Impact Story
F4D Supports Crowdfunding for Startups and SMEs in Albania
Investment-based crowdfunding is an alternative finance solution that can address financing gaps not addressed by regulated capital markets and venture capital/private equity funds. It is typically offered through a fintech platform business model that connects investors with small businesses looking to raise capital or borrow by issuing securities to the “crowd.” Crowdfunding helps enable small businesses to reach out to many potential investors and offer investments in their companies.
In Albania, Finance for Development (F4D) Umbrella Program supports a multi-year program Enhancing Access to Green and Innovative Finance and Strengthening Supervision of Non-bank Financial Sector, generously funded by Swiss State Secretariat for Economic Affairs (SECO). One of its components aims to support the Albanian authorities in introducing a regulatory framework for crowdfunding activities. Such regulatory framework development is one of the key objectives of Albania’s Business Investment & Development Strategy (BIDS) 2021 – 2027, aiming to enhance availability of products tailored for MSMEs, start-ups and innovative companies, including risk sharing instruments, crowdfunding, angel investors, among other priorities.
As part of the World Bank’s Technical Assistance, the teams help authorities to draft the necessary legal and regulatory solutions and provide capacity-building and awareness-raising workshops to the authorities. This initiative is set to play a pivotal role in shaping a robust regulatory framework for crowdfunding activities in the country.
A recent workshop, organized by the World Bank team for the Albanian authorities, delved into the opportunities crowdfunding as an innovative financing option for startups and SMEs in Albania. World Bank engaged with participants with a focus on essential elements for a regulatory framework and assessing the market potential for crowdfunding in Albania. The 18-month project will focus on crafting regulations and bolstering the Albanian authorities' capabilities in this domain.
Attendees included representatives from key ministries, financial regulators, fintechs, startups, and private sector stakeholders. Discussions highlighted the need to engage institutional investors, improve data access for risk assessment, address brain drain, and develop practical regulations that mitigate money laundering risks. Additional topics included the Financial Supervisory Authority’s potential oversight role, the integration of angel investors into the regulations, and learning from the slower pace of Albania’s stock market development.