the individual member states.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2016
Number of pages142
SupervisorsSøren Friis Hansen