By Kylie MacLellan
LONDON (Reuters) - A British website which allows members of the public to buy stakes in small unlisted businesses is expanding across Europe, saying it was responding to demand to open the site beyond Britain.
As banks rein in lending due to tougher capital rules and greater regulatory scrutiny, crowdfunding, which originated as a way to raise money for creative projects, has expanded rapidly as an alternative source of finance.
Last year crowdfunding websites helped companies and individuals worldwide raise $2.7 billion from members of the public, an 81 percent increase on 2011.
Seedrs, through which individuals can invest as little as 10 pounds ($16.19), said on Monday investors from across the European Union and other European countries including Norway and Switzerland could now back companies or raise funding through the site.
"We kept getting emails from people saying 'why won't you let me invest or raise (money)?' ... we have seen a tremendous amount of demand," said Chief Executive Jeff Lynn. "We wanted to expose entrepreneurs to as a big a pool of capital as possible and expose investors to as many deals as possible."
While other crowdfunding platforms have opened in more than one country, Seedrs would be the first to offer cross-border investment, Lynn said.
To help fund the expansion, Seedrs said it planned to raise 750,000 pounds via its own site, a target it met within hours.
Initially all funding will be done in pounds, but Seedrs plans to extend this to give companies and investors the ability to fund in euros from early next year.
Last month Britain's financial watchdog the Financial Conduct Authority (FCA) proposed tighter controls for crowdfunding sites in order to protect inexperienced investors. Seedrs is already regulated by the FCA.
There are no Europe-wide crowdfunding rules but the European Commission has said it is examining whether to regulate the industry.
Last week fellow British equity crowdfunding site Crowdcube, which has already also launched in Sweden, said it planned to expand into Italy, Spain and New Zealand early next year through joint ventures with local operators.
Crowdcube, which has agreements in place to launch joint ventures in Brazil, Poland and Dubai, said it was also seeking potential partners in France, Germany, Canada and the United States.
(Editing by David Holmes)