Digital Capital Raising - Estonia

The country in Estonia is projected to reach a total transaction value of US$3.46m in the Digital Capital Raising market market by 2024.
In this market, MarketCrowdlending (Business) is expected to dominate with a projected total transaction value of US$1.65m in 2024.
When compared globally, the United States leads with the highest cumulated transaction value of US$36bn in 2024.
Estonia is emerging as a hub for digital capital raising, leveraging its advanced e-governance infrastructure and proactive regulatory environment.

Definition:

The Digital Caiptal Raising segment relates to digital financial services for business customers, and private borrowers. Included are Crowdinvesting models, which focus particularly on start-ups exchanging investment for company shares (equity-based), and Crowdfunding solutions, which are used for non-monetary compensation, for example product launches, music, art & film financing (reward-based). The market also includes bank-independent loan allocation for SMEs (Crowdlending) and for personal loans (Marketplace Lending or so-called Peer-to-Peer lending) through private or institutional investors via online platforms. In view of processing complexity, this market is focused on small and medium-sized enterprises (SMEs), freelancers and private persons. Bank financing is not considered, neither are any financial aspects that reach beyond the scope of small and medium-sized enterprises or donation-based Crowdfunding models.

Structure:

Digital Capital Raising consists of Reward-Based Crowdfunding, Crowdinvesting, Crowdlending and Marketplace Lending.

Additional Information:

The market comprises of transaction values, campaigns, average funding per campaign.

Alternative financing for SMEs and freelancers
Equity-based Crowdfunding (or Crowdinvesting)
Reward-based Crowdfunding (or Crowdfunding)
Alternative lending for SMEs and freelancers (bank-independent loans)
Online marketplaces for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Traditional bank loans
Traditional venture capital investments by institutional or private investors

The Digital Capital Raising market in Estonia has been experiencing significant growth in recent years, driven by various factors such as customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Estonian customers have shown a strong preference for digital capital raising platforms due to their convenience and accessibility. The ease of accessing and investing in digital assets has attracted a large number of retail investors, who are looking for alternative investment opportunities. Additionally, the younger generation in Estonia, who are more tech-savvy, are increasingly turning to digital platforms for capital raising, further driving the growth of the market.

Trends in the market: One of the key trends in the Digital Capital Raising market in Estonia is the rise of crowdfunding platforms. These platforms allow individuals and businesses to raise capital from a large number of investors, often through small contributions. This trend has gained traction in Estonia due to its ability to democratize access to capital, particularly for startups and small businesses. The government has also been supportive of this trend, implementing regulations that promote crowdfunding as a means of capital raising. Another trend in the market is the emergence of blockchain-based capital raising platforms. Blockchain technology provides a secure and transparent way of raising capital, which has gained the trust of investors. Estonia, known for its advanced digital infrastructure and e-governance initiatives, is well-positioned to embrace blockchain technology in the capital raising market. This trend has attracted both local and international investors, further fueling the growth of the market.

Local special circumstances: Estonia's small size and close-knit business community have created a favorable environment for digital capital raising. The country has a strong entrepreneurial culture, with a high number of startups and innovative businesses. This, coupled with a supportive regulatory framework, has made Estonia an attractive destination for digital capital raising. The government has implemented policies to encourage innovation and entrepreneurship, providing tax incentives and grants to startups and small businesses. These special circumstances have contributed to the growth of the Digital Capital Raising market in Estonia.

Underlying macroeconomic factors: Estonia's strong economic performance and stable political environment have provided a solid foundation for the growth of the Digital Capital Raising market. The country has experienced steady economic growth, driven by sectors such as information technology, e-commerce, and digital services. This has created a favorable investment climate, attracting both domestic and international investors. Additionally, Estonia's membership in the European Union and its adoption of the euro as its currency have provided stability and credibility to the market, further boosting investor confidence. In conclusion, the Digital Capital Raising market in Estonia is experiencing significant growth due to customer preferences for digital platforms, market trends such as crowdfunding and blockchain-based platforms, local special circumstances including a supportive regulatory framework and a strong entrepreneurial culture, and underlying macroeconomic factors such as Estonia's strong economic performance and stable political environment. These factors combined have created a thriving market for digital capital raising in Estonia.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.