A vector of democratization and disintermediation of funding, crowdfunding interests dynamic, daring and innovative companies …
Thanks to the Internet,
SMEs can solicit funds from a wide audience via
crowdfunding platforms. This crowdfunding goes to them
allow them to complete their financing plan to support
their creation, recovery or development. It takes on different
forms, such as the paid loan and the bond loan.
How does it work ? What are the benefits for
companies using it? What are the best platforms
where to present an entrepreneurial project?
How it works
crowdfunding to finance businesses?
crowdfunding corresponds to the meeting of a bearer of
project (here, the company) with a host of individuals and
professional investors (crowdfunders), through
a dedicated website, the crowdfunding platform. The SME must
present their project as part of a campaign to obtain the
In terms of
corporate finance, it is customary to distinguish the
crowdfunding according to:
- The type of businesses: crowdfunding for SMEs dedicated to mature businesses or start-ups for start-ups;
- The company’s activity sector: real estate crowdfunding for real estate developers or even one dedicated to renewable energies.
Participative sites can offer business projects of any kind. Their constraints are due to their regulatory status and the maximum amount of collection. For example, a site with a Participatory Investment Advisor (CIP) certification can collect up to 8 million euros per transaction since October 30, 2019, compared to 2.5 million euros previously.
From the launch of
the campaign, the conditions for participation are clearly set out
on the website so that each crowdfunder knows what they are funding,
for how long and with what consideration. On many
platforms, if the amount requested by the company is not
reached, the project is canceled and the amounts collected reimbursed.
Throughout the project, investors are
kept informed of its progress.
This alternative finance makes it possible to collect very diverse sums (from several hundred euros to several million euros) by companies from all sectors. It is possible to distinguish three types of crowdfunding financing the company according to the form of the collection:
- Reward crowdfunding: donations (crowdgiving) with or without consideration or pre-sales;
- Crowdlending: loans with or without interest or mini-vouchers;
- Crowdequity: investments in capital, bonds or against royalties.
benefit from the services of the financing platform
participative, the company must remunerate it. Generally it
is a percentage of the money collected: often
between 5 and 10% HT. The SME must integrate this additional cost into the
financing plan for his project.
What interest in
use crowdfunding for a business?
Although the benefits for an SME to use this alternative finance depend on many parameters, it is possible to identify 13 general advantages which, we hope, will bring good luck:
1 # Have
additional funding quickly with great flexibility
speed and agility are essential qualities for a
SMEs. To initiate a project, conquer a new market or deposit
a patent, being in the right timing is crucial. Also, the
crowdfunding is a funding method perfectly suited to
business needs. Crowdfunding platforms
have operating modes which correspond to the logic of
markets. They accompany the implementation of the collection, often
with a dedicated contact, to complete a financing plan
quickly and seamlessly. Conversely, a bank will put two to
three months to respond to a loan request, if it does not request
no additional parts, additional guarantees or a
transfer of the file to another decision center.
2 # Diversify your
sources of funding through crowdfunding
One of the benefits
major for a company to use crowdfunding is to
be able to diversify its funding. Accustomed to
banking establishments, businesses thus have access to
new partners. Crowdfunding is no substitute
(generally) not to bank financing, but supplements it. In
using a greater number of financial partners, a
PME demonstrates its financial solidity and encourages confidence
in her. Thus, she enters a virtuous circle allowing her to
convince more and more organizations to give it
credit and credits.
3 # Palliate the
reluctance of banking establishments
This point should not be overlooked! Obtaining a bank loan is much more difficult these days, especially when you are an ambitious company with high potential. The banking requirements before granting a loan are much more drastic than before. The minimum equity capital that is imperative to have has risen sharply in recent years, particularly following the tightening of the Basel Accords. Also, if a company can benefit from an additional contribution via crowdfunding, it can present it as a “quasi” equity which allows it to raise more bank contributions.
4 # Enjoy a
communication induced by a crowdfunding campaign
A crowdfunding campaign offers the visibility of a media relay to a company. Beforehand, it must reflect on its message and its arguments before putting them forward. The SME will be able to speak about itself, its DNA and its values. She will present a project and / or some strategic directions. His campaign can be relayed on social networks and in the press. The company will be able to stimulate word-of-mouth sometimes viral. In this way, it can increase its notoriety, reputation and brand image.
5 # Adapt to
companies in tune with the times
When a company
is not a historic and stable company with nice accounts
over several very clean financial years, his banker risks
look at her askance. If in addition it evolves in a sector
innovative, technological and pioneering, it will scare him. It is
true that a bank will like positive results and in
growth like the possibilities of collateral and
that few disruptive start-ups can offer. On the other hand,
a crowdfunding platform knows these cases closely
of figure, understands them and integrated them into his model
6 # Develop the
crowdfunding campaign, an SME is offered the opportunity to
test certain things with the general public. It is by
example, an ideal option to verify that a market exists
before an official launch. So the degree of adherence of the
crowd of consumers present on the platform can be a
determining indicator of the viability of the business project. The
crowdfunding is in this logic a way to forge
a community. The SME will thus convince some new (or
first) customers to follow it and relay it in their
7 # Benefit from more global financial support from SMEs
Getting bank financing is a challenge. It is important to initiate a large number of steps, not only complex and lengthy, but which in addition, in the end, risks leading to a partial loan. This may have originated from the amount requested, considered too large with regard to the commitment ratios, or the type of expenditure to be covered, not retained by the funder. With the constraints which are theirs, the banking establishments can offer less and less a complete assumption of responsibility of the project of an SME. Crowdfunding then represents an additional solution to cover all financing needs.
8 # Finance
needs not covered by banks
The shackles of bank financing have for a long time forced SMEs in search of financing to mobilize their own funds for a certain number of needs. Indeed, given their functioning, banks do not cover certain types of expenditure and do not even consider them. They can make a loan to build a building. But to finance a working capital requirement, it often gets stuck. Generally speaking, banking establishments will not take into account certain intangible needs: research and development, recruitment campaign, commercial prospecting, bottom of balance sheet … On the other hand, for crowdfunding, this is not a problem!
9 # Counter the
fierce appetites of certain types of funders
In addition to banks, SMEs have the opportunity to approach other types of financiers. But to benefit from their help, many counterparts, and not the least, are required. These are business angels, seed funds, venture capitalists, etc. Generally, this type of structure will have an inquisitive right to look into society, or integrate capital, which will dilute it. In addition, capital financing is more expensive than debt financing: 15 – 25%, against 10 – 15%. Crowdfunding platforms are much less intrusive, even if they want to see many documents!
10 # Change the
power relationship with the financial partners of the SME
crowdfunding, a company shows that it is capable
to convince a crowd of investors to follow it. She
becomes empowered compared to banks by obtaining financing
complementary. It proves to investment funds that it
has other options. It manages its shareholders with funding
capital by increasing their number as he sees fit. This
disintermediation of corporate finance emancipates SMEs there
11 # Do
recognize a business other than accounting
The emergence of alternative finance gives the opportunity to mobilize support thanks to the arguments that society will be free to choose. It is no longer only required to present an accounting balance sheet, income statement and nickel-chrome business plan. The company also has the possibility and the opportunity to arouse the commitment of a community of investors on its business project, its DNA, its ecological or social positioning, its ambition … With good storytelling, it can directly promote your vision to the general public through the communication solutions offered by the crowdfunding platform.
12 # Opt for
financing that suits his business
Apart from crowdfunding, SME financing solutions constrain them as to the object and the nature of the aid granted. Banks will set their sights on the company’s durable goods and capital investment funds. However, the needs of society are not necessarily only, or even primarily, at this level. By its flexibility and its wide range of offers, crowdfunding can better cover the real needs of a business.
13 # Have access to
a large panel of investors
that evolve in crowdfunding do not all have
a few dozen euros to invest. These crowdfunders can also
be annuitants or institutional investors with budgets
consequences devolved to this mode of financing. With the launch
in a single campaign, an SME will be able to meet
from a wide range of potentially investor profiles
interested in his project.
What are the
best crowdfunding platforms for funding
Here are the top 20
participative sites to finance a business:
- Wiseed : stocks, bonds and equity securities for start-ups, SMEs, cooperatives and mid-caps
- Tudigo (ex Bulb in Town): pre-sales, donations, actions or debt for very small businesses in the real economy
- october (ex Lendix): loans to companies of all sizes
- Sowefund : crowdfunding equity for high-potential start-ups
- KissKissBankBank : generalist crowdfunding reward for all types of businesses
- Participatory BGE : donation, remunerated loan and capital investment for the creation of very small businesses supported by BGE
- Baltis Capital : investment in commercial and hotel walls
- Enerfip : loan or investment dedicated to companies implementing energy transition projects
- We do good : fundraising in royalties for start-ups and SMEs
- Blue bees : reward crowdfunding and crowdlending of projects favorable to sustainable agriculture and food
- Homunity : investment in real estate crowdfunding
- Miimosa : grant with consideration and paid loan for agriculture and food companies
- Lita.co : loans, stocks and bonds for social enterprises with strong positive impact
- HappyCapital : investment in the capital of French companies
- Ulule : crowdgiving with consideration for companies
- Solylend : loan with interest for solidarity projects
- Lendopolis : loan to VSEs and SMEs in the renewable energy and real estate sectors
- spreads : investment in start-ups, scale-ups, local and international SMEs
- Credit.fr : loan to French VSEs and SMEs
- Bolden : loans paid to SMEs
presentation of crowdfunding to finance a business, what
argument seem most convincing to you at the dawn of 2020?