Investment climate
Investment climate

Lithuania’s Crowdfunding Law: How Will It Work and What Does It Mean?

December 12, 2016

Last week, the Lithuanian Parliament passed the Law on Crowfunding that will come into force on December 1 this year. Vytautas Šenavičius, Chairman of the Board at Lithuanian P2P and Crowdfunding Association and Partner at TVINS Law firm, says it is another step towards a startup-friendly jurisdiction. He has shared his insights on this legislation and explained its practical implications.

According to the Bank of Lithuania, approximately 40 percent of SME loan applications are rejected in Lithuania, and 50 percent of Lithuanian residents hold their savings in cash. Number of rejected loans is even higher for the startups. Therefore during the last year the necessity for alternative financing and alternative investment opportunities in Lithuania was one of the top priorities of the Ministry of Finance and the Bank of Lithuania. With the ambition to become one of the most attractive FinTech destination in Europe, this autumn Lithuania approved a number of regulatory changes: amended KYC regulation (enables non face-to-face identification), amended consumer credit rules related to peer to peer regulation. Finally last week the Parliament of the Republic of Lithuania passed the Law on Crowdfunding. The Law on Crowdfunding eliminates obstacles in Lithuania related to crowdfunding business in Lithuania.

The Law on Crowdfunding entails the startups to raise funding in a new way. For startup market alternative funding opportunity is extremely important given the funding from the credit institutions is not always possible and angel investors’ funding procedure could take couple of months. Through the crowdfunding platform the startup may get the funding in a few weeks. Moreover, the opportunity to publish startup’s business idea in crowdfunding platform allows to receive prompt feedback on whether the crowd believes in your project. Startups who will decide to raise funding through crowdfunding platforms will in general have free marketing campaign in case their project will be funded – the knowledge about the startup and it’s idea will spread between investors, their friends, colleagues, media, etc.

Read more: Startup Lithuania

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Aistė Žebrauskienė
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    Aistė Žebrauskienė Press Officer
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    Thank you!

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