The Investment Crowdfunding Landscape in France

 

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By Jonathan Sandland, TheCrowdCafe

Reward-based Crowdfunding is booming in France, and security-based crowdfunding is following in its footsteps. I suspect this doesn’t come as a surprise; what is more interesting, however, is to understand how a country famous for strikes and extended holidays can be a fertile soil for such an innovation as crowdfunding.

  1. France is a place for companies and startups in general It’s hardly known but France is full of global competitive companies. France tops European countries in the Fortune 500 global ranking, by number of companies,  with 32 companies—the same as Germany, but with 25% less population (1). France is a fertile soil for startups as well: Paris is the 11th most promising startup ecosystem in the World, only second to London in Europe, according to research published by the Startup Genome Report last month (2).

  1. France has among the highest household saving rates in the world Frenchmen are not big spenders. We tend to save money a lot. Comparative studies show they save more than 3 times more money than US Citizens (3). The more money they save, the more they are willing to invest in crowdfunded companies.

  1. Government support & new Regulation The French government desperately needs to stimulate the economy and create jobs. Crowdfunding provides a mechanism to do so, and the government isn’t sitting by idly. With the help of Fleur Pellerin, a young minister with a strong business background, new legislation is being championed that will bring structure and support to security crowdfunding markets in France. (4)

Market Landscape: Investment Crowdfunding in France

Seemingly, a new platform emerges with every passing week. While not all will make it, it fuels competition and innovation. I’ve listed a few of the leading platforms below. Wiseed.fr has pioneered the market in France with great success.

Leading security crowdfunding platforms in France (2013)

Name

Founded

Category

Amount raised

Co’s funded

Wiseed.fr

2009

Equity

€5,4Mn

26

Smartangels.fr

2011

Equity

€2Mn

6

Anaxago.com

2012

Equity

€1Mn

n/a

Participeep.com

2013

Equity

n/a

n/a

Happycapital.com

2013

Equity

n/a

n/a

The Advantages of Niche

It’s hard to say how new entrants will fare in such a crowded market. Differentiation will be critical. As it’s said: “Differentiate or die”. In this respect,  I’m particularly optimistic about niche crowdfunding—and it’s why I chose to start Lymo, a niche real estate crowdfunding platform.

Real Estate has a few advantages over technology startups.  While not as “sexy” persay, it’s an asset class everyone is familiar with, and has receives broad interest from investors. At Lymo, we figured,  “Why not create a real estate crowdfunding platform?”

Six months later our startup lymo.fr has raised €500,000+ from more than 140 investors. It’s only a start, but a good one.  Unlike traditional crowdfunding platforms, we are also producers of the products offered on the platform  (in our case real estate developers). Consequently, we generate our primary revenue through the production of goods (i.e. housing units) rather than the distribution of them (i.e. fees on amounts raised).

Might this be an alternative model for new platforms?

Sources

  1. World’s largest corporations by geography (Forbes)
  2. World’s 20 Hottest Startup Scenes (Entrepreneur Magazine)
  3. Household savings rate data in France
  4. More on proposed Crowdfunding regulations in France (in French)
 http://www.thecrowdcafe.com/investment-crowdfunding-in-france/

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About Jean-Baptiste Vayleux

Jean-Baptiste Vayleux is the co-founder of Lymo, the first European Real Estate Crowdfunding Platform (www.lymo.fr). Lymo enables investors to invest in real estate residential niche projects that target a 10% annual return. Launched in Feb 2013, Lymo has raised €500k+ so far on 3 projects. If you’re interested in real estate crowdfunding, you can reach Jean-Baptiste at jean-baptiste.vayleux@lymo.fr.

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