2013-10-27 14:04:55 - Urbanara GmbH, is an online retailer for household products and will be the first to complete the crowd funding process on Bergfürst, with their offering closing in just a few days time. Currently, they’re on target to raise approximately €3 million, setting them up nicely for further corporate developments.
Bergfürst is a name that will soon be on the lips of many entrepreneurs in Europe. In the wake of initiatives like the Elite programme run by the Borsa Italiana, Bergfürst is a new crowd funding market place based in Berlin, Germany, which is boldly moving into uncharted waters for European regulators, with a fully electronic trading platform, accessed online by retail investors.
Bergfürst is a meeting place for entrepreneurs and retail investors, enabling both parties to circumvent banks and other more established institutions who would normally play a part in this type of transaction. For as little as €250, investors can become shareholders in early-stage companies, with a flat fee of five euros for all transactions.
Their business model is
to reduce many of the overheads associated with the retail model, by sourcing outstanding products from small producers all over the world, making them available online. In this way, design, warehousing, retail space and other elements are entirely dispensed with, giving customers great deals and investors a profitable business model. The company was formed in 2010, and on the back of recent developments, an IPO in the next five years may not be out of the question.
Investors are encouraged to carry out their own research on a specific investment, but a comprehensive information package is published by the company, including a BaFin authorised prospectus and a video explaining in detail the nature of the investment. Once an investment has been made, the investor becomes a shareholder in the company with a one-to-one voting right according to the number of shares held. By participating, investors accept the risks associated with an early stage company, and neither Bergfürst nor the company receiving investment monies offers a guarantee. In reality, this is an attractive business model, allowing adult taxpayers to decide for themselves exactly how they wish to use the money and which company they feel is sufficiently attractive to merit their attention.
In this way, many of the regulatory issues faced by companies listing on a more established stock exchange are sidestepped. Although new, Bergfürst seems to be filling an important niche in the market. The closure of the First Quotation Board on the Frankfurt stock exchange in December 2012 essentially meant that startups and early stage companies had virtually nowhere to turn to in Germany. Many have sought alternatives such as the GXG Markets in London or the NYSE Euronext in Paris, in an attempt to find the capital they’re looking for.
Bergfürst comes at a time when many more established players in the market are themselves developing new offerings for entrepreneurs with early-stage companies, streamlining regulation and helping them to raise capital that would traditionally have been offered by the banking system. The London stock exchange this year created new opportunities in its market, with a slim down listing requirement for early stage companies. In May 2013, the NYSE Euronext in Paris established the EnterNext programme. Whilst Deutsche Börse, owners of the Frankfurt stock exchange, must still be scratching their heads over the demise of the First Quotation Board, if they are to maintain their position in the market, they must surely be thinking of a similar change in their market, in light of developments in London, Rome and Paris.
This space has become an interesting one to watch, as across Europe, governments are increasingly turning to small business growth to support flagging economies. Stock exchanges themselves have identified a need to expand their markets in order to maintain market share, which has resulted in a number of mergers and acquisitions, with the Borsa Italiana now being owned by the London Stock Exchange Group. With Internet-based technology now being widely available in people's pockets, it would seem that the Bergfürst model could teach some of the larger players in the market a few lessons. That's often the way, when a fresh approach is taken, pushing aside the established norms and getting back to the essence of the business. Urbanara has achieved this in their business model, and Bergfürst in theirs. We shall watch with interest developments in this sector and update readers in the coming weeks.