Crowdfunding activities and banking activities are too often opposed. After an inventory,
Crowdfunding is on the rise. Long considered as marginal sources of funding, Crowdfunding platforms are establishing themselves as serious and sustainable players in the financial landscape.
After several years of successive growth, the first half of 2015 confirms the trend with 133.2 million euros collected – and an increase of 150% in particular for investment platforms compared to 2014. Today there are more than 1.75 million USA people who have already contributed to a campaign, including 750,000 this year.
Crowdfunding therefore appears for some as a direct alternative to bank financing. But are the two sectors comparable?
Very different types of financing
– Banks as the majority source of financing for SMEs
In USA, banks still represent 95% to 98% of financing for SMEs and therefore undoubtedly remain the main source of financing for young companies.
More and more risky, the large banking institutions play little role in supporting businesses in the early stages of their growth. This is where crowdfunding comes in.
– The risk-taking, the bias of crowdfunding.
It is important to distinguish here the different forms of crowdfunding (donation, loan and investment).
> The donation : It is the “love money” extended to a 2.0 community, allowing entrepreneurial and artistic projects to see the light of day. For generally low amounts, this method of financing makes it possible to support project creators in the first stages of their adventures.
> Investment : Close to the venture capital activities practiced by many investment funds, equity crowdfunding continues to focus on young companies, by adding important selectivity criteria. The objective for investors to bet on companies whose growth prospects make it possible to envisage – despite the risks – a substantial return on investment.
> Loans : The sector probably closest to the bank, the loan, allows you to expect attractive returns by entrusting your savings to SMEs that have been profitable for several years.
Differentiating themselves by their products in a more or less pronounced way from banking activity, it is above all in the user experience that crowdfunding stands out.
A disrupted user experience
– For users
The phenomenon of crowdfunding is also a consequence of the transformation of uses via social networks and the omnipresence of the Internet in services. The offers of crowdfunding platforms present an alternative to traditional investments. We are slowly witnessing a change in the investment market. Indeed, the advantage of crowdfunding platforms is to be able to create real collaborative communities, by linking investors and entrepreneurs over time through reports or even events.
In addition to this “societal” advantage, crowdfunding is clearly involved in the real economy by proposing projects that allow the creation or maintenance of jobs but also to support the national entrepreneurial dynamic.
This educational contribution is a real asset and has found its audience. The platforms allow investors to have a global view of investment offers. Each investor is able to know exactly where his investment is going. He is also able to know everything about the economic promise of the investment. Thus, the platforms provide a guarantee of transparency, where banking activities are often obscure for consumers. Crowdfunding has simplified the investment circuit and this is good news for investors!
– For the entrepreneur
Crowdfunding, in addition to providing funding that the banks had neglected for too long, provides project leaders with real community strength by presenting their projects to several thousand people. In fact, in addition to a financial impact, entrepreneurs have real feedback from the community which provides them with advice, expertise and support.
Does crowdfunding overshadow the bank?
Crowdfunding platforms have made the following observation: startups and SMEs have great difficulties in obtaining financing via traditional banking channels on the one hand, and that there was a real demand for alternative investments for individuals from another part.
This ability to develop new sources of financing is felt more and more and, even if it is often complementary financing for project leaders, crowdfunding can prove to be a real alternative for individuals.
The most convincing example to date is real estate. More and more platforms are now offering individuals to finance, alongside developers, the construction of the homes of tomorrow. Even if this contribution in equity does not call into question the bank loans which are always essential in the promotion, the returns on investments are such that they come into serious competition with the banks which often offer secure investments but with derisory interests, far from satisfying a demand. much of their savers.
The rise of crowdfunding platforms is forcing banks to be more innovative and take initiative. Moreover, some have already set up partnerships with platforms in order to segment the offer and respond to demand globally. Others are even planning to set up their own crowdfunding platforms.