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1. Introduction

Crowdfinance Ecosystem is on early stage of its development in Russia. J’son & Partners Consulting’s consultants distinguish crowdfinance on three types - crowdfunding, crowdinvesting and crowdlending:

  • Crowdlending is the crediting of individuals and legal entities by individuals via specialized internet platforms;
  • Crowdfunding is the collection of funds in order to implement projects without further participation in equity capital;
  • Crowdinvesting – collection of funds in order to implement projects with further participation in equity capital.


Crowdfinance Ecosystem started its history in Russia in 2011 - 2012 with the launch of first platforms:

 

2011г.

  • 2011 – launch of VDolg.ru platform. VDolg.ru is a full cycle service, including search of borrowers, scoring, organization of loan provision and payments under it, in terms of overdue debts – professional collection and jurisdictional procedures with receiving list.


2012г.

  • Launch of Boomstarter and Planeta.ru crowdfunding platforms
  • Launch of Loanberry crowdlending platform


2013г.

  • Launch of crowdlending platform Credberry


2014г.

  • Launch of Fingooroo crowdlending platform
  • Start of StartTrack, VCStart and WeShare crowdinvesting platforms
  • Service Yandex.Money announced the launch of the platform – Together: For Greater Good – which is aimed to make the process of collecting funds for different projects and charity via Internet easier.
  • Payment system WebMoney launched the service Collective Purchases – allows users to form a group in order to purchase goods via suppliers by wholesale prices and for large orders in foreign shops. New service Funding by WebMoney Transfer had implemented 4 directions – besides the classical crowdfunding, where users invest money on interesting projects, there is an opportunity to make collective purchases and organize events, there is also a function for charity projects.

 

2. Current State of the Industry

According to J’son & Partners Consulting experts’ estimations, total crowdfinance market volume was 640 - 700 mln RUB in 2014. Market structure by key directions is presented below.

 


Main monetization model for all participants is still a commission from attracted funds, which varies from 5 till 10%.

 

Key market players by market segments:

 

3. Crowdfunding

Peculiarities of analysis methodology on crowdfunding market:

  • charity projects were excluded;
  • funds collected in social networks were excluded.

Current estimation of crowdfunding market turnover in Russia is 160 - 180 mln RUB, where 75-80% came from platforms such as Planeta.ru and Boomstarter.ru (according to J’son & Partners Consulting).

In projects structure prevail projects in the following spheres: technologies, art and cinema.

 

 

Projects’ analysis by number of collected funds revealed that dominate projects in the sphere of cinema and music.

 

 

J’son & Partners Consulting’s experts also analyzed projects per average volume of inquiry. Maximum average volume of inquiries was in the segment Technologies – 1.7 mln.RUB, while average volume per all projects – 600 thousand RUB.

 

 


4. Crowdinvesting


Crowdinvesting is the youngest segment of the market – first platforms appeared only in 2014. Less than for the year total turnover of collected funds via platforms was 50 - 60 mln.RUB.


Nowadays, there are three key market players: StartTrack, WeShare and VCStart.


Starttrack platform was developed close to the classical crowdinvesting platforms – made by IIDF based on syndicated investments by business-angels model. Same model is used by American platform AngelList. Average share in projects placed on Starttrack, which founders are ready to transfer to investors, is 20%.


WeShare specializes on attraction of investments for BMS: cafes, restaurants, printing-office services etc.


Maximum number of projects placed on VCstart, but the largest finance volume is not more than 5 - 7%.

 

 

 

  • Total number of projects – 36
  • Number of registered investors – 199 people with the total investment potential – 22.3 mln USD.
  • Seed stage prevails in the rounds’ structure.
  • According to the survey, conducted by the platform, more often investors are ready to invest in the project till 50 (33%) or till 100 (24%) thousand USD. Meanwhile, 23% of the surveyed do not consider volume of investments over 3 thousand USD.

 

 

 

  • Total number of available projects – 11
  • Number of registered investors - 4 704 people
  • Min.volume of investments - 50 RUB
  • Volume of required funds – 11.3 mln RUB – ongoing projects; 14.7 mln RUB including successfully finalized projects.
  • Volume of collected funds – 5,79 mln RUB – ongoing projects; 7.22 mln RUB - including successfully finalized projects.

 

 

  • Total number of available projects - 115
  • Volume of required funds – $7.7 mln USD
  • Volume of collected funds - $0.2 mln USD
  • Number of completed investments – 2.6 thousand
  • Average amount per investment - $65
  • The most frequently added projects on the platform are in the categories – Services, Apps and Social Networks.

 

5. Crowdlending

According to J’son & Partners Consulting, crowdlending is the major segment of crowdfinance market of 400 - 440 mln RUB or 66% market share. VDolg.ru and Webmeny Transfer system take major market share. Positive moment is an appearance of new market players such as Fingooroo (2014). Besides, due to the early stage of market development and the process of finding optimal business model is still on, some market players leave the market or “freeze” their activity.


According to J’son & Partners Consulting, there are the following operating platforms at the moment:

 

  • VDolg
  • WebMoney
  • Fingoroo
  • Loanberry
  • Credberry

 

An important event for the industry became the launch of VDolg.ru platform – opportunity automatically form investment portfolio for investors, which obviously increases investment attractiveness.

 

Taking into consideration available information, average volume of provided loans on the crowdlending market is lying in the range of 10-20 thousand RUB, average interest rate is 0.5 - 1.5% per day. At the same time, market is still on the early development stage, which is why J’son & Partners Consulting experts consider that these indicators can vary and change with a time.

 

It is possible to mark the following pre-requisites for active crowdlending market development in Russia:

 

1) Active development of micro-crediting with ultra-high interest rate. Result – increasing share of overdue debts, which is over 20% currently, worsening of credit history and necessity to refinance debts.
2) Decreasing banking activity on credit market and sever terms to receive consumer loans.
3) Difficult access to credit funds of small and average business.
4) Low yield of traditional conservative instruments, such as deposits.

 

There are also some serious barriers constraining the market development, such as:

 

• High interest rates, comparable to micro-financing organizations;
• Lack of legislation
• Low level of people awareness and potential investors.

 

Based on barriers’ influence on the market, J'son & Partners Consulting prepared several scenarios of market development. In accordance with optimistic scenario, exponential market growth will start in 2015. The following factors could help:

 

• Lower interest rates (lower than provided by micro-financial organizations – MFO);
• New services (possibly, based on MFO);
• Stronger position of scoring system (lower risks and decreasing share of “bad” credits);
• Population should get used to this and increase its trust towards new instruments;
• Legislation;
• New investors.

 

6. Expert Opinions

In terms of the research, J'son & Partners Consulting’s specialists have surveyed key market participants regarding the development of crowdfinance in Russia


Ruslan Tugushev,
Founder of Boomstarter – Crowdfunding platform


Why crowdfunding is attractive?

Projects with final goal are interesting for people, something that they can buy in general shops.
There are preferences in every category.


Just imagine the shop with goods and services, which hadn’t been yet launched on the market, but you can already purchase or order them. Besides, there are special offers, which are not presented in general shops.


Can you buy a book with author’s signature or with your name in the text in a general shop?


Can you buy a gadget 3 - 6 month before official sales will start?


Can you possess special attributes in a videogame, which only you can have?


How can you be a part of movies production, which you like? To be in the shot or titles and not spending millions on this?


All this and many more can be achieved via crowdfunding platforms.

 

Irina Lilenko, CrowdAll Conference Organizer


What are benefits of crowdfunding for projects’ initiators?


Crowdfunding is an effective instrument to check the idea among public. It helps to get answers on various important, for any project, questions.


First of all is a testing of ideas’ viability. If people ready to vote for your idea by investing money, it means it is interesting or useful or both.


Second of all, project’s author receives estimation as project’s manager. Can he set tasks for himself and fulfill them without any monitoring from the director, for example. Can he be one-man band (marketing, sales, copywriting, and analysis) in order persuasive and for a long time promoting his project?


I think the development of crowdfunding in Russia also facilitates the development of public social activity. Developers of ideas receive one-meaning signal from population about their needs and preferences.


Konstantin Shabalin, CEO,
Crowdinvesting platform StartTrack

What is your estimation of crowdinvesting influence on venture capital market in Russia?


Convenient and legitimate financial instrument - crowdinvesting will allow to attract enough funds in order to change the existed venture market structure in Russia.


Balanced investors’ risks and founders of business projects will help to get necessary funds much faster and more systematically, as it is right now, by creating clear early stages investment market. Crowdinvesting – is a new, and now already very understandable and necessary stage of financial markets development.

 

 

 

 


Olga Svyatchenko,
CEO, Crowdlending platform Fingoroo

 

1) How do you estimate crowdlending market in Russia?


We feel like market is far away from saturation. The service attracts attention from creditors and lenders. We must to admit that the service is new and some lenders (who usually used IFI) do not understand from the beginning that it is possible not only take but also give money via the service.


2) What factors stimulate development of this segment?


- the continuous cancellation of crediting programs in banks together with worsening of population’s financial situation force banks to make the process of borrowers selection more severe. Near prime segment is appearing on the market – those who have a habit to live on loans.
- Desire to get passive income is increasing, especially when income level is dropping from main working place.
- Common efforts to promote P2P idea among the mass media.

3) How Russian crowdlending market differs from foreign?
American mature market can allow having the rate higher or lower than the banking rate, in Russia this rate is surely only higher. We can already see the trend – creditors are ready to accept lower income level with partial decrease of the risk level.

 


Alexander Timofeev,
Managing Partner, Crowdinvesting platform WeShare


How do you estimate crowdinvesting development in Russia?
Crowdfunding, same as crowdinvesting – are relatively new definitions in Russia. The level of awareness of business society about new financial instrument is very low, major part of them does not know about crowdfunding and its benefits and business opportunities.
During working process with currently ongoing and start-up projects, we face not only the not-understanding of crowdfunding and crowdinvesting platforms, but with elemental financial illiteracy, lack of business planning, inability to work with credit and investment money resources. It is interesting that major small business owners are not ready to use credit instruments till the moment of bankruptcy, and to attract investors only when an opportunity to get the loan is out of question.
This situation leads to the fact that almost 99% needs to get information about modern use of any of financial instruments, we have to consult them also about legal and tax aspects and provide min education about basic business evaluation and financial planning.
However, despite the difficulties with attracting projects, we would like to mark high interest towards such types of platforms among business society. Almost 80% of businessmen, who understood the crowdfunding mechanism, and its perspectives for business, make a decision to cooperate with crowd-platform. On decision making process influences not only the availability to work with long and cheap money but also the desire to test new sales channel, pass the market test by receiving feedback from current clients and future product’s consumers, increase brand recognition, and also to get an image of open and public company.

 


7. Crowdsourcing in Russia: prepared by Crowdsourcing.ru

Crowdsourcing and especially social projects have been actively developing last years in Russia. Such projects as those, which are being initiated by non-commercial organizations and government authorities, are gaining its value. People try to take the active civil position, participate in discussion of solutions and offer different ideas. Government authorities consider it is very important to use opportunities and ideas of population as an initiative for solving public tasks. Among them are budgeting and its consumption. Local authorities determine cost items but local citizens can also participate in selection of prior budgeted costs. The budget, made with the help of population is now called Participatory Budgeting. Population involvement in budget spending has a range of advantages.


For people is a good opportunity to evaluate the clearness in budgeting process. And the most important – is an opportunity to participate in the prior financing directions and development of the certain territory. Local authorities also gain from this cooperation – this allows managing the conversation between the government and population, opportunity to discuss the necessary measures, based on the voice of the active part of population.


The most popular definitions in Russia are “public” or “open” budget. According to the Crowdsoursing Map, projects which include information about budget spending, major authorities called open, but projects with the use of crowdsourcing are being called public.


There are not so many “public budget” projects in Russia – no more than 3 - 4 from 197 crowdprojects.


Such “un-popularity” is being explained as budgeting is a very complicated procedure and not that interesting to major citizens, and general citizen is not an expert for authorities, who can evaluate real financial results in terms of receiving profit.


According to forecasts, the number of such projects in Russia regions will grow and crowdsourcing will be used in terms of budget cost items negotiations regarding provision of urban amenities.


There are three successful cases in Russian regions which should be researched.


According to the Crowdsourcing Map’s authors, first project appeared in Astrakhan in 2012. The main point of the project – is that part of budgeted money will be spent on the necessities and goals, identified by citizens. Each citizen will know how much money is being spend on the certain object, what works are being handled and when they will be finished. There is an electronic city map on the portal, where it is possible to add a new suggestion or to vote for the existed one. The project was implemented as electronic city map on the city official web-site.


Among the most prior projects are roads reconditioning as well as rail ways, construction of special places for children and park zones reconstruction, construction of child care medical center and reconstruction of Culture Center.
“Public Budget” Project in Tula region is a leader by attraction of participants and investments – is also a crowdsourcing project. Tula region governor provided 300 mln.RUB in 2014 for the public budget project. Citizens got a chance to implement the widest range of projects: renovation of roofs of living houses, water pipes and heating systems, recreational development, construction and renovation of roads, memorial complexes, cultural centers, park zones and others.
During the regional competition with the use of scores system, which provides the objectiveness of the selection, winning projects are being chosen. There are no limits by number of wining projects per city, max amount per project for the urban city – 3 mln RUB, for rural cities – 2 mln RUB. The key and the most important peculiarity of this project is the fact that budgeted funds are being provided only on terms of co-financing by population, local authorities and sponsors. Other words, this project can be distinguished as crowdfunding project.


Results of the year: 588 inquiries passed among 1000 registered, the total volume of financing was 375 mln RUB.


A little bit different form public budget project implementation was chosen in Yakutsk. Initiatives aimed at overall development of Yakuts are being chosen with the help of crowdsourcing portal OneClickYakutsk. The best initiatives according to the voting and competitive selection will receive support from the City Administration. The project, which was launched in 2014 had collected 184 initiatives in a very short time. 47 grants for over 30 mln RUB had been allocated by Yakutsk’s city authorities. In Yakutsk, same as in Tula, key participation in public budget principle – is co-financing not only by local government, but also by sponsors – legal entities and individuals. 20% of the total project’s amount should be provided by population and sponsors. The project is expecting a range of novelties in the coming year. For example, allocation of grants, public control over winners-projects implementation will be fulfilled by Public Chamber of Yakuts. In case initiatives are not implemented, the initiator will be obliged to return the grant.


Population’s interest towards public budget shows that the use of crowdsourcing elements in the territories’ development will be the most developed in the coming years. The projects’ implementation experience revealed the problems: from the methodology of how to attract people till the active co-financing and investing in such projects. Business representatives do not participate widely. But exactly such steps by government authorities, population and business – is an opportunity to make an impact in review and acceptance of financial solutions on prior questions.


8. Content of the Full Version of the Research: Russian and Global Crowdfinance Markets, 2014 - 2018

Module 1. Crowdfunding
1. Introduction
2. Methodology and Definitions
3. Global Crowdfunding Market: Current State and Forecast, $, 2013 - 2018
4. USA
4.1. Market estimation and forecast
4.2. Profiles of largest companies
4.2.1. Profile Kickstarter
4.2.2. Profile …
4.2.3. Profile …
4.2.4. Profile …
4.2.5. Profile …
4.2.6. Others
4.3. Currently ongoing business-models
4.4. Crowdfunding legislation
5. UK
5.1. Market estimation and forecast
5.2. Profiles of largest companies
5.2.1. Profile Crowdfunder.co.uk
5.2.2. Profile …
5.2.3. Profile …
5.2.4. Profile …
5.2.5. Others
5.3. Currently ongoing business-models
5.4. Crowdfunding legislation
6. China
6.1. Market estimation and forecast
6.2. Profiles of largest companies
6.2.1. Profile DemoHour
6.2.2. Profile …
6.2.3. Profile …
6.2.4. Profile …
6.2.5. Profile …
6.2.6. Others
6.3. Currently ongoing business-models
6.4. Crowdfunding legislation
7. EU
7.1. Market estimation and forecast
7.2. Profiles of largest companies
7.2.1. Profile OurCrowd
7.2.2. Profile …
7.2.3. Profile …
7.2.4. Profile …
7.2.5. Profile …
7.2.6. Others
7.3. Currently ongoing business-models
7.4. Crowdfunding legislation
8. International projects
9. Industry investment attractiveness
10. Russia
10.1. Market estimation and forecast
10.2. Legislation
10.3. Profiles of largest companies
10.3.1. Profile Planeta.ru
10.3.2. Profile …
10.3.3. Profile …
10.4. Trends and Tendencies
11. Conclusion

 

Module 2. Crowdinvesting

1. Introduction
2. Methodology and Definitions
3. Global Crowdinvesting: Current State and Forecast, $, 2013 - 2018
4. USA
4.1. Current estimation and market structure
4.2. Profiles of largest companies
4.2.1. Profile AngelList
4.2.2. Profile …
4.2.3. Profile …
4.2.4. Profile …
4.2.5. Profile …
4.2.6. Others
4.3. Currently ongoing business-models
4.4. Crowdinvesting legislation in USA
5. UK
5.1. Current estimation and market structure
5.2. Profiles of largest companies
5.2.1. Profile Crowdcube
5.2.2. Profile …
5.2.3. Profile …
5.2.4. Profile …
5.2.5. Profile …
5.2.6. Others
5.3. Currently ongoing business-models
5.4. Crowdinvesting legislation in UK
6. China
6.1. Current estimation and market structure
6.2. Profiles of largest companies
6.2.1. Profile AngelCrunch
6.2.2. Profile …
6.2.3. Others
6.3. Currently ongoing business-models
6.4. Crowdinvesting legislation
7. EU
7.1. Current estimation and market structure
7.2. Profiles of European market leaders
7.2.1. Profile WiSeed (France)
7.2.2. Profile …
7.2.3. Profile …
7.2.4. Profile …
7.2.5. Profile …
7.2.6. Profile …
7.2.7. Profile …
7.2.8. Others
7.3. Currently ongoing business-models
7.4. Crowdinvesting legislation
8. International Projects
9. Industry investment attractiveness
10. Russia
10.1. Market estimation and forecasts
10.2. Legislation
10.3. Profiles of key market players in Russia
10.3.1. Profile Starttrack
10.3.2. Profile …
10.3.3. Profile …
10.4. Trends and Tendencies
11. Conclusions

 

Module 3. Crowdlending

1. Introduction
2. Methodology and Definitions
3. Peer-to-peer lending: current market state and forecast, $, 2013 - 2018
3.1. Global Market
3.1.1. USA
3.1.1.1. Profiles of the largest market players in USA
3.1.1.2. Crowdlending legislation in USA
3.1.2. UK
3.1.2.1. TOP-5 market players’ profiles
3.1.2.2. Crowdlending legislation in UK
3.1.3. China
3.1.4. Other countries
3.1.4.1. Australia
3.1.4.2. Brazil
3.1.4.3. Germany
3.1.4.4. Holland
3.1.4.5. Italy
3.1.4.6. Spain
3.1.4.7. Poland
3.1.4.8. France
3.1.4.9. Switzerland
3.1.4.10. Sweden
3.1.4.11. Estonia
3.1.4.12. UAE
3.1.4.13. International projects
3.1.5. Industry investment attractiveness
3.2. Russia
3.2.1. Market estimation and forecasts
3.2.2. Legislation
3.2.3. Key players’ profiles
4. Conclusion

__________________________________________________________________

Interviews and TV-Programs with industry experts had been used during preparation of the Report:

CrowdAll Conference, Irina Lilenko:
http://json.tv/ict_video_watch/crowdmap14-irina-lilenko-predsedatel-orgkomiteta-foruma
http://json.tv/ict_video_watch/ekspertnyy-razgovor-vypusk-4-irina-lilenko-kraudsorsing-i-kraudfanding-v-rossii-i-mire-2014091211501236

Crowdlending Platform Fingoroo, Olga Svyatchenko:
http://json.tv/ict_video_watch/buduschee-gde-to-ryadom-gost-studii-olga-svyatchenko-fingooroo-2014082511173781

Crowdinvesting Platform WeShare, Alexander Timofeev:
http://json.tv/ict_video_watch/buduschee-gde-to-ryadom-aleksandr-timofeev-weshare-razvitie-kraudinvestinga-v-rossii-20141216082127

 

We would like to express our gratitude and respect to the following companies and its representatives: 

Boomstarter (Ruslan Tugushev, Founder)
CrowdAll (Irina Lilenko, Conference Organizer)
StartTrack (Konstantin Shabalin, CEO)
Fingoroo (Olga Svyatchenko, CEO)
WeShare (Aleksander Timofeev, Managing Partner)

for cooperation and participation in the data provision, preparation of the current Report and TV-Programs about Crowdfinance

 

 

This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.