Increasingly active crowdfunding platforms! Crowdfunding, or crowdfunding in English, has grown significantly in recent years. It is one of the different forms of alternative financing. The 2008 banking crisis, new uses of the Internet and the development of reliable and secure web platforms have greatly contributed to the development of crowdfunding …
For the company that uses crowdfunding, the important thing is to choose the right platform for the project. It is advisable to consult the projects already underway on each platform, to find out about their success rate and the reputation of the platform. Some are specialized in themes or forms of projects. The legal form of your business is also a parameter to consider. It is quite possible that the incorporation of a company with adapted statutes is necessary to deposit your file on a platform.
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Finance personal projects, associations or companies
If they are more numerous and better known to the general public, cultural or associative projects using crowdfunding are not the only ones to use crowdfunding. Certain personal, individual or collective projects also call for crowdfunding. These are usually small amounts. For entrepreneurs, crowdfunding makes it possible to collect funds to finance a specific project (new product, new activity, etc.) or for starting a business.
The link between the funder and the project is not just economic and financial, there is an emotional part. The lender participates in the development of a product or service to which he feels close (need, affinity, etc.). For its part, the company enriches its knowledge of the expectations and needs of potential customers ready to follow it. It’s also an effective way to communicate, using social media.
Online collection for a limited time
Fundraising is carried out via an internet platform. This way of working makes it possible to widen the number of potential contributors as much as possible. They decide to fund directly and monitor a project. The duration of the collection is limited in time and the funds are paid only if successful. Otherwise, the lender will not be charged for his gift or loan.
The platform charges a commission on the funds collected, between 3% and 10% depending on the nature of the project and the duration of the loan. Each platform must clearly display the cost: platform commission and bank transaction fees for example. This is to be taken into account when calculating your fundraising.
Three different types of crowdfunding
Donations with or without compensation / consideration
We speak in English of donation platform: crowdgiving.
The donor finances the project but does not necessarily receive any compensation.
In the case of a documentary film, for example, depending on the amount donated, the name of the donors may be displayed in the credits or invitations to a special screening may be offered. For an association, it may just be a question of funding a specific action, without any consideration. This type of project relies on generosity, commitment to a cause and the social networks of friends or relatives.
In the case of a business, it may be to pre-order a product. The lender allows the business to finance its production. In return, he can benefit from a reduced price, a bonus or a personalized version of the product.
Loans with or without interest
Crowdlending involves lending money to a business or individual who repays with or without interest. The terms of the loan are defined from the start, generally a maximum amount is fixed. The goal is to have more small investors than one big investor. The maximum loan amount is set at € 1 million. Each investor, natural person, can invest 1,000 euros maximum per project with interest and 4,000 euros for projects without interest. In the case of a company, it is better to take stock of the legal form and transform it if necessary. Each platform has its criteria for selecting the projects it will host: duration of activity, minimum turnover, etc.
Examples of known platforms are My major company, Ulule, Lendopolis, Unilend, Hello thanks …
Investments in financial securities
Crowdfunding has also grown for investment professionals. These “business angels” or “venture capitalists” receive shares or bonds according to their participation. These are platforms called in English crowdinvesting or equity crowdfunding. This most often concerns young companies that the platform offers after studying their file. These professional platforms commit more capital for longer and with a risk of total loss of investment for the lender.
For this type of collection, it is important to take stock of your legal status: how to integrate new shareholders, what their powers will be … It is preferable in this case to provide for a shareholders’ agreement. The appropriate legal forms are simplified joint stock companies (SAS) or public limited companies (SA).
Examples of shareholding platforms: Anaxago, Smartangels, Sowefund.com…
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