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Crowdfunding for SME by FriendsClear

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Crowdfunding for SME by FriendsClear …

Crowdfunding for SME by FriendsClear
EFMA Retail Credit Conference 20-21 june 2013 Amsterdam
Complementarity or Competition with Banks

Published in: Economy & Finance, Business
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  • 1. Crowdfunding for SMEEFMA Retail Credit Conference20-21 june 2013Nicolas Guillaume – Financial Breakthroughnicolas.guillaume@finthru.comBlog : http://nicolasguillaume.fr/Twitter : http://twitter.com/NicolasMaxMobile : +33 6 19 98 57 65Financial BreakthroughBlog : http://finthru.com/Twitter : http://twitter.com/finthru1EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 2. Agenda• Key points• Global Market• SME Focus• FriendsClear’s case• Feedback• Marketing• Regulation• US Crowdfunding Act• Competition vs Complementarity2EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 3. Key Points• Free and extended access to projects to befunded by investors (funders)• Direct choice of funding by investors• Full Transparency3EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 4. Key Points (detailed)• Free and extended access to projects to be funded by investors (funders)– Projects individualy identified and described (information disclosure)– Defined amount requested with predefined use of funds– Projects reviewed by platforms– Usually through Internet• Direct choice of funding by investors– Limited amount by investor– Directly assigned to a project– Assessment carried by each investor– Large number of investors requiring a collective approval (collective intelligence)• Full Transparency– Amounts funded– Amounts collected and fundings granted– Returns4EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 5. Key Points (continued)• Each point very differenciating from traditionalfinance product• Social Media (info disclosure, virality, interactivity,internet accessibility)• Funding is not the point– Multiple funding models : reward, no returnallocation, loan without interest, loan with interest,equity, bond– Third party (direct funding) or own account (mirroringfunding)– Funding, Refunding, Additional funding5EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 6. Global MarketSource : Massolution, May 20126780 M$ loans originated(2012)EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 7. SME Focus7Kickstarter Babyloan FriendsClear FundingCircleCréditAgricoleSmartangelsFunding Type Reward Loan withoutinterestLoan withinterestLoan withinterestLoan withinterestEquityProject sample 3Doodler3D Plasticmelted pencil2,3M$ (30K$requested)Tilagavady &DjeasridarIndianrestaurant5K€MatérielForestierWoodcutter8K€Score a Hole inOneEventsOrganization50K£Eolienne LouéWindmill1,2M€ (on atotal of 17M€)SentineloMobileapplication500K€Funders Nb 26.457 82 26 24 250 33Av. funderamount88 $ 68 € 307 € 2.084 £ 4.800 € 15.000 €FundercounterpartDeliveryPromiseFundingAccount(mirroring)Term BankAccount (withsecurities)Loan part Term BankAccount(mirroring)Ad hoc OfferEquityRisk DeliverydefaultMicroFinanceInstituteDefaultLoan default Loan default No risk •Operation•Valorization•LiquidityEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 8. Kickstarter888$ / funderhttp://www.kickstarter.com/projects/1351910088/3doodler-the-worlds-first-3d-printing-penRewardEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 9. Babyloan968€ / funder (82 funders)Loan without interest (cf Kiva)Nicolas Guillaume – FriendsClear / FinthruEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 10. FriendsClearEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam 10Requested : 8.000€307€ / funder(26 funders)Loan with interestNicolas Guillaume – FriendsClear / Finthru
  • 11. Funding Circle112.083£ / funder (24 funders)Loan with interestEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 12. Smartangels1215.000 € / funder33 fundersEquityEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 13. FriendsClear’s case• Professional Projects funded by loan (3K€-25K€, 3years, 8,5% fixed rate + 4% flat fees)• Selected & funded by internauts through adedicated crowdfunding account with TermDeposit (interest rate 4,5%) mirroring projects(and guarantee)• Money collecting, account management and loanorigination performed by a banking partnerCredit Agricole• Projects reviewed (FriendsClear) and bankingcontrols (Credit Agricole)13EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 14. FriendsClear Regulation frictions• Regulator remarks (Quiet period)– No discretionary refusal for loan– Direct selection– Risk fully supported by funders• Modified model– Discretionary refusal for loan– « Projects Basket » : choice of a project into a « basket » ofprojects– Capital guarantee by Credit Agricole• Risk on interest not capital (4,5% default rate OK)• Double selection process not convergent (timing cycle, criterias,segment addressed) => not scalable14EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 15. FriendsClear Feedback• Projects are the product• Very attractive product (for funders, project owners,media)• 2 levels of client involvement– (Non financial) « contribution » (vote, recommend, virality,comment)– Funding• 2 models of virality– Ad hoc communities (Social Media)– Recurrent funding communities• High impact of funding tools and regulation (clientcommunication, legal, risk management,…)15EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 16. Clients profiles16FundersProject owners• Emerging phase projects• Non standard profiles (young, withoutexperience, professional change,…)• Small size projects (commerce ambulant,service à la personne, internet)• Assessment problem projects (innovation,unknown indutry)• Scoring flag projects (excluded industries,unfilled ratios)• Risky projects (startup, retournement,...)• No accounting or bank relationship history• Equity « Funding gap » (100K€ to 2 M€)• Bank reluctance• Internet based quick and packaged (lesspaper) process => not in FriendsClear’scase• Wide client profiles diversity• Motivation• Project support• Active selection• High yield• Transparency / Traceability• « Power users »• Favored segment : experiencedexecutives or managers closed toretirement• Time• Money• ExpertiseEFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 17. Crowdfunding Regulation• Collecting money : eMoney, KYC, AML• Client qualification & protection : MIFID /PRIPS, Prospectus• Middle-man : eMoney, Broker, ?• Funding tools : Prospectus (equity), Loan,…• Regulation is an issue but not a problem(except if you are a bank)17EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 18. US Crowdfunding Act• Exemption 2000$/year / funder• Funding Portal(Middleman)18Source : Forbes,Sept 2012EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 19. Competition vs Complementarity• High involvement product for special needsand segments• Small amount• Can be « packaged » to be retailed bytraditional banks• Much more complementarity thancompetition19EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 20. Thanks for your attention20EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 21. Questions21EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam
  • 22. Nicolas GuillaumeFinancial Breakthroughnicolas.guillaume@finthru.comBlog : http://nicolasguillaume.fr/Twitter : http://twitter.com/NicolasMaxMobile : +33 6 19 98 57 65Financial BreakthroughBlog : http://finthru.com/Twitter : http://twitter.com/finthruRessources :Blog : http://nicolasguillaume.fr/Twitter : http://twitter.com/NicolasMaxCours Social banking & Fin Part : http://fr.slideshare.net/NicolasMax/2012-cours-social-banking-prt-participatif2222Paternité-Pas dUtilisationCommerciale-Pas de Modification2.0 Francehttp://creativecommons.org/licenses/by-nc-nd/2.0/fr/EFMA CONFERENCE – RETAIL CREDIT 20-21June 2013 - Amsterdam

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