“It’s not the money that interests us, we don’t need it. During the launch of Qonto’s crowdfunding campaign in early 2022, its boss, Alexandre Prot, wanted to make things clear and recalled that the neobank for SMEs had raised a few weeks earlier… 486 million euros. For the French unicorn, this crowdfunding – which allowed it to raise 5 million euros – served above all to engage your customer community.
It is for another reason that proptech Masteos has once again asked the general public and has just exceeded its initial goal of one million euros, a few months after a funding round of 40 million euros. “It’s a marketing operation to have our brand ambassadors,” explains Thierry Vignal, the CEO, in general, there are three reasons to do crowdfunding: a particular appetite for the community, marketing or lack of money. That’s good because for a few months now, money hasn’t been flowing freely at French Tech.
Crowdfunding, previously perceived as the poor relative of ecosystem financing, can be a good tool to overcome the crisis. “Many entrepreneurs want to postpone the deadline for raising funds with venture capital. All means are good to achieve this, a euro is a euro”, says a businessman who raised money through crowdfunding.
Lack of financial education
“Sometimes we work on bridges [sorte de levées d’urgence, NDLR] but just raising money is not a good motivation,” explains Constant Dacbert, commercial director France at Crowdcube, a British “crowdequity” platform. Since its launch in France in early 2022, fintech has recorded around twenty operations with a “strong acceleration” at the end of the summer.
Same story on the side of Tudigo, a competing French platform. “Some companies that want to raise a B series come to us with the idea of having the same valuation as the A series or else making a non-dilutive bridge”, says Alexandre Laing, its superintendent director.
Bringing in retail investors in the valuation of the previous round is not to everyone’s taste. “People don’t know what €140 million worth of valuation represents for a start-up that doesn’t have great metrics. They see that the brand is on TV and decide to invest, I find that worrying”, underlines Mathias Flattin, partner at Axeleo Capital. “Talking to people who don’t know how to value a company is a limit”, adds Augustin Sayer, partner at Newfund.
Transparency will soon be mandatory
Start-ups defend themselves by indicating that most investors inject low tickets compared to business angels, ranging from a few tens to a few thousand euros. And they demonstrate more or less pedagogy.
“We explain that our Ebitda is negative and when we intend to make it positive”, specifies Aymeric farmco-founder of 900.care, a refillable hygiene product brand that raised a million in crowdfunding at the same valuation as the previous round.
Masteos, in turn, provides a series of financial information, deliberately omitting some aspects such as profitability or cash level. “If an individual sees that a company is not profitable, he will not invest. I don’t reach out to catch it”, says Thierry Vignal.
Soon, transparency will cease to be a formality. The European regulation governing the crowdfunding sector, which will come into force in November 2023, will force platforms to publish a lot of information about the projects they refer to. “The last three accounting years, a list of financial ratios… And if the individual investor places a ticket in excess of 1,000 euros or makes an investment that represents more than 5% of his assets, the platform will have to ask him if he is insurance to take that risk,” says Matthieu Lucchesi, a lawyer specializing in fintech issues at Gide.
These measures come at a time when funding for start-ups by the general public is in the spotlight. The third season of the program “Who wants to be my partner”, currently broadcast on M6, registered its best start with 1.89 million viewers, for an audience share of 10.1%.