“Legal hurdles hold crowdfunding in France back”



In April, French minister for SME’s Fleur Pellerin (photo) will receive proposals to make crowdfunding in France more attractive, as part of the ‘Assises de l’entrepreneuriat‘ – a broad programme of interpellations among entrepreneurs and stakeholders about how to spur entrepreneurship in France.

For crowdfunding, new rules are urgently necessary, say a few crowdfunding platforms, because the rules today are in no way adapted to reality.

“The rules today are made to protect savings, rather than encourage entrepreneurship,” co-founder Joachim Dupont of Anaxago told Les Echos.

The most important hurdle holding crowdfunding back is a rule that imposes a maximum of 149 investors who can ask for information about the investment. More than that and the investment offer becomes “public”, which means the company has to abide by the rules of the Autorité des Marchés Financiers (Financial Markets Authority). This would entail – among other things – that the entrepreneur has to present a financial plan for the next three years.

Another rule demands that crowdfunding platforms keep at least € 730 000 in equity capital -  which is not in proportion to the amounts of money that they handle or the service they offer, say the platforms.

But not everyone agrees that the strict rules are a problem. Louis Godron, the president of the French Association of Growth Investors, told Les Echos that he’d rather see strict regulation than an avalanche of complaints three years from now when investors feel cheated because they didn’t realise how risky it is to invest in a startup.

Appartently, investors in My Major Company (crowdfunding for artists) complained recently that they don’t have access to the books of the company to check how their money is being used.

Fleur Pellerin on the other hand seems determined to make crowdfunding more broadly accessible. Recently she remarked that in France, only € 10 million per year is invested via crowdfunding. In the US, that is up to $ 2 or 3 billion.

Crowdfunding in France

[Les Echos][Photo: Leweb, Flickr]

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Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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