Colombia allows larger crowdfunding securities issues

Colombia has amended crowdfunding rules to help support growth of the local capital market. 

Regulations were introduced in 2018 via a decree that defined crowdfunding as a new activity within the securities market sphere and established how much could be raised. 

Securities, debt-focused to date, are issued under a simplified regime and issues do not need to be included in the national securities registry. A key aim is easing the flow of resources to SMEs and spurring financial innovation. 

Under the latest changes, the maximum issue size is increased to about 50bn pesos (US$13.6mn) from around 9bn pesos. In the decree, limits are expressed in minimum legal monthly salaries. 

A central aim of the changes is to close a market gap created by the main issuance mechanisms, Edwin Zácipa, co-founder of local fintech chamber Colombia Fintech and country head of British open finance company Open Vector, wrote in an article for regional fintech industry website Latin Fintech Hub. Other changes in the decree encompass areas including transparency and donations. 

“With these changes included in the decree, the government hopes to increase the participation of issuers of different sizes in the capital market,” wrote Zácipa.

To date, regulated crowdfunding in Colombia has channeled more than 3.57bn pesos into 21 SMEs, via 1,257 investors. This corresponds to corporate fintech a2censo of local stock exchange BVC, which accepts investments from 200,000 pesos from both qualified and non-qualified investors, partly backed by a national guarantee fund

Read the decree amending the crowdfunding rules here (in Spanish).