Crowdfunding in France Grows 25% and Raises €2.3 Billion
Real estate crowdfunding has grown much faster than the crowdfunding industry in general. It reached a record €1.6 billion in 2022 compared to €1.1 billion in 2021. The number of projects funded increased from 1,346 in 2021 to 1,628 in 2022. The market remains predominantly oriented toward residential real estate financing, accounting for 71 percent of projects.
According to the “Crowdfunding Barometer,” published by Mazars and the French Crowdfunding Association (Financement Participatif France, FPF) shows that crowdfunding in France reached a new high in 2022.
In fact, more than €2.3 billion were raised, a 25 percent increase over the previous year, when it raised €1.88 billion. Real estate crowdfunding remains the main driving force. With a 40 percent year-on-year growth rate, it accounts for two-thirds of total fundraising, followed by environment and renewable energy.
Fundraising channels are increasingly diverse. While the direct approach remains predominant (66 percent of fundraising), indirect channels such as financial promoters (15 percent) and investment funds (8 percent) are growing. In an economic environment troubled by the war in Ukraine and the ensuing energy crisis, crowdfunding has proven its resilience as a credible and reliable asset class for investors.
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Real estate as a driving force
Real estate crowdfunding has grown much faster than the industry in general. It reached a record €1.6 billion in 2022 compared to €1.1 billion in 2021. The number of projects funded increased from 1,346 in 2021 to 1,628 in 2022. The market remains predominantly oriented toward residential real estate financing, accounting for 71 percent of projects.
Commercial real estate financing dominates (56 percent), while real estate development is declining (35 percent). The market is driven by the renovation of urban centers and the redevelopment of larger urban areas. In 2022, 562 projects repaid €382 million in principal and interest.
Sustainable finance is increasingly at the heart of crowdfunding in France
The social or environmental dimension is an essential component of many development projects. Sustainable finance numbers remain high again this year, with 61,891 projects with a social or environmental dimension, not counting real estate, which is increasingly promoting a “green and sustainable city” offering.
A total of €552 million was raised for social or environmental projects. In addition, three-quarters of crowdfunding platforms take environmental, social, and governance (ESG) criteria into account when selecting projects.
Crowdlending breaks records again
Crowdlending saw a significant increase in 2022, crossing the €2 billion threshold in inflows, up from €1.6 billion last year. Most loans go to small and medium-sized enterprises. Most loans are issued in the form of bonds, particularly in real estate crowdfunding. But small and very small businesses are increasingly inclined to raise funds through interest-bearing loans.
Equity crowdfunding: a limited but growing sector
With €150 million raised in equity or royalties, up from €104 million in 2021, this sector continues its strong growth. One-third of the volume raised goes to fund environmental and renewable energy projects.
The decline in donation crowdfunding
Although below previous years, donation crowdfunding remained at a high level, with 116,155 projects funded, the situation has changed. The volume of donations raised has dropped to 107 million due to, among other things, the impact of inflation on household budgets and the backlash of solidarity outpourings during the Covid years of 2020 and 2021. The social sector is the most affected sector in decline, while the cultural sector continues to concentrate the vast majority of donations.
Damien Guermonprez, president of PFP and chairman of Lemonway, commented on the report:
“Crowdfunding meets the needs of all types of sectors, as evidenced by its sustained growth […] in France. The year 2023 is a crucial year for lending and investment platforms with the entry into force of the European Crowdfunding Regulation [ECSPR]. Crowdfunding platforms must now obtain approval as “crowdfunding service providers.”
Bertrand Desportes, Partner at Mazars, said that despite an uncertain economic environment, there is a real craze for crowdfunding fostered by the increased diversification of fundraising channels. “Crowdfunding is catching on among the French as a reliable money management solution that supports meaningful projects.”
(Featured image by JACLOU-DL via Pixabay)
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