• France's news in English

'Cautious' France turns to crowdfunding in a crisis

The Local/AFP · 9 Oct 2013, 09:11

Published: 09 Oct 2013 09:11 GMT+02:00

Facebook Twitter Google+ reddit

Scented "Made-in-France" underpants, a wind turbine that looks like a tree, customized prosthetic limbs, films, emerging singers... The French projects are snowballing, with several examples of meteoric success and they are all linked by one word - crowdfunding.

This new form of funding, which allows people with project ideas to go online and solicit money directly from other individuals, is fast rising in a country hit hard by the economic crisis, where entrepreneurs are seen as key to kick-starting growth but face considerable financing difficulties.

"Finance participatif" is not something you would associate with France, whose business culture is renowned more for its caution than risk-taking. However the culture appears to be changing and more importantly it is being embraced by the country's government.

"We are the fastest growing sector in France. Crowdfunding can really boost start-ups in France at a time when the economy is struggling," Joachim Dupont, co-founder of crowdfunding platform Anaxago told The Local on Wednesday.

"It's not growing as fast as in the UK where people are generally less risk averse and more connected, but the culture is changing in France.

"People in France are starting to understand that if you invest money on the stock exchange you can lose a lot, but with crowdfunding they can invest in a business they understand, they can meet the CEO etc. It can be a very different story.

Government leads the way

Last month, the country's Socialist government announced a series of new proposals aimed at facilitating crowdfunding, which until now was in regulatory limbo.

These include the creation of a new legal status that would ease regulatory burdens for online crowdfunding platforms - a first in Europe according to innovation minister Fleur Pellerin.

"We all know how much banks can be unadventurous, scared of new ideas from inventors and those with projects," Pellerin said at a conference announcing the measures, which if adopted will kick in in early 2014.

"This is a problem, particularly in a context of crisis where we actually need to encourage audacity, and test groundbreaking solutions to create more jobs.

"For young or new entrepreneurs, (for) all those who... refuse to bow to the dictums of banks, crowdfunding is a real boon."

The Socialist government's eagerness to embrace crowdfunding has impressed Anaxago's Dupont, who says France can lead by example.

 "We started the first association for crowdfunding in France and have been lobbying the government for nearly a year to introduce a laws to help promote it and regulate it," he said.

"The government has reacted very quickly. We will be the first country in the world to give crowdfunding a legal status, so France will be an example for other countries in the world to follow. It's very positive."

And Europe intends to follow France's lead.

"We intended to regulate crowdfunding sites, and a draft proposal will be presented early next year," the EU's Internal Market Commissioner Michel Barnier told the EurActiv news site.

Clement Scellier, who turned to crowdfunding to help develop his firm Jiminis agrees that crowdfunding can help change business culture in France.

"In France, there's a culture of caution. If you fail with a company, it's almost impossible to get a bank loan again whereas in the United States, it's considered a 'guarantee'... that you won't make the same mistake again," said Scellier.

"Crowdfunding in France is a very good thing, it will make access to funds easier for entrepreneurs."

Globally, the crowdfunding market grew 81 percent in 2012 and raised $2.7 billion, a figure expected to shoot up to $5.1 billion this year, according to research firm Massolution.

North America is by far the leader in this innovative form of funding, which broadly falls under three categories -- donation-based financing, peer-to-peer lending and buying equity in a company.

"Made in France" underpants

In France, the trend emerged around 2008 with the rise to fame of Grégoire, a singer who financed his first album via the My Major Company crowdfunding platform.

It has slowly gathered momentum. Some €33 million ($45 million) were raised in the first six months of 2013 - more than the whole of last year - with more to come.

"Growth (in France) will be around 150 percent this year, compared to around 100 percent at a global level," said François Carbone, head of the French crowdfunding association.

"This shows that there is strong interest in France for this mode of funding, and that it is rising quickly."

Investors need to understand risks

Story continues below…

Buzcard is a case in point. The French firm that makes innovative, scannable business cards raised €260,000 in just three days this year after months of unfruitful talks with angel investors, who traditionally provide capital for start-ups.

On the lower end of the spectrum, beekeeper Thomas Cambassedes raised more than €27,000 to buy much-needed hives -- over three times his initial target.

The government itself has also jumped onto the bandwagon to help renovate its national monuments at a time of dwindling funds.

The Pantheon, the famed resting place for French national heroes, the Mont-Saint-Michel, the medieval city of Carcassonne... all raised more than they had initially asked for.

But analysts caution that only half of all projects submitted on crowdfunding websites get financed in full.

Scellier and Rabastens, for instance, have so far only raised half of the €10,000 they need to pay back machinery used to make the insect snacks - due to be commercialized from December -- although they still have a month left to reach their target.

Oliver Gajda, head of the European Crowdfunding Network, warned that inexperienced investors needed to understand that there were risks involved and that those expecting a return could be disappointed.

"Best practices need to be established," he said, adding that more transparency would be needed on online platforms.

Don't miss a story about France - Join us on Facebook and Twitter.

The Local/AFP (ben.mcpartland@thelocal.com)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
How speaking French can really mess up your English
Photo: CollegeDegree360/Flickr

So you've mastered French, but now it's time to learn English all over again.

French claims that Jungle camp is empty are rubbished
Photo: AFP

Reports from the scene say scores of migrants are still in the area of the Jungle despite French authorities claiming "mission fulfilled."

Kidnapped Riviera millionaire left tied up in car boot in Nice
Photo: AFP

Head of luxury Cannes hotel has been found alive after being kidnapped in Nice on Monday.

Paris landlords still charging illegally high rents
Photo: Panoramas/Flickr

... and it's tenants in the smaller apartments that get hit the hardest. Could you be paying too much?

France takes baby steps to make life simpler
Photo: AFP

... including extending the ridiculously short time limit for registering a new baby.

IN PICTURES: Calais Jungle camp goes up in flames
All Photos: AFP

Migrants leave behind a scorched camp as they are moved to locations across France.

French expats in UK suffer Brexit abuse
French ambassador to the UK Sylvie Bermann with Foreign Secretary Boris Johnson. Photo: AFP

French nationals no longer feel at home in the UK, ambassador says. But Brits in France have been greeted with sympathy since the referendum.

Six to go on trial in France over topless Kate photos
Photo: AFP

The topless pics sparked fury among the royals.

France sees biggest drop in jobless rate for 20 years
Photo: AFP

Good news at last. But it's unlikely to keep President Fran├žois Hollande in his job.

Calais migrants given mixed reception in French towns
Photo: AFP

Some in France have shown solidarity with their new guests, while others have made it clear they are not welcome.

The annoying questions only a half French, half Brit can answer
Sponsored Article
Last chance to vote absentee in the US elections
Forget Brangelina's chateau - here are nine others you've got to see
The must-see French films of the millennium - Part One
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
jobs available