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Is now the right moment to launch a crowdfunding campaign?

The health crisis caused by the coronavirus outbreak and the closure of companies are putting venture capital at risk. The COVID-19 pandemic has made investors freeze their investments to focus on other issues. However, on crowdfunding sites, campaigns are not affected, as the amounts seem to continue to increase. Tudigo launched a loan offer to help SMEs and VSEs cope with the economic downturn.

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At first glance, the current economic situation does not seem to have had an impact on crowdfunding campaigns. On the pages of Ulule or KissKissBankBank, the campaigns are continuing, and while time is running out the amounts seem to continue to increase.

However, some projects are suffering from an ambient gloom that goes beyond the economic area. “There is a slowdown in the campaigns that need to be launched. For those that are underway, some are impacted, others are not,” explained Vincent Ricordeau, CEO and co-founder of KissKissBankBank.

On the entrepreneurial side, concern also remains “from an economic point of view, of course, concerning the survival of our small, fledgling company, but above all from a health point of view.” When health becomes the priority, the desire to “communicate about the campaign” is no longer there, not to mention the parties and other events organized to thank the precious donors,” confided Mathilde Guillier, founder of Zèbre et Colibri.

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The COVID-19 pandemic has a different impact on crowdfunding depending on the platform

The situation does not affect all SPVs in the same way. Within Goodeed, a platform that allows non-governmental organizations to finance by watching advertisements (acquired by KissKissBankBank and Banque Postale in 2018), “there is a slowdown in the implementation of campaigns but their business model is little affected in the end,” said Vincent Ricordeau.

With regard to Lendopolis, a crowd equity subsidiary of Banque Postale, the situation is a little more complex, because the platform faces a double responsibility towards companies and investors.  “We are in the midst of discussions with our communities on this issue. We should give companies a two-month period to let the epidemic pass,” said  Ricordeau, even though none of the companies on his platform are having problems at the moment.

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And what about the same platforms whose economic health depends on the commissions earned on holdings? “We are a subsidiary of Banque Postale, so we are fairly calm and solid, which is not necessarily the case for other companies in the sector, which are at risk of a fairly high cash burn,” said the CEO and co-founder of KissKissBankBank.

Extending campaigns as a solution for some crowdfunding projects

Whether in crowdfunding or crowd equity companies, adaptation and flexibility are a must. As soon as the crisis started, Ulule sent an email to its Ululeurs offering the most vulnerable people to extend their campaign for a few weeks.

Mathilde Guillier wanted to take advantage of this solution. “We preferred to postpone the end of our campaign by 15 days to take a step back, “get used” to the situation and think about how to present – approach – communicate perhaps different to what was planned.” The same goes for KissKissBankBank, which gave 30 extra days to entrepreneurs who needed it.

Tudigo, which enables private individuals to invest in companies, decided to launch a loan offer starting from $1 to $54,000  (€10 to €50,000) to help VSEs and SMEs cope with the economic downturn. Repayments will be deferred for 3 to 6 months.

In terms of support, meetings and workshops are often “transformed into an online event,” said Ulule. Digital tools allow teams to continue their activities and to continue to support start-ups and project leaders. As with the rest of the economy, crowdfunding is adapting while waiting for a return to a calmer and less anxious climate.

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(Featured image by TheDigitalWay 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.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Daphne Freeman has worked in the crowdfunding and impact investing industry for the past few years, gaining experience in marketing, and connecting businesses and entrepreneurs in need with the right investors. As a seasoned grant writer as well as financial market journalist, she is passionate about making a social impact in the world. A free spirit, Daphne also enjoys writing and exploring topics of interest, currently CBD, health and beauty, and social media influencers.

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