The crowdfunding market - France (2024)

1.2 A robust global market

Crowdfunding market size Worldwide, ****-****, in billions of dollars CAGR: +**.** Source: ****

In ****, the global crowdfunding market size was estimated at $*.** billion. The market is expected to grow at a rate of **.*% per year until ****, reaching sales of $*.* billion. In terms of volume, China dominates the market: in ****, the country held a **% share, while the USA held **% and Europe *%. [***]

A number of factors are contributing to this growth, including the very essence of crowdfunding, which consists in bringing entrepreneurs and investors together. Crowdfunding makes it possible to invest directly in ideas that investors believe in, without any intermediaries, which not only establishes a solid link between capital and ideas, but also gives investors a sense of greater control over the situation. In terms of what companies looking for this type of financing can offer, the method is attractive because it allows financing to a greater extent. An entrepreneur seeking credit from a bank is faced with many more requirements and limitations than when the public provides financing.

Most active categories World, June ****, % Source: ****

The table above gives an overview of the categories that have received the most investment to date. This breakdown is based on **** projects currently in progress. We can see ...

1.3 Sustained growth in the domestic market

Market size of alternative finance France, ****-****, in millions of euros CAGR: +**.*% Source: ****

The graph above shows the evolution of the total amount of funds raised in France through participatory finance between **** and ****. The market has experienced exceptional growth in recent years. Since ****, the funds raised each year have multiplied by ** to reach a cumulative total of **** billion euros. Generally speaking, this financing structure is booming in France. In ****, over *,*** billion euros were raised.

The study conducted by cainet Mazars distinguishes three types of funds raised: donations, loans and investments. The breakdown of amounts raised is as follows:

Breakdown of funds raised through crowdfunding by type France, ****, in Source: ****

The overwhelming majority of funds raised are in the form of loans. Almost **% of the total amount raised is in the form of loans. Donations and investments represent a much smaller share of funds raised in ****, at *.*% and *.*% respectively.

Most popular categories, by total amount invested (***) France, June ****, % of total Source: ****

In France, the most common crowdfunding channels measured in euros invested are solidarity and citizen-related projects (***).

Film and video (***) are also popular categories.

2.1 Preferences of French investors

Donations

Evolution of the volume and structure of donations in crowdfunding France, **** - ****, in €M Source: ****

Although it represents a small share of the total amount raised in crowdfunding (***), the donations segment grew significantly between **** and ****. This increase was driven by non-rewarding donations, which increased more than fivefold in ****. This dynamic can be partly explained by the health crisis. Numerous fund-raising campaigns have been organized, and the French have been particularly generous in financing the projects they have supported.

Breakdown of participatory donation financing by sector France, ****, in M€ Source: ****

The cultural sector accounts for the largest share of donations made through participatory financing, with €**.* million raised. The economic and social sectors account for an equivalent share of the total, with **.* and **.* million euros respectively.

Loans

Growth in volume and structure of crowdfunding loans France, **** - ****, in €M Source: ****

The largest segment of funds raised, loans largely take the form of bonds. However, the share of interest-bearing loans has been gaining in importance since ****. This sub-segment accounted for €**.* million in ****, compared with €***.* million in ****. Minibonds, meanwhile, are less and less popular (***), as are non-interest-bearing loans. Finally, the share of government-backed loans is also declining.

Breakdown of participatory loan financing by sector France, ...

2.2 Characteristics of French investors

Source: ****

The map above shows the geographical distribution of French investors, expressed as a percentage of amounts financed in each region. There is a strong concentration of demand in Ile-de-France, with **.**% of amounts financed, followed by Provence Alpes Côtes d'Azur (***) ,with foreign investors contributing **.**% of amounts financed.

The age breakdown by type of financing is as follows:

In addition, **.*% of investors are men, compared with **.*% of women.

2.3 Demand trends: real estate crowdfunding

Today, real estate crowdfunding is a very dynamic sector, driving growth in the crowdfunding market.

Growth in amounts raised through real estate crowdfunding France, **** - ****, in €M Source: ****

In fact, the volume raised by this crowdfunding segment is clearly on the rise, topping the €*,*** million mark in ****. This figure is **.*% higher than in ****, while the overall crowdfunding sector has grown by **.*%. The number of projects financed is also experiencing exceptional growth:

Number of real estate projects financed France, **** - ****, in €M Source: ****

A total of *,*** real estate projects were financed in ****, more than a thousand more than in ****.

More specifically, these projects mainly concern real estate transactions.

Breakdown of projects financed by type of operation France, ****, as % of total Source: ****

This type of transaction accounts for **% of projects, while property development accounts for a large proportion (***). [***]

2.4 Demand trends: sustainability

At a time of climate change, the crowdfunding market has a crucial role to play. The sector has a duty to develop a sustainable industry that combines economic, social and environmental dimensions. Investors seem well aware of this challenge, as this segment is very dynamic. **,*** projects have a social or environmental dimension , raising a total of *** million euros. In particular, a large proportion of these amounts came from donations, which almost always have a social purpose.

The development of projects with a social and/or environmental focus is partly enabled by the involvement of platforms in this area: **.*% of them take into account "ESG criteria in their approach to identifying eligible projects" .it should also be noted that the ESG dimension is an original feature of crowdfunding, which embodies a mode of financing opposed to traditional, speculative and disembodied finance. [***]

2.5 Influence of the pandemic on the sector

The French government helps companies meet their liquidity needs. For example, since May *, ****, the government has provided a state-guaranteed loan via a lending platform with the status of an intermediary in participatory financing (***). [***]

Planet-fintech reports that there will certainly be a slowdown in investments linked to traditional fundraising, and therefore also crowdfunding. For example, Wiseed, a French leader, has activated its business continuity plan with regard to the global pandemic. Essentially, this means that the platform is closely monitoring its participation to minimize exposure to at-risk sectors or companies with low cash reserves. In other words, the platform seeks to ensure that participants can limit the damage by looking for warning signals.

The same source reports that Lita. co, another crowdinvesting platform, has announced that it will be abandoning commissions. In other words, all traditional investment costs are free, in order to "enable a wave of solidarity towards companies with a positive impact".

Crowdfunding royalties are payments to investors based on the performance of the underlying brand. Inevitably, these payments will decrease in proportion to the decline in cash flow in general. For some investors exposed to this structure, cash flows are close to zero. This applies, for example, to the ...

3.1 Market overview

Crowdfunding platforms act as intermediaries between investors/donors and project contributors. The following diagram describes the relationships between these different players:

Source: ****

France has three market-leading platforms: Ulule, KissKissBankBank and WiSeed.

Fundraising is organized on web platforms that must be registered with ORIAS (***) as :

Intermédiaire en financement participatif (***) for financing in the form of a loan; Conseiller en investissement participant (***) for capital investment in the form of bonds or minibons; Investment Services Provider (***), which enables it to operate within the same framework as the CIP, and to extend recoveries to other financial instruments, or to "pass through" its activity in Europe. Prestataire de services de financement participatif (***) for "bringing together the interests of investors and project sponsors in the financing of entrepreneurs, using a participative financing platform"[***].

3.2 A relatively concentrated market

Volume of funds raised

The crowdfunding sector is driven by a small number of major players, and in this sense resembles an olligopoly.

Platform segmentation by fundraising volume France, ****, in Source: ****

In fact, six platforms account for more than half of the total amount collected (***), while ** others account for just *.*%. What's more, for these same six platforms, the average amount collected was ***.* million, compared with *.* million for the other **.

Number of approvals

Trend in the number of approvals and deregistrations of platforms France, **** - ****, in units Source: ****

The number of operators on the market fluctuates widely, with some platforms obtaining approval and others being deregistered each year. Since ****, however, there has been a downward trend in the number of approvals. Whereas there were ** that year, there were just * in ****. Conversely, there have been a large number of deregistrations (***).

At the end of ****, the structure of crowdfunding platforms was as follows:

Number of crowdfunding platforms by category France, ****, in units Source: ****

Participatory financial intermediaries (***) status.

3.3 Typology of players

The players who can launch a fund-raising campaign are diverse and varied. The following chart provides an overview of the main projects funded:

Number of projects financed by type of player France, ****, in units Source: ****

Individuals are the most prolific in terms of projects financed, with **,*** projects in ****. Players in the social economy are also dynamic, with **,*** projects financed. VSEs / SMEs / ETIs complete the podium with *,*** projects financed.

4.1 Types of financing

As mentioned above, there are three main types of funding: donations, loans and investments.

The following table lists the financing methods and project proposal frequency of the various crowdfunding players:

Associations are the most active in terms of project proposals. On average, they propose *** projects per week. This dynamism is due to the fact that crowdfunding (***) is one of the few effective means of financing for them. Today, crowdfunding is a very popular channel for making donations. Start-ups, on the other hand, propose only one project per month.

Donations

Selection rate and average costs by project type France, ****, in Source: ****

Projects financed by donations with rewards are more difficult to obtain: over **% of proposed projects are rejected, compared with **% for donations without rewards. In addition, projects financed by donations with rewards are slightly more expensive (***).

Loans

Selection rates and average fees by type of financing France, ****, in Source: ****

Loan-financed projects appear to be much more difficult for platforms to validate. Selection rates are relatively low for all types of loan: *.**% for interest-bearing loans, *% for minibonds and **.**% for bonds. On the other hand, average fees are lower than for grant financing (***).

Investments

Selection rates and average costs by financing method (***) France, ****, in Source: ...

4.2 Case study: the Ulule platform

Ulule is a major player in the French crowdfunding sector. The company has raised a total of over *** million euros. In ****, total funds raised amounted to **.*** million euros.

The following chart shows the average amount paid out by category:

Average contribution by project category France, ****, in € Source: ****

Average contributions are globally homogeneous, hovering around fifty euros. However, some areas stand out with significantly higher contributions. For example, the Heritage category is the one that collects the highest amounts (***).

Number of projects launched by category France, ****, in units Source: ****

Unsurprisingly, the "Solidarity & Citizenship" category is the most dynamic, with **** projects launched in ****. The Music and Film & Video sectors are also very active, with **** and **** projects launched respectively. Conversely, only *** projects were launched in the Heritage category. Projects launched in Technology are also rare compared to the other categories (***).

4.3 Fee comparison

Source: ****

5.1 Current regulations

Structure

The text below comes from Financement Participatif .

The decree of September **, **** created the status of intermediary in participatory financing (***), for IFP platforms; or by the AMF l'Autorité des marchés financiers, for PIC platforms. Platforms must adopt one of the following statutes, and be registered with Orias , the unique register of financial intermediaries.

The regulations impose a number of constraints on platforms, particularly in terms of protecting contributors, with disclosure requirements on risks, default rates or implementation thresholds. On an IFP, a lender may not lend more than €*,*** per project for an interest-bearing loan (***). This regulatory threshold forces contributors to limit disproportionate risk-taking and diversify their investments. For Internet users wishing to invest on an FTC, there is no limit per project, but the platforms are progressive-access sites which guarantee that the Internet user has fully understood the risks inherent in his investment and that he is in a position to lose all or part of the capital invested.

The additional rules of transparency adopted by the FPF are the watchwords of participatory financing platforms, whether in the choice of project to which to allocate one's money, or in the platform's own practices, which must take care to maintain a ...

6.1 Segmentation

• GoFundMe
• Funding Circle
• KissKissBankBank
• Ulule France
• Anaxago
• Bricks.co
• Crowdcube
• Tudigo
• Club Funding
• Tickando
• Sowefund
• Blast
• Lendosphère