Crowdfunding in France: From Boom to Slowdown and a Glimpse of Rebound

Crowdfunding, a concept launched in France in 2014, is an alternative financing method carried out on dedicated platforms (general or specialized). This alternative to bank loans allows project leaders of any type to raise funds online by soliciting a large number of contributors (hence the term “crowd”). These investors can contribute in the form of donations, loans, or “crowdequity” (subscriptions to unlisted financial securities).

The real estate crowdfunding decline

For ten years, real estate crowdfunding has been booming, judging by the approximately €10 billion invested. It must be said that the return prospects displayed by platforms dedicated to real estate crowdfunding were promising, with an average rate of between 9.1% and 9.9% between 2017 and 2023.

Despite the peak of 10.7% reached at the end of the first quarter of 2024, the latest barometer produced by France Fintech and the audit firm Forvis Mazars reveals for 2023 a beginning of a slowdown in momentum, with a decrease of 11.6%, a decline confirmed by a further drop of 17.1% in 2024.

This downward trend reflects the state of health of the economy in general and of real estate in particular (rising interest rates, business failures, decrease in the number of transactions, etc.). These difficulties are added to an increase in late payments, around 30% at the end of March 2024, which have become a major issue and challenge for investors.

The decline of investors and the French crowdfunding platforms

Faced with the risks involved, contributors have lost confidence and become more cautious. The other consequence of this decline is that some of the 60 platforms dedicated to crowdfunding, including some of the largest, have abandoned this market to turn to more profitable activities.

The French Financial Markets Authority (AMF) is issuing a twofold appeal: on the one hand, it is urging investors to be more vigilant, and on the other, it is asking platforms for greater transparency. In particular, it is encouraging them to publish returns clearly, distinguishing between contractual and actual performance, and highlighting payment delays.

The renewable energy sector, which has raised 352 million, continues to increase its market share, with 20% of the total raised (compared to 17.6% in 2023). The projects financed mainly focus on solar (67%) and wind (12%), with the remainder being shared between biogas, storage, and hydroelectricity.

According to the 2024 barometer, a third of the crowdfunding platforms remain profitable, with 10% representing more than 50% of fundraising. The work carried out by fully engaged platforms, combined with current positive market data (slight recovery, greater selectivity of real estate files, etc.), could herald a rebound in 2025.

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(Featured image by Rafael Garcin via Unsplash)

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First published in Boursorama. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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