The document discusses crowdfunding and the potential role of mutual guarantee societies in crowdfunding. It notes that crowdfunding is a fast-growing market that could reach €20 billion collected by 2015 and €1 trillion by 2020. It presents data on the size of different crowdfunding models and the French crowdfunding market. It then examines how a mutual guarantee society could help secure lenders, borrowers, transactions, and platforms involved in peer-to-peer lending crowdfunding. This includes verifying borrower data, analyzing projects, diversifying risk, and collecting loan payments. The presentation considers opportunities and threats of guarantee societies' involvement and outlines SIAGI's agenda to understand

1. AECM Seminar 2014 – ISTANBUL
Assemblée Générale – 16 octobre 2014
New products :
Crowdfunding : Where to position guarantees?
Michel COTTET, Managing Director of SIAGI, France

2. Crowdfunding
Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET2

3. Crowdfunding, 5 segments of market
3 non speculative models
Free donation
1.2 bn €
2 speculative models
Social Lending
(no interest)
1.1 bn €
Donation
with reward
0.8 bn €
Peer to peer
lending
(with interest)
1.4 bn €
Equity
0.15 bn €
3Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

4. A fast growing market
x4 in the next 2 years
 2012
• 536 platforms
• 2.2 bn € collected
• 1.1 million projects
• 72% North America
• 26% Europe
 2013
• 800 platforms
• 5 bn € collected
• 2.2 millions projects
 2015
• 20 bn € collected
 2020
• 1 000 bn € collected
4Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

5. The French market
 2012
• 25 platforms
• 22 M€ collected
• 17 500 projects
 2013
• 75 platforms
• 80 M€ collected
• 50 000 projects
 2020
• 2.2 bn€ collected
• 1.5 bn € Peer to peer lending
• 1% of the French savings
market
5Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

6. Peer to peer model :
« the funding circle » UK
 Created in 2010
 5 500 enterprises financed
 32 000 lenders
 390 M£ cumulative lends
 100 M£ over the last 6 months
 From 5 000 £ to 1 M£
 Interest rate up to 10%
 5 Years monthly repayment
 Fees up to 4%
6Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

7. The French crowdfunding regulation
 2013/06 position from the supervisors (both savings and banking)
 2014/02 public announcement from the Government
 2014/05 publication of the 1st Order (ordonnance)
 2014/09 publication of the implementing legislation
 2014/10/01 the status comes into force
7Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

8. The French framework for lending
 A new type of body: IFP (Participative Finance Intermediary)
 Another body for equity as CIP (Participative Investment Advisor)
 Light regulation
• Listed on a register of insurance intermediaries
• Manager professional skill
 Double Limits
• Max 1 M€ by project
• Max 1 000 € by project by person
8Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

9. An example of criteria
 Target : very small and sme’s
 Minimum 2 balance sheets
 Growth project including working capital
 Maximum 5 years
 Interest rate from 4% to 10% according to an internal rating (before taxes
and losses)
 Up front fees 4% on the capital
 No collaterals
 30 days to collect funds from the crowdfunder
 3 days to provide funds to the enterprise
9Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

10. The potential role of
a mutual guarantee society
 Secure lenders
 Secure borrowers
 Secure the transactions
 Secure the platform ?
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11. Secure lenders
 Datas
• Verify the informations and the sources of information from the
borrower
• Verify the consistency of the datas
 Analysis of the project
• Cross referencing with external datas
• Assessment process
 Risk mutualisation
• Diversification
• Selectivity rate
 Flows collections
• To be allocated to the enterprise
• To be allocated to the project of the enterprise
• To be allocated to the lenders (interest, capital, unpaid collection)
11Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

12. Secure borrowers
 Protection of datas
 Confidentiality of transactions
 Adequacy between enterprise, project and type of financing
 Adequacy between costs and return on (E, I etc..) ?
 Preliminary advices ?
12Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

13. Secure the transactions
 Individual basis
 Collective basis
 Proportional losses
 First losses
 Losses in excess
 Collaterals
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14. Secure the platform ???
 Risk of reputation
 Legal prosecution from lenders and borrowers
 Insurance
 Money laundering
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15. Guarantee positioning
Opportunities
• Fast growing market
• Unlimited resources (apparently)
• Securing transaction
• New type of mutualisation
• Revenues
• Bank complementarity
• Technique of securization
Threats
• Low volumes, low unit size
• Fragmented market
• Poor sensibilisation to risk
• Diversification vs Mutualisation
• Costs
• Bank generalization
• Finance generalization
15Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

16. Agenda SIAGI
 Understand the model
• Work on the inside
• Participate in the risk policy, in the individual decisions…
 Create an appropriate guarantee scheme
 Encourage « cross-financing »
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17. Thank you for your attention.
17Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET