Crowdfunding – how to harness the power of the crowd?

Anna Wojciechowska

by Anna Wojciechowska LL.M. legal counsel and head of the German Desk at WKB Wierciński Kwieciński Baehr law firm
There is no doubt that the popularity of crowdfunding is constantly growing, directly connecting those who can give, lend or invest money with those who need financing for a specific project. Since the financial crisis and due to the subsequent difficulties in obtaining financial support from a bank, crowdfunding is gaining importance and is becoming an attractive alternative for financing a business.

What is crowdfunding actually?
Crowdfunding can be defined as a collective effort of many individuals who network and pool their resources, usually via or with the help of the internet, to support efforts initiated by other people or organizations. Entrepreneurs’ projects and businesses are financed with small contributions from a large number of individuals. Currently, four types of crowdfunding are distinguished and used in practice: donation-based (people donate money to a given project and are not promised anything in return), reward-based (in exchange for contributions people get some products or services), equity-based (transferred money is exchanged for shares or a small stake in the business, project or venture) and lending-based crowdfunding (campaigners take the position of borrowers and contributors act as lenders).

Polish crowdfunding grows in strength
Crowdfunding is gaining momentum all over the world and Poland is providing its own examples for this phenomenon as well. About 12 crowdfunding platforms, both equity-based and non-equity-based, are now active in Poland and are achieving significant successes in their activities. Despite the fact that all platforms declare an openness to all types of projects, we can observe a focus on specific thematic categories. For example, engages mainly in sport projects, attaches great importance to games, focuses on cultural projects and supports only fundraising for charitable and social purposes. One of the most interesting initiatives on the Polish crowdfunding market appeared recently on By means of equity-based crowdfunding, InPay (supplier of payment solutions with crypto-currency Bitcoin) is conducting a public offering of shares, allowing anyone interested to invest. The company plans to raise PLN 200,000 offering 5 percent of shares. A similar form was also used for the first Polish equity-based crowdfunding project for Beesfund (owner of the platform).

Change for the better
For a long time, the development of crowdfunding in Poland encountered considerable difficulties. The provisions were not adapted to the new reality and the former Act of 1933 on public fundraising, if not explicitly prohibited such financing, certainly stifled its growth.

In 2014, the European Commission launched a consultation document clearly supporting the idea of social financing as a stimulus for the EU economy. It constituted a direct incentive for the Polish government to change anachronistic laws and facilitate the development of crowdfunding platforms by way of adopting a new act on public fundraising. According to the new regulation, fundraising by means of money transfers through SMS or a bank transfer (including online transactions) do not fall within the scope of the act. However, equity-based crowdfunding, regulated restrictively by the Act on Public Offering and Conditions Governing the Introduction of Financial Instruments to Organized Trading and Public Companies, still faces some difficulties. Whereas conducting a public offering of up to €100,000 is rather not burdensome, a public offering of more than €100,000 requires a prospectus, approval by the Polish Financial Supervision Authority and making it available to the public. Despite some imperfections of the Polish legal system, it seems worthwhile to face the crowdfunding challenge and exploit its potential as an investor or as an initiator.

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