crowdfunding for sme by friendsclear
DESCRIPTION
Crowdfunding for SME by FriendsClear EFMA Retail Credit Conference 20-21 june 2013 Amsterdam Complementarity or Competition with BanksTRANSCRIPT
Crowdfunding for SME
EFMA Retail Credit Conference 20-21 june 2013
Nicolas Guillaume – Financial Breakthrough
Blog : http://nicolasguillaume.fr/ Twitter : http://twitter.com/NicolasMax Mobile : +33 6 19 98 57 65
Financial Breakthrough
Blog : http://finthru.com/
Twitter : http://twitter.com/finthru 1
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Agenda
• Key points • Global Market • SME Focus • FriendsClear’s case • Feedback • Marketing • Regulation • US Crowdfunding Act • Competition vs Complementarity
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Key Points
• Free and extended access to projects to be funded by investors (funders)
• Direct choice of funding by investors
• Full Transparency
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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
– Returns
4 EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Key Points (continued)
• Each point very differenciating from traditional finance product
• Social Media (info disclosure, virality, interactivity, internet accessibility)
• Funding is not the point – Multiple funding models : reward, no return
allocation, loan without interest, loan with interest, equity, bond
– Third party (direct funding) or own account (mirroring funding)
– Funding, Refunding, Additional funding
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Global Market
Source : Massolution, May 2012 6
780 M$ loans originated (2012)
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
SME Focus
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Kickstarter Babyloan FriendsClear Funding Circle
Crédit Agricole
Smartangels
Funding Type Reward Loan without interest
Loan with interest
Loan with interest
Loan with interest
Equity
Project sample 3Doodler 3D Plastic melted pencil 2,3M$ (30K$ requested)
Tilagavady & Djeasridar Indian restaurant 5K€
Matériel Forestier Woodcutter 8K€
Score a Hole in One Events Organization 50K£
Eolienne Loué Windmill 1,2M€ (on a total of 17M€)
Sentinelo Mobile application 500K€
Funders Nb 26.457 82 26 24 250 33
Av. funder amount
88 $ 68 € 307 € 2.084 £ 4.800 € 15.000 €
Funder counterpart
Delivery Promise
Funding Account (mirroring)
Term Bank Account (with securities)
Loan part Term Bank Account (mirroring)
Ad hoc Offer
Equity
Risk Delivery default
MicroFinance Institute Default
Loan default Loan default No risk •Operation •Valorization • Liquidity EFMA CONFERENCE – RETAIL CREDIT 20-21
June 2013 - Amsterdam
Kickstarter
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88$ / funder
http://www.kickstarter.com/projects/1351910088/3doodler-the-worlds-first-3d-printing-pen
Reward
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Babyloan
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68€ / funder (82 funders) Loan without interest (cf Kiva)
Nicolas Guillaume – FriendsClear / Finthru EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
FriendsClear
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam 10
Requested : 8.000€ 307€ / funder (26 funders)
Loan with interest
Nicolas Guillaume – FriendsClear / Finthru
Funding Circle
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2.083£ / funder (24 funders) Loan with interest
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Smartangels
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15.000 € / funder 33 funders
Equity
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
FriendsClear’s case
• Professional Projects funded by loan (3K€-25K€, 3 years, 8,5% fixed rate + 4% flat fees)
• Selected & funded by internauts through a dedicated crowdfunding account with Term Deposit (interest rate 4,5%) mirroring projects (and guarantee)
• Money collecting, account management and loan origination performed by a banking partner Credit Agricole
• Projects reviewed (FriendsClear) and banking controls (Credit Agricole)
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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 » of
projects – 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 scalable
14 EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
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 (client communication, legal, risk management,…)
15 EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Clients profiles
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Funders Project owners
• Emerging phase projects • Non standard profiles (young, without
experience, 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 (less
paper) process => not in FriendsClear’s case
• Wide client profiles diversity • Motivation
• Project support • Active selection • High yield • Transparency / Traceability
• « Power users » • Favored segment : experienced
executives or managers closed to retirement • Time • Money • Expertise
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
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)
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US Crowdfunding Act
• Exemption 2000$/ year / funder
• Funding Portal (Middleman)
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Source : Forbes, Sept 2012
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam
Competition vs Complementarity
• High involvement product for special needs and segments
• Small amount
• Can be « packaged » to be retailed by traditional banks
• Much more complementarity than competition
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Thanks for your attention
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Questions
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Nicolas Guillaume
Financial Breakthrough
Blog : http://nicolasguillaume.fr/ Twitter : http://twitter.com/NicolasMax Mobile : +33 6 19 98 57 65
Financial Breakthrough
Blog : http://finthru.com/
Twitter : http://twitter.com/finthru
Ressources : Blog : http://nicolasguillaume.fr/ Twitter : http://twitter.com/NicolasMax Cours Social banking & Fin Part : http://fr.slideshare.net/NicolasMax/2012-cours-social-banking-prt-participatif
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Paternité-Pas d'Utilisation Commerciale-Pas de Modification 2.0 France
http://creativecommons.org/licenses/by-nc-nd/2.0/fr/
EFMA CONFERENCE – RETAIL CREDIT 20-21 June 2013 - Amsterdam