Episode 2 – Beyond Borders: Learning from EU ECSPR to Build Global Crowdfunding Passports

Theme: Unified Global Ecosystem / Passporting
Moderator: Karsten Wenzlaff (Secretary General, Digital Invest Germany; German Crowdfunding Association; GECA Steering Committee)
Panelists: Benoît Collas (Enerfip Group); Aaron Shafton (DealMaker Securities); Honish Zaveri (Kiani Ventures)

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Moderator — Karsten Wenzlaff
Secretary General of the German Crowdfunding Association and board member of the European Digital Finance Association. A GECA steering committee member, Karsten helped shape the EU’s ECSPR framework and advises regulators globally on digital finance and crowdfunding policy.

Benoît (Ben) Collas — Enerfip
Cross-border lead at Enerfip, one of Europe’s leading renewable-energy crowdfunding platforms and among the first ECSPR-licensed in France. Ben brings an energy-industry background and hands-on experience rolling out ECSPR operations in Spain, France and Italy, including investor tax and disclosure localization.

Aaron Shafton — DealMaker Securities (USA)
Managing Director at DealMaker Securities, where he helps issuers run Reg CF, Reg A and Reg D raises at scale. Aaron specializes in cross-border mechanics between the U.S. and Canada, disclosure standardization, and founder readiness for retail offerings.

Honish Zaveri — Kiani Ventures (India)
Partner at Kiani Ventures and active angel investor. A serial entrepreneur, Honish operates syndicates that back early-stage tech across India and abroad, navigating SEBI rules, accredited-investor thresholds and emerging pathways for global participation.

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Andrew: Hello everyone. Welcome to our Architects of Change Think Tank series, a series of five round table discussions, all with subjects that aligned with one of the GECA core pillars. Now, GECA stands for Global Equity Crowdfunding Alliance, and all of our supporters share one vision, which is a truly borderless global equity crowdfunding ecosystem.

One of the pillars that we have detailed in our manifesto is to strive for a unified global ecosystem. The notion that industry standards across the globe should be more aligned for the industry to be able to compete as a viable asset class. So this meeting digs a little deeper into that subject by looking at how the EU passport system works in practice, lessons learned pathways to extend mutual recognition models globally.

We’ve called it Beyond Borders, learning from EU ECSPR to build global crowdfunding passports. And that’s more than enough from me. I’d just like to introduce our moderator for today’s session. So he’s the man who’s going to guide our participants through the session. Please welcome Karsten Wenzlaff – Karsten’s a leading voice in digital finance and crowdfunding.

He’s Secretary General of the German Crowdfunding Association, a board member of the European Digital Finance Association, and most recently he’s also joined us here at GECA as a member of the steering committee. So Karsten’s been deeply involved in the design and implementation of the European crowdfunding service providers regulation or ECSPR, which is a landmark piece of legislation that aims to harmonize crowdfunding across Europe.

And this puts him in a perfect position to help us moderate this discussion. So welcome Karsten. Thanks very much for moderating and over to you to introduce the participants.

Karsten Wenzlaff: Yeah. Thanks so much, Andy. And I really want to thank you as well for bringing this all together and also putting all the efforts into GECA. I think it’s a really great forum. I think the vision is great and for me personally, it’s just great to learn about other parts of the world and how the equity crowdfunding ecosystem is developing and what’s necessary to get them, to get platforms to collaborate with each other, to build trust from the investor side, but also to have international projects on this platform. So that’s going to be very interesting for the panel today.

And passporting, I think is one of the issues which is getting a lot of attention recently, partially because as you mentioned, the European crowdfunding service provider regime, which essentially allows a platform to be licensed in one country and then offer to issuers to reach out to investors all across the European Union.

But at the same time, other regions in the world are also discussing how to make equity crowdfunding offers to be able to be used across borders – for instance, in Africa, the African FinTech Network recently hosted a panel as well on how passporting for FinTech licenses can be made possible. Several legislators in Asia are also talking about this, recognizing each other’s licenses, etc. We already have some examples of this.

And then of course in North America, I think it’s quite interesting to see how the different, the Jobs Act and they have been able to create this unified regulatory regime, which was before that was quite dis-harmonized. And essentially, for some securities regulation, it’s still a little bit dis-harmonized, but the Jobs Act and the Reg A regime has been able to, in my view, make the idea of crowdfunding across the American, across the United States, very viable. And so that would be interesting to see whether there is also passporting, for instance, for the Canadian neighbors, etc.

But so I have a really distinguished panel, which I’m very proud to have this conversation with today. From closest in terms of geography is Ben Collas, who works for the crowdfunding platform Enerfip. Enerfip is one of the leading crowdfunding platforms operating in the field of renewable energy. And has also has been, I think, one of the first platforms also to receive the license according to the ECSPR in France. Very active on the international scene. There’s a lot of collaborations going on between Enerfip and other platforms, which I think it’s very exciting. And so Ben, I really look forward to tell us about a little bit what is your experience in terms of reaching out to different investors, etc.

And also what this passporting means. You have a background coming also from the energy industry, originally before you joined Enerfip. So that would be really interesting to hear how that passporting regime, how the ECSPR regime is also make it interesting for institutional investors to co-invest alongside the retail investors.

And then we have Aaron Shafton is the manager director of DealMaker Securities in the USA. So Aaron, I really look forward to having you here because you have the experience of several, supporting platforms, building platforms, and also taking issuers on this journey because I think especially in the United States, when we look at the regime for equity crowdfunding, it puts a lot of requirements on the issue of securities. And so someone like you, you have been helping issuers trying to make sure that they are compliant with the different regulations.

And I think in, there’s a slight philosophical difference between the United States Securities Regulation and the European one, which is in the European one, you essentially, you can do what is in the law. And you try to be as compliant as possible. But in the American side, the American regulators will let you do, for a long time, they will let you do whatever you think might be working. But if they catch you doing something really bad, they will be on your toes and on your back very quickly. And so this is, I think, the main philosophical difference between United States and Europe. And so we’ll discuss that as well.

And then our last panelist, from India Honish is joining us, and he’s a partner at Kiani Ventures, and that’s a platform which is based in India. And also, Honish is a very active angel investor, who has been a serial entrepreneur also in the area of supporting early stage ventures. And that is interesting as well, I think from the point of view, to see, to get the perspective from India.

Because India, in my view from Europe, is an interesting case of equity crowdfunding because we do have this large lending platforms, which had some issues in terms of regulation, etc. But equity crowdfunding from what I’ve seen, is now just catching up to the large SME lending platforms. But it’s needed a lot because we are creating a new generation of angel investors through these equity crowdfunding platforms because people are starting with small amounts. Small tickets, but they are becoming angel investor soon. So I think that journey is really interesting for to also compare the different perspectives.

Alright, let’s dive in. So passporting in the European Union experience, of course, means that essentially you are, you don’t need to go to all of the European Union member states in order to be allowed to do, to operate the platform. And this is, was one of the biggest selling points for the ECSPR. Maybe we’ll start with you, Ben. What do you think from the platform perspective at Enerfip? What was, is that the biggest benefit that you are looking at from on the ECSPR and what it provided to you? Or was it regulatory clarity or was it the possibility to have an improved regulatory regime? But so what is, from your point of view, the most beneficial aspect of the ECSPR?

Benoît Collas: Good evening, Karsten. Thanks for the introduction. So let’s say that I’m a baby of the European crowdfunding agreements. I joined Enerfip as soon as the rule was over. So I just happened at that time. Let’s say I’m a baby. I used to work a lot with crowdfunding before I was already a client of Enerfip. I know quite well, but it was only like French regulation. So everything was blocked on the border of France.

Then came that license and I joined exactly at that time. The objective was, market was fine for being active in France. Objective was, okay, let’s go somewhere else. And licensing was perfect for us. So we said let’s start to work in Spain. And in the meantime, let’s start to get this new licensing. So we open an office in Spain, in Madrid. And at the same time we spent maybe six months to get the license. And we said, okay, it’s okay for us.

We were expecting with this harmonization to get everything easy, one process for Spain, France, Netherland, whatever. And as soon as we really started operating in Spain, we said, no, it’s totally different. So for us it was, let’s say that first three to six months we had to understand. But because even if we were working with these agreements at the end. There were so many new rules to respect in Spain. All issuing process was totally different and we had a lot of issues at the beginning and we succeed to make it. But for us, beginning was a half. And then shift to a real success after one year of operation. We get the first deal made and we continue.

So let’s say that even if we have this nice paper saying everything is the same in the 20 plus countries of Europe, you really need to continue to check what is here in each country. Fine. We can address to much more investor than before, but in the meantime, it remains a lot of constraints. For example, I’m, we currently have project in France, Spain, and Italy. So our idea is to make them cross-border because it’s, we have been working in France for 10 years, so the idea is to make our investor cross France to invest in Spain. Nice idea. But taxation is super complicated. Each country remains with this initial regulation for taxation, and even with a nice crowdfunding agreement, nothing changed so far. Yeah. Okay, people can invest everywhere. But us as a crowdfunding provider, we definitely need to educate them to say, okay, you want to invest, but this is how you do it. Look, this is this boring, like tax documents that you need to fulfill. You need also to withdraw whatever percent of your interest and so on. Yeah. So it has been a real challenge and we said, okay, if we don’t want to take this tax challenge forget the European market. Okay. And we try and succeed.

Karsten Wenzlaff: This is actually, I think it’s interesting for all international audience as well, because with the European license essentially, there are still things which have to be taken care of on the local level as well. So you have to respect, like you mentioned, Ben tax laws, you have to respect local consumer protection laws. You also have to, maybe put your offering documents, the key investment information sheet. You have to, you can choose if you want to put it in a local language. So maybe just on that specific question, Ben, could you let me know, like for the offering that you have right now on the platform, do you put this into, for instance, into English language or do you offer the key investment information sheet in Italian, French, and Spanish which includes all the information there? How do you deal with that challenge?

Benoît Collas: There’s several aspects. The first one is the legal one. Legally speaking, we are forced to publish or some key documents in the language that we want to market. So let’s say if I want to go to Spain, I can speak in English because countries say if you want to work in my country, let’s say France, you must speak French. But some country like Spain they said, you must speak Spanish or English. Okay, so each country establish a list of acceptable languages. Sometimes it’s it’s like only one France, for example, and sometimes it’s several languages. As I said, with Spain. I see.

So let’s say that we try to, we respect the rules and as soon as we market in Spain, we speak not English. I was kidding. But Spanish, and as soon as we go to a country, we try to be close to the language, and it’s not because we have a business of like trust. And for us, we try to have some point of contact. It’s in each country we operate. And we ask them to have a nice publication in their own language, native language in order to show what the quality is here and trust can be given. So this is always the mix what is legally possible and what we think is good for our investors.

Karsten Wenzlaff: Interesting. Thanks so much, Ben. So let’s move to the North American perspective. So Aaron, so with the Jobs Act and the Reg CF and Reg A regimes for offering securities, my impression from far away is that most of the offerings, which are on the American market, they stay being targeted to the North American investor base. So I don’t on the platforms, but just my perspective, I don’t see a lot of international offerings where there’s, for instance also people who could invest into projects outside of the United States, etc.

And my impression is that this is because the American investor base is, the North American investor base is very large and the Jobs Act has allowed essentially to address public offerings to retail investors and to equity investors all across the 50 US states. But maybe Aaron, could you take us a little bit into the topic of what the American equity crowdfund regulation achieved in terms of harmonizing securities offerings across the states? And then also your perspective on whether it’s, it has created maybe like a silo, like a closed shop, making it difficult for American equity crowdfunding platforms to collaborate with some outside of United States. What’s your opinion on that?

Aaron Shafton: I think it’s a great question and before answering it, I will just say thanks to everyone for having me and it’s a pleasure to be speaking with a bunch of experts from these different places in the big world we live in. It is really interesting thinking about the EU regime and the passport system in comparison and contrast to the US and to some extent, the Canadian market.

Karsten I think ultimately you’re correct passing of the Jobs Act. Transformative, obviously. What an understatement. Transformative for equity crowdfunding in the US, right? It creates the Reg CF exemption. It basically recreates the Reg A exemption. It makes it feasible to conduct an offering across the US. You still have to be aware in some cases of state security law. There’s our filings and disclosures and things to think about, but generally speaking, it’s much easier than it’s ever been to go out and raise from everyday people in every state across the country.

I think, as an observer from North America, when I look at, even the intricacy of the sum of the federal and state level laws in the US similarly in Canada, of the federal and kind of provincial level laws and the cross border ability, the EU passport is quite notable for its ambition and its direction, right? To take a bunch of neighboring companies with shared, but also different values. Have regulators actually create a unified and modern framework. It’s something we’d love to see even more of.

It is shockingly complicated to put together a cross-border US Canadian offering, for example, and I’m sure we’ll get into it in later questions, but you can have Canadian companies listed on US stock exchanges that find it difficult to do US retail offerings. A lot of progress has obviously been made, but I think there is a North Star we want to work back from. You want to make it easy and safe for founders to raise money from people across the world and for investors across the world to participate. And from a North American perspective, seeing what’s been done in the EU is a really remarkable North star.

Karsten Wenzlaff: So you mentioned briefly the Canadian perspective because let’s talk about this as well, because I think even much more than the United States and Canada, each province has almost created its own regulation for crowdfunding. If the, if I think. If that’s correct. So I think there’s a national law if I’m not mistaken, but what I hear from sometimes people who are using equity crowdfunding, they find it difficult that the regulation in Ontario might be completely different than let’s say in Saskatchewan or something like this. But I, maybe that’s something that will be interesting to see if that is the biggest hurdle already moving for instance, within Canada. Or as you said, being able to connect to both the US market and the Canadian market. If you’re an entrepreneur from Canada, what’s your perspective on that?

Aaron Shafton: Absolutely. I think you mentioned something earlier. There is a bit of a different, like almost philosophical perspective in the US versus Europe, call it North America versus Europe on the way we think about securities regulations and rules and while we don’t have to deeply analyze that, the outcome of that is that disclosures, requirements, formats are often like highly specific in nature, and the consequence of veering from that standard could be quite severe, right? You would never dream of doing that.

So there are lots of situations where, to your point, within Canada crowdfunding, let alone even a traditional private placement of securities, you’ll have different forms. People are filling out from one province to another to invest in ultimately the same offering. The formats can be wildly different. Between Canada and the US even the accounting standards for the same company could be different. And all of these things are all tiny cuts that add up to the ultimate injury that an issuer without tons of resources and like a really driven mission isn’t going to conduct across border offering. Maybe they’ll do one at a time, but a simultaneous offering to people across jurisdictions. If not done with the utmost care, it can be really challenging.

So I think there is a lot of room for that, and I think it’s something founders obviously want. At the end of the day, a founder who’s committed to raising capital from a community, from building a following, they’re going to be mostly agnostic to where that following comes from. They want it to be, they want to advocates, and the and they need the capital. So everything we can do as providers, as people who interface with our regulators to make it easier to do that, I think is a step in the right direction.

Karsten Wenzlaff: Very interesting. Alright, so let’s have the perspective from India. India, Honish. So you as an angel investor, of course, you properly source your deals from all across the Indian continent. But I want to ask you, first of all, maybe you can provide us also a little bit of feedback on how the Indian equity crowdfund regulation differentiates between the different Indian states, or provinces. Because what I have learned from in, from the regulation in India is that even though the federal government has provided some like a framework for that. But nevertheless, security regulation is also still, to some extent, something which the Indian provinces and are, have their stake it. So does that cause also some frictions for equity crowdfunding or are is the framework, the National Indian Framework for equity crowdfunding sufficiently harmonized?

Honish Zaveri: First and foremost, I would want to take this opportunity to say thanks for inviting me to this round table session. I think it’s, I think it’s great and I’m also learning a lot of new things now from you as well as GECA. So thanks a lot for this, giving me this opportunity.

In India, I think about eight to nine years ago, I believe we like we created this ecosystem of angel funds, basically. It’s still there. So there are angel funds. And then what this Angel funds are registered with the SEBI which is the equivalent of Security Exchange Commission in US. So SEBI is Indian equivalent of Securities Exchange Commission in US. And then they came out with certain regulations, SEBI the securities board and whoever wants to invest in startups, can get registered with these angel funds and they can do that.

So I also, at Kiani Ventures also, we do investments through our syndicate and via an angel fund. It ensures that not everybody’s on the captive having said that. So there, the states or if the state. So there’s a unified regulation, which has come up, which the government said, and it has, there’s a more detailed processes of forming angel funds. So at the state level, there are no separate rules or regulations for this thing.

Also one more thing is this is not, we do have regulations around angel funds, but there is no explicit regulation around equity crowdfunding. The Securities Exchange Board of India, which, it did come out with a consultation paper about few years ago on equity crowdfunding based on the Jobs Act, 2012. But then there was not much headway on that one. So currently angel investors, those who want to invest in early stage startups or even no, in early stage late stage startups, they essentially invest through angel funds, which are angel funds or angel certificate like us, which are registered with the securities board.

And also recently I think, what the government. In fact, what they’re trying to do, the securities board is trying to do is that they’re going in the reverse direction actually, unfortunately. Is that they have introduced this concept of accredited investors, which is now based on US. So one, it says that only those investors who reach a certain amount of income or net financial threshold only they can invest in startups via angel funds. So then you have to register.

Unfortunately, India, there is very few accredited investors. Not many people actually want to do that because they don’t want to disclose their financial information or income information. I think, industry evolving, I, we’re still like evolving. I don’t, we do require an equity crowdfunding, equity crowdfunding, some regulations around that. And yeah, I think this is one of the best platforms not to help put forward whatever case to the regulators and government.

Karsten Wenzlaff: Yeah. Interesting. And so you mentioned, okay, the situation in India. Just to clarify also, if they invest into a syndicate, what is the ticket size, the minimum ticket size for the retail investor to invest into an angel syndicate in India right now?

Honish Zaveri: Yeah, the minimum investment ticket size is around two laks. Piece two laks in. And that would be helpful. In dollars, I think how much it’ll be somewhere around, slightly less than $3,000.

Karsten Wenzlaff: Okay. Yeah. Yeah, because I think this is interesting. I think we have the same development of course in Europe, that before the introduction of the ECSPR, it was easy to offer securities to sophisticated investors. And even now in the European crowd selling regulation, sophisticated investors, they are a little bit easier to onboard than classical retail investors. But the purpose of the ECSPR was really to open up the investment into equity crowdfunding to small ticket sizes, essentially, to make it possible to invest. I could go to Enerfip and then invest into a wind energy project in Spain and I could use a very small amount and diversify my own portfolio. And that’s, that was the original idea behind ECSPR

But again, when we come back to the passporting, this is something where the, in my view, there’s also some considerable differences because people understand, have different understanding about what it means to be a sophisticated investor or to be a non-sophisticated investor. But Honish, just one question from your point so regarding other platforms out there, which also facilitate cross border investments into into other countries in the region or even across Asia, etc. have you seen this type of equity crowdfunding, which goes beyond India?

Honish Zaveri: Yeah, we can do, I have invested in one of the US based startups through AngelList, now that companies is a unicorn. So we definitely, we can do and also in India, like to give city, even NRIs or non-resident Indians or even foreigners know, can invest in Indian startups. So that is there and Indians can also invest in non-Indian startups, up to a certain limit, up to a certain limit. They should, they, they can invest in US startups as well.

Karsten Wenzlaff: Yeah. Okay. I think the one of the topics why Andy brought us up this idea of a global passporting system is I think there’s a big market, especially in renewable energy and impact investing across the globe. So essentially we have citizens who are maybe residents in, let’s say in Sweden. And they would like to invest into a renewable energy project, based in Uganda, for instance. And they want to not just provide a loan, they want to invest into the project, take the risk, but also benefit from the upside, of course, because a lot of these renewable energy projects, they can be quite reliable in terms of what they pay to the investors because depending of course, the circumstances, but this is, I think, the huge potential.

But Ben, I wanted to ask you something. With your experiences with the European crowdfunding passporting, do you think it would be possible to create some sort of system where you could also put issuers or projects on Enerfip, which are outside of the European Union, but where the regulators on both sides accept each other’s regulatory obligations. So essentially a passporting system, where for instance. In the United States and the European Union would accept that a crowdfunding platform licensed in the European Union and a crowdfunding platform which is operating in the United States, fulfill similar obligations and therefore they recognize each other’s licenses so that you could, for instance, also approach American investors. Is that something that is feasible or is that something that you see as a vision or you think it’s something which is not required right now?

Benoît Collas: Could be a dream. No, I think it’s a wonderful idea and this is what we try to set up, three, five years ago when with what we made in Europe, it was the same at the end. Getting France plus Spain plus Hungary and so on altogether. But it’s complicated. Look, when we have this kind of idea, for example, I want to raise money for, you mentioned Uganda or whatever. It’s so complicated to deal with the rule of the other country, but we don’t know anything there. If I want to work there, I need to take a bunch of lawyers and so to understand them, to pay them to spend time and so on. So it’s impossible.

Every time we have this kind of project abroad, let’s say that for us, the project owner has the way to build a vehicle locally. And so when I call locally, it’s in one of Euro European country. Let’s say that, let’s go that way because I know the rule of some countries in Europe. He knows also the rules. And then you will get the fund there, but the proposes to finance his Uganda project. So this is not the perfect method, but at least it does work and I think in a sense, it’s a way to answer your questions. Say if I want to to work from my European perspective to a Uganda or US project, how should I do to link to complicated crowdfunding regulation? I think it will be more 20 years. So we did just some small bridges and but giving some, asking the project owner to do the last transfer.

Karsten Wenzlaff: Yeah, to what is quite interesting is that both in the US and in Europe, when there was this big push for equity crowdfunding, 10 years ago, everything was quite fast. The ECSPR took about 10 years, which is quite fast compared to other topics in the European Union, which take much longer to be implemented. And that everybody was aligned with it, EuroCrowd, where your board member was very much active in pushing for a harmonized regime. The policy makers, they like that so I wonder, this is something that I think is interesting that we, if politicians see the need to collaborate and recognize each other’s license, et cetera, it can happen if there is like a big push from society about it. And if a lot of investors would say, hey, we would like to support the climate transition in the global south. We want to invest into renewable energy projects in the global south from the northern countries. That would mean. That maybe these kind of frameworks would emerge eventually.

Yeah. But may, maybe Aaron, so do you see, what is your point of view? Do you think there will be, what would be like a benefit of creating a global system where for instance, a startup from let’s say a startup from the States, instead of just attracting only US investors, they would be able, through passporting, be able to attract retail investors from all over the globe. Because I think right now, if I’m not mistaken, but Aaron, maybe you, I’m warm on this, is, if I would go to an American platform, it wouldn’t be that easy, that I invest into a US startup couldn’t buy US securities offering on an American platform, or is it fairly easy right now?

Aaron Shafton: The answer is, it depends. It’s it’s highly complicated. It’s much more so than you’d expect at face value. What certainly is almost impossible for, US company, raising on a US platform to do is go actively advertise in other jurisdictions, right? So it’s one thing when people find their way into offerings predominantly targeted, albeit online to a US market. But there’s no shortage of issuers. We’ve spoken to both, local North American companies who want to expand internationally or who already have an international community or customer base, and they want to include them. In a crowdfunding effort or vice versa.

The US is obviously a huge market for retail investors and there are lots of foreign companies who are expanding their businesses in the US Sometimes they go and list on US stock exchanges. They want that same approach when they’re doing these crowdfunding offerings. And yeah, it’s extremely difficult. I think having a standardized system, of course, makes that easier. My belief is also that it does in fact improve the experience for investors, right?

I think again, about even the differences between a Canadian and a US disclosure document for a variety of kind of similar offering types, and while there are differences culturally, there’s many similarities between Canadians and Americans. Like what the average investor, I believe is looking for is probably pretty much identical between those two parties. Standardization, simplification, centralization like that is better for all parties. It reduces the burden on founders. It makes it more consistent for an investor to learn to understand all the resources, point in the same direction. So I, I hope we are trending on a global level to a standardized system. I think it benefits every single party along the way.

Karsten Wenzlaff: So one of the topics in between regulators and supervisors who are talking also about passporting, one of the things which they talk about is principle based supervision, which essentially means that you might not, for a platform like a crowdfunding platform, you would not have the same licensing requirements, but you would have a memorandum of understanding between two jurisdictions or multiple jurisdictions and saying the licensing requirement for crowdfunding platform A and is essentially the same as the licensing requirement in crowdfunding platform B. So once we have established that they use, they have the same principle of requirements. Even though the exact requirements might be not be a hundred percent matched, then it’s possible to accept each that. Each of these platforms can operate in the other jurisdiction. So that’s one of the topics which is being discussed with regulators right now.

And so that could be a way forward for, I think, a global passporting system to emerge because I think Ben, like you said, it’s maybe something which is it’s a vision for the future. But through this principle based supervision, I think that’s something to for also for our white paper, etc, to discuss whether this is something like, as a first step to foster these kind of reg, collaborations.

Honish, I wanted to ask you, with that specifically, I know that the Indian regulator, and particularly they have been trying to set up these partnerships, also with other countries in the region in Asia. There’s a intense dialogue, more towards in the, in, but also in central Asia between regulators to make it easier for fintechs to have this, to be able to operate in many different countries. I’m, I am assuming you also, when you’re looking at the regulation in other countries, in the region. From a startup perspective, not from the investor perspective, from, but from the startup perspective, is that actually manageable right now? So my question, so let’s take a typical Indian startup. When they would do have their first round of financing, would they have enough resources to already start thinking regionally or globally? When does that usually come up, that they are expanding into other markets where they would need funding from the region or the globe?

Honish Zaveri: Yeah, from a startup perspective as of now, I believe maybe it’s difficult to pitch to a global audience from India, to be honest. The, if they’re pitching to a, I mean to, of course, Indian investors is still okay. They can invest to. To pitch to Indian angel investors or angel funds, micro VCs and all. But if, is it like, easy to invest, via if, is it easy for startups to invest, to pitch to global investors, on a standard platform? I think, it’s difficult right now. Not impossible, but it is difficult. As of now, it’s difficult there’s no interoperable platform, which no makes it. Which makes life easy for startup, founders to raise money from global investors or non-Indian investors as easy as easily that they can raise money from Indian investors. So it was a lot of people work and all, not that it can’t be done, but yeah, I mean it is time consuming and it was a lot of effort. Definitely, yeah. But through EFCT it can be done to some action, but that also is still time consuming. But there is no interoperable system as of now where starter founders can pitch to. No. investors, even regionally or nobody, and know they can get funding from investors, whoever is invested. It is tough.

Yeah. Because there are KYC, because of the, there are KYC requirements and all those things that needs to be fulfilled before you can actually even invest in startups. So those KYC requirements are not, globally inter interoperable. It’s difficult. It requires certain, yeah. So because of these documents and all that, it’s, it is difficult. Yeah. As of one.

Karsten Wenzlaff: Yeah, exactly. This is, I think one of the issues, regarding KYC, because quite, so for instance, I give you one example. In Europe we get all of the ECSPR platforms together and ask them how they do KYC regarding their clients and we found out that even though they all use the same harmonized legal framework, there’s still quite some differences in what they actually do, what kind of information they’re being asked for. The question is though, for. From an investor protection in the end, it doesn’t matter so much whether you use method A or method B. It what, is important from the retail investor is to be able to trust what the platform is doing. So this is where principle-based supervision comes in that you don’t prescribe a specific, let’s say KYC requirement or a specific onboarding requirement, but you just say you want to have certain principles which are found in the regulation.

So let’s talk about platform collaboration because I think what is interesting is in the past couple of years we have seen a network of platforms doing joint financing rounds. Which means that they are each based in their own jurisdiction. But they collaborate with platforms which are based in a different jurisdiction. So each of them approach their own investor base, but the funding target is the same. So I have seen startups, which were for instance, on a platform based in Israel and working on a platform based in the United States. And they did the funding for the startups at the same time, completely compliant with each other’s jurisdiction. Ben, what is your view on that? Do you have collaborations with other platforms so far? And if not, what is the obstacle behind it? What is the challenge in collaborating with other platforms?

Benoît Collas: I would’ve preferred to choose the question. It’s a very hard one, a strategic one, and very sensitive. Let’s say that I will divide it in three. First we try to do it from the beginning. It was in France. We never succeed. When I came at this European level, we tried to, it was very interesting. Say, ah, let’s unit it together and try to be stronger together. We had some, maybe not this kind of proposal, but kind of organization. I can, your project owner needs 5 million. I know, but I can raise four and you can raise one. So wonderful. You will be happy. Everyone is happy. We try to set it that way. We didn’t succeed so far then we had another approach. It was a success. But it was, let’s say, unexpected, difference of the European framework. So let’s say that it was not a clear and classic organization and this, sorry, I’m telling, but without telling it’s, but let’s say that it was. No, nobody in Europe is organized that way. So this one was good, but an exception.

Okay. Let’s go back to your real question. Yeah. To be honest, we are working on it again. We did several tests and let’s say that we have one open, so not published, so it’s. Too early stage, but let’s say that we work on the clients from scratch and from scratch we are saying, oh, this is Enerfip and this is platform X and we will finance you together. Okay. It’s long, but it’s always longer project. It’s for us. It’s maybe sometimes six months. I think it’ll be a success. So let’s meet together in three months if you want. Yes. But still it remains something important. In my example, number two, when we have this exception, that we use and we succeed. The real issue at the end is a fee split between platforms. We were fighting and spending so much time on this question, oh, I’m doing the sourcing. I’m working more than you, I’m doing the blah, blah, blah. It’s, we spend so much time negotiating for tiny amounts because everyone wanted to show what he was doing the job. No. And so I really trust about cooperation, but it’s long and you need to build it, and to have like counterparts who are really looking to advance.

Karsten Wenzlaff: Yeah. Thanks so much. It’s really interesting and I would ask Aaron as well on, on this topic, have you seen in the North American space collaborations between different platforms and this topic that Ben mentioned, the sharing of responsibilities, like the due diligence requirements and all of these things, I wonder if there’s like a model where one platform is the lead platform, and they do they, they make sure the issuer of the securities are doing everything according to the law, but then other platforms simply tag along and provide their own investor base and provide part of the funding, and they get part of the fee. Then as a business model. Has this happened in the United States and Canada?

Aaron Shafton: Maybe probably not as, probably not as formally as it sounds like it has happened in Europe. There are issuers who work with a Canadian and a US platform, for example, and we have friendly relationships with many other platforms, on other sides of the border. Again, because of the way the rules are structured, because they’re not harmonized if you’re going to raise simultaneously in the US and Canada. Fundamentally, you are doing two parallel offerings, right? You’re doing a US offering the US people and a Canadian offering to Canadian people. And yes, maybe the terms are the same and a lot of the marketing materials are the same and the company’s the same, but from a legal perspective, ’cause the disclosure is different and the mechanisms are different, it’s really two different offerings. And so you engage A and B for each one and you go out and do it.

I don’t think we’ve seen someone formally set up like a selling group. For example, the way you would in a traditional financing across borders, but that does happen in traditional finance. Obviously still rare, but companies do offer securities across borders all the time, and we’ve had private placements on our technology platform that have process investments from dozens of countries. It’s just, again, it’s very challenging without a single disclosure framework in place.

Karsten Wenzlaff: So this is quite interesting. I think it points to the fact that a global harmonized framework. Maybe doesn’t need to be like in that sense, completely harmonized that a platform from Europe can go to India and then just start working there. Maybe what we would need is simply as a first step, a framework which makes platform collaborations easier. And then from that move towards more harmonized frameworks, because I think that would, and for instance in the, in, like the requirements for platforms to do money laundering or counter terrorism finance are very similar. They’re not exactly the same, but they’re very similar in each of the global countries right now. So they just need to be recognized each other that if you do, if you have a license in jurisdiction A you also are subject to money laundering requirements, etc, which should be acceptable enough to create these collaborative frameworks.

And Honish, what’s your opinion about this platform collaboration? And also because you mentioned the angel syndicates. Do you see the, like angel syndicates from different countries in the region collaborating? Or what is the obstacle there?

Aaron Shafton: It’s a little outside my expertise, so I’ll get that caveat. But my understanding is that’s fairly common. Yes. You could have an angel round. Okay. For a company and I could imagine it being fairly common that maybe there’s a couple Canadians and a couple Americans or other folks around North America. Yeah. With your, to the point you were making like. When it comes to selling products online, for example, If I’m not raising money, if I’m just selling products, it’s not identical to sell them in the US versus in Germany. But it’s easy enough today that I can open a Shopify store and I can fill out the tax info and I can do it. Exactly. I don’t think practically it has to be this perfectly harmonized thing where. 200 of us sit at a very big table and all agree on the exact disclosure. But if I have a Form C for my Reg CF that has 95% of the information you need in your FIIS statement, there should be an easy way, if I can turn a Canadian law degree into something that lets me write the US bar, I should be able to take this disclosure and make it work across the border. If we can move people’s professions across the world, certainly we can crack this knot. I just, I think it needs a little more work.

Karsten Wenzlaff: Yeah. Thanks Aaron. Honish, what is your opinion on this platform collaboration and maybe, yeah, it’s especially collaboration between syndicated structures.

Honish Zaveri: Yeah, sure. I think, it’s very interesting, interesting idea and to some extent, We have, in fact, we have also tried to collaborate with syndicate, which is based in Singapore. We have tried collaborating, no, it’s like my base of investors will invest in their startups and vice versa. And their base of investors can also invest in Indian startups. But as I said, because regulations, their regulations, our requirements and all their thing, it’s not the same and it is not harmonized and it is not unified. So it becomes difficult if, if not impossible. So it becomes very difficult. But we have tried, having said that especially in the ASEAN region, not necessarily Indian, but especially let’s say Singapore, Malaysia or something like that. If there are syndicates, they do, they do collaborate because they have similar kind of regulations and all those things, but similar kind of rules and principles, principle based regulations basically. But yeah, we have tried at Kiani Ventures also. We have tried doing that with the syndicate based in Singapore, but we haven’t been successful so far.

Karsten Wenzlaff: Okay. But this is nevertheless very interesting because I have the, my feeling is that, that this sort of topic of how to make equity crowdfunding more operable across borders is a very hot topic among regulators as well, because they see there’s a huge need to raise private capital to innovative companies in the areas of deep tech AI. Energy efficiency, etc but also just into invest into infrastructure. We all across the globe, we need a new energy infrastructure. For instance, in renewable. It’s going to be a huge investment. And we need private capital to be able to access not just one jurisdiction, but actually, be there on the global scale.

So with that, I think, I want to thank my panel very much for sharing your experiences and also sharing some food for thoughts. We covered a lot of topics. We covered the harmonization of the ECSPR and the different ways, how there may be frictions even in the United States or the Northern America and India. We also covered how. The topics which a passporting could provide, but also possibilities and also challenges to collaborations between platforms. And I think we’ve managed to tackle this issue in a little while. And so that’s why. Thanks so much, Andy, and back to you, for making it possible to actually move this topic a little bit further.

Andrew: Thank you so much Karsten, and thanks to every panelist, to Honish, to Aaron and to Ben. A fascinating discussion. We’ve it’s the tip of the iceberg really, that we’ve discussed there, and there’ll be further discussions to be had, it’s clear just from that short discussion, there’s so many nuances and differences that need to be harmonized. And in theory it makes sense to do it. It just means that all the fundamentals that keep coming up in these conversations like trust building, marketing, education, they can all work effect. If things are harmonized and all of that’s going to help equity crowdfunding meet its true potential via cross border activity. So look fascinating for me as well. I’ve learned so much. It’s great listening to experts who are so passionate about the subject. And I just say would like to say thank you again for taking part. And yeah, we look forward to future discussions. But thank you very much.