By Hector Botero
Last year, the French government told startups they could raise up to $1.4 million (€1 million) per crowdfunding campaign. This rule applies equally to rewards-based campaigns like Kickstarter and to equity-based crowdfunding. The government also placed a limitation on funders of Kickstarter-like campaigns, telling them they could only invest $1,400 (€1,000) per campaign. This restriction was put in place to ensure that campaigns didn’t over-promise.
Next to the United Kingdom, France has the largest crowdfunding sector in Europe. Not bad for a country considered to be socialist. There are several crowdfunding sites operating in France, giving campaign backers lots of options.
Crowdfunding Opportunities in France
Growth in this industry looks promising. Here’s a short survey of French crowdfunding sites.
Ulele was one of the first crowdfunding sites to open up in the European Union. The doors opened in October 2010. Since then, the company has successfully funded almost 10,000 projects from 163 countries. Their focus is on creative, innovative, and community-minded projects.
Kisskissbankbank has a little broader appeal. Project categories include sports, art, design, ecology, journalism, education, solidarity, and fashion.
Babeldoor funds artists, writers, travelers, and other creatives. Projects have 100 days to reach their goals and funders have a minimum €5 investment threshold.
In the equity-based crowdfunding space there are several opportunities that give French financiers a chance to own a part of the company they are investing in. For example, Investir99 requires project leaders to find 99 sponsors before it can launch a campaign. The project leader can then present a business plan, but they have 12 months to raise startup funds.
Smartangels give campaigns two or three months and require €200,000 to €2 million for funding an application. Projects are carefully selected by the crowdfunding site.
Kiosktoinvest specializes in land development and job creation projects. Wiseed specializes in the health, environment, digital, industry, and services sectors. Sowefund is a new site that allows entrepreneurs to supplement previous investments with new equity funding.
France is also home to several peer-to-peer lending platforms. These include Babyloan and Unilend. Babyloan specializes in microcredit while Unilend offers a fixed interest rate.
Why French Crowdfunding is Growing
There are three primary types of crowdfunding in France: Equity, debt-based, and donations-based. Investment or intermediary crowdfunding platforms are required to register with the French regulating authority ORIAS (Organisme pour le Registre des Intermédiaires en Assurance). Portal managers must also have a background in banking or finance.
While other European countries are tightening the regulation of crowdfunding, the French are moving in the opposite direction. As a result, there is explosive growth taking place. The French have committed themselves to supporting crowdfunded projects.
Equity-based platforms can register under two categories: Crowdfunding Investment Advisor or Investment Service Provider. Both categories have their advantages.
Top officials in France have made public statements in support of crowdfunding with intentions to grow it without impediment. For instance, Guilleaume Prunier said he wants to see Paris be the crowdfunding capital of Europe. Prunier is in charge of innovation and entrepreneurship in French Economy Minister Emmanuel Macron’s cabinet. French President Francois Hollande said in 2013 that he wanted to promote crowdfunding, and he has allowed the French government to do just that.
As the world grows smaller and more competitive, we’ll see more countries like France take a proactive approach to investments, particularly crowdfunding. That’s a good thing.
France is no longer just competing with other European countries. They are also competing globally with China and the rest of Asia, and the Americas. It seems they understand the stakes, and that’s why they have committed themselves to crowdfunding growth. It will be interesting to see how the future plays out.