In the 2000s, we saw the emergence of participatory financing, otherwise known as Crowdfunding. It consists in calling upon Internet users to find financial resources in order to carry out cultural, artistic, entrepreneurial, social or environmental projects.

Funding can take three forms: donation, loan or investment. For cultural or social projects, it is most often donations, as this is important to us, but we are now seeing an increase in fundraising for business development. In these cases, it is more a question of investment.

The investor's point of view

In the same way as venture capital funds or business angels, it is possible to invest in a company in the making or for a specific project. This is called "Crowdlending". The borrower must mention, in addition to the description of the project, the financial counterpart, the duration of the investment and the remuneration. Thus, the investor will be able to position himself for the amount that suits him and take part in the project. The returns can be high and correspond to the specificities of the borrower and the uncertainty of the project.

From the borrower's perspective

These borrowed amounts come in addition to or instead of bank loans. Either by choice or by necessity, borrowers use alternative solutions to finance their projects. To do so, these companies rely on institutions specialising in crowdlending. Before proposing the operation to potential investors on its financing platform, the organisation will study the project and check its credibility. Being outside the banking environment, the criteria assessed to decide whether to grant the application are different and allow for an individualised decision. This gives companies the possibility of borrowing and thus obtaining the funds necessary for their development or the completion of operations undertaken. These alternative solutions are particularly popular with individual developers, property dealers, traders or very small businesses, for example.

The costs are higher than those of bank loans but when it is necessary for the project to succeed, it is worth the cost!

As you can see, these investments have a real economic and societal utility. The emergence of these alternative financing methods meets a need of our companies and represents a real boon for some of them.

Whether you want to participate in useful and concrete projects by investing or whether you need to raise funds for your company, the Wealth A7 and France Crédit teams can help you. Contact us!

In a world that is on the move, Wealth A7 is there to bring your desires to life.