The French regulations address the three main types of crowdfunding: Equity, debt and donation based crowdfunding. The Industry grew at a rate of approximately 200% from 2013 to 2014. There are no restrictions on the number of investors in any particular pitch. Companies are able to raise up to €1M per crowdfund campaign.
Three Types Of Crowdfunding Portals/Intermediaries
- Investment portals/intermediaries have been divided into three categories:
- Loans, either interest free or generating interest, this asset class falls under the category of intermédiaire en financement participatif (IFP).
- Securities including equity, these intermediaries would come under the conseiller en investissement participatif (CIP)
- The CIP may not offer services in other EEA countries
- There is also the prestataire en services d’investissement (PSI) that may offer securities as well.
- A PSI may give advice and must be approved by the ACPR (French Prudential Supervisory Authority).
- More involved crowdfunding platform that also has certain minimum capital requirements.
- All three types of securities platforms must be registered with ORIAS (Assurance, Bank of France). All investment are compelled to comply with detailed requirements.
- Portal managers are expected to have a background in banking or finance and must not be bad actors.
In order to enable platforms to get paid by companies as well as the investors they must:
- register as a crowdfunding investment advisor.
Understanding The Risks:
- French crowdfunding platforms are required to prominently display the risks involved with investing in unlisted securities.
- Any investor must affirm they understand completely that they may lose their entire investments prior to participating in crowdfunded offers
- No maximum investment, but the platform will have to check that people have enough savings to support a potential loss.
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