A survey carried out at the 22nd Entrepreneurs’ Fair in Paris recently showed that both French private individuals and companies are taking an interest in crowdfunding, which is a fairly new activity in France but fast becoming trendy.
According to a survey carried out by Paris-based market research firm Institut Think at the 22nd Paris Salon des Entrepreneurs (Entrepreneurs’ Fair), which took place on 4-5 February at the Palais des Congrès, two thirds of all French people know about crowdfunding and fully 7% of them say they have already given, lent or invested money via a crowdfunding platform. The poll also showed that the ventures French people were most likely to support were: firstly, a local business; secondly, a charity or social solidarity initiative; and thirdly the development of a new product or service. So it would appear that the French regard crowdfunding as a means of supporting initiatives close to their hearts rather than primarily as a way of making money.
© Institut Think
Supplementing bank finance
Three out of four heads of companies classified as ‘very small’ or ‘small/ medium-sized’ know about crowdfunding, and as many as a third of those surveyed said they would be prepared to finance the development of their company through a platform providing reimbursable loans. These respondents see crowdfunding platforms as a way to finance business ventures where traditional banks might be reluctant to get involved, and they also like the fact that these platforms do not demand any guarantees or insist on personal liability. In fact small-medium enterprises now see crowdfunding as a useful supplement to traditional bank finance. The banking system is not seen as the enemy of crowdfunding; the two are viewed as complementary. “Many companies have difficulty raising funds, and crowdfunding enables millions of euros to be injected into the real economy,″ points out Vincent Ricordeau, founder of KissKissBankBank, one of France’s crowdfunding pioneers. However, some entrepreneurs are still wary of going the crowdfunding route and especially fear the idea of having to report the company’s accounts on a regular basis to a legion of small investors who have bought equity in the company and being forced to update this army of shareholders on the firm’s development plans before going ahead.
© Institut Think
From fans supporting their favourite artists to B2B loans
Since German company Sellaband – a music crowdfunding site that enables artists to raise money from their fans in to record an album – launched in 2006, similar providers have sprung up. French crowdfunding platform My Major Company started by offering ‘shares’ in a musician’s work, and online contributors would then receive a return on their investment based on the album sales. These sites have now broadened their business model to encompass a wider range of ventures and are also working somewhat differently. Most now offer Internet users a means of financing an innovative arts initiative, offering symbolic or emotional rewards in proportion to the sum they have injected. This might for example take the form of a signed music album, a mention of their name in the credits for a film or documentary, an invitation to a private showing, or the chance to pre-test a product. While the undisputed world leaders in crowdfunding – Kickstarter and Indiegogo – are from the United States, France is also well represented in this field. Since launching four years ago, KissKissBankBank has enabled close to 500,000 members of the general public to contribute a total of €26 million to finance over 10,000 ventures. Under the new French law on crowdfunding, which came into force in October last year, new types of platform allowing private individuals to lend to companies in return for interest payments have started up in France, for example Lendopolis – launched by the KissKissBankBank founders – and Lendix. French businesspeople are now awaiting the imminent adoption of legislation authorising companies to lend directly to other firms, a clause which is part of the Macron Bill currently being debated in Parliament.