The Planets Align for the French Crowdfunding Sector in 2024

In 2023, volumes collected on crowdfunding platforms fell by 11.3%. But Bertrand Desportes said that if crowdfunding experiences its first historic decline in 10 years, in 2024, all the indicators seem favorable on the startup side:

“Capital investment is becoming popular, particularly thanks to television shows. The PSFP (Participatory Funding Service Provider) approval professionalizes the sector and allows passporting, recently achieved by the arrival of the British player Crowdcube. The new tax system is ultra favorable. The ambitious objective set by Paul Midy to raise an additional 600 million for startups by 2024 should be achieved, and the crowdfunding channel should play an essential role.”

Same story with Benjamin Wattinne. Its platform dedicated to innovation and impact Sowefund has never contributed so much to the financing of ambitious and promising projects: “Real estate, the main asset class of crowdfunding, experienced a difficult period in 2023. However, this had the effect of favoring startups. The acceleration is significant. They collected 267.23 million in 2023 compared to 150 in 2022, and this trend should continue in 2024 ,” he explains. Since its creation, Sowefund has supported 114 projects, for a cumulative amount raised reaching 90,893,008 euros.

A concrete case which confirms the results of the annual crowdfunding barometer in France co-produced by Mazars and Financement Participatif France (FPF): “Crowdfunding is not immune to fluctuations in the sectors it supports. If real estate experienced a decline in 2023, renewable energies have progressed, and financing for startups has exploded with +78%, explains Bertrand Desportes. For the latter, the curve is exponential and we cannot really see where the flattening is located.”

A before and after Qonto in teh French crowdfunding sector

“In my opinion, there was a before and after Qonto,” explained the founder of Sowefund, referring to the fintech that became the first European unicorn to have opened its capital to its clients. For Benjamin Wattinne, this unprecedented initiative has had a definite impact on the sector. “The startups coming to Sowefund are more and more numerous and more and more mature. While the economic context of the last 18 to 24 months has led to a paradigm shift, money has become scarce, investment funds are significantly less reactive and investors are much more attentive to profitability , they come to us because they see Sowefund as a complementary source of financing. »

In addition to the financial aspect, the CEO of Sowefund observes that the growth of crowdfunding stems from an increased awareness among startups of the importance of building a community and engaging massively. “Startups understand that we have become essential players in the ecosystem ,” he adds.

The PSFP opens the borders to European funding

But Qonto is not the only reason for the consolidation of crowdfunding. The arrival of PSFP approval – with which platforms had until November 6th to comply – is another important element in strengthening the market.

“Its objective is to harmonize all European approvals with a single status. The PSFP also provides transparency by requiring platforms to provide, for investors, a very detailed sheet concerning the ins and outs of the investment. It also intensifies controls and forces platforms to exercise prudential management, in case, for one reason or another – and we have had a few examples in recent years – their activity disappears,” explained Benjamin Wattinne.

For the administrator of Financement Participatif France, the ten years of regulation and the arrival of the PSFP are consolidating the sector: “The platforms will be more controlled, more monitored. They will have higher reporting obligations. This is a good thing for savers who are guaranteed to see their money managed properly.”

The JEI and JEIR files in the viewfinder

The reform of tax advantages for investors in startups, proposed by Paul Midy and included in the Finance Law, also constitutes for Benjamin Wattinne a major incentive to support startups. The first effects should be felt before summer.

“The Young Innovative Company and Young Innovation and Disruption Company schemes should have a significant impact on the democratization of investment and on the activity of platforms since they are only open to Business Angels or investors who go through platforms,” explained the CEO of Sowefund.

“With this reform which now allows you to benefit from a tax exemption of up to 50% of investments, compared to 25% in 2023, investors can reduce their income tax by up to half of the amount invested in eligible startups . It’s much more attractive. » It therefore seems that all the signals are green for crowdfunding.

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(Featured image by moerschy via Pixabay)

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

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