Yannig RothMarketing Director, WiSEED

@YannigRoth @WiSEED #SMEweek2016 #SMEassembly2016

Bratislava, November 25th 2016

WiSEED is a French, MIFID-compliant crowdfunding platform

• A diversified crowdfunding platform− 2008 : start-ups (equity)

− 2011 : real estate (bonds)

− 2015 : cooperatives (bonds)

− 2016 : renewable energy (bonds)

− 2016 : agroforestry (equity)

• Founding member of European Crowdfunding Network

• Double focus− Start-ups, scale-ups, SMEs

− Private & institutional investorsWiSEED.com

Starting-up is easy, experimenting & scaling-up is not

• Every year, 200 000 SMEs file for bankruptcy, representing a job loss of1 700 000 jobs in Europe

• Access to capital is vital, Europe has a solid layer already

− European Fund for Strategic Investments

− Competitiveness of Enterprises &SMEs programme

− Horizon 2020’s SME Instrument

− Start-up and Scale-up Initiative (announced this Tuesday)

Source : Startup Europe Partnership (SEP)

Crowdfunding:

What are we looking at?

Crowdfunding : the only way to market & fund at the same time

• Why marketing ?

− Showcase technology, assemble consumer communities, get market attention & validation…

• Why finance ?

− Choice in type of financing, pitch to investors, access to smart money, speed & transparency…

Crowdfunding: Definition and taxonomy

• Generating investments or funds for a project, cause, or enterprise by acquiring funds from many individuals over the internet.

• Types:

− Donation-based crowdfunding

− Reward-based crowdfunding

− Peer-to-Peer (P2P) lending

− Equity based crowdfunding

Donation & reward-based crowdfunding

Peer-to-peer (P2P) lending

Equity-based crowdfunding

Where we stand today & how we got there

Crowdfunding across the globe (1)

• Global crowdfunding volume was $34.4Bn in 2015

− North America $17.2Bn

− Asia $10.54Bn

− Europe $6.48Bn

− Oceania $68.6Mn

− South America $85.74Mn

− Africa $24.16Mn

Source : Massolution

Crowdfunding across the globe (2)

• Cambridge’s “Sustaining Momentum” report shows a similar number for Europe, but much higher in other world regions

− Asia-Pacific €94.61Bn (mainly China)

− Americas €33.58Bn (mainly US)

− Europe €5.43Bn (mainly UK)

» UK €4.35Bm

» France €0.319Bn

» Germany €0.249Bn

» The Netherlands €0.111Bn Source : University of Cambridge

Crowdfunding across Europe

• In 2015, U.K. represented 81% of Europe’s crowdfunding volume (75% in 2014)

− Double nb of platforms than closest follower France

» Crowdcube, Seedrs, Syndicate Room, Funding Circle, Zopa…

− Benefit from highly attractive taxschemes

» Seed Enterprise Investment Scheme (SEIS)

» Enterprise Investment Scheme (EIS)

− Open-minded and voluntary regulation by FCA

Source : University of Cambridge

Heterogeneous development

• Alternative Finance Maturity Index

− Captures the causes behind the current state of crowdfunding in Europe

− 15 areas to assess the maturity of the alternative finance industry

» 7 general areas (volumes, platform diversity, accessibility of data…)

» 8 related to regulation

Source : Crowdfunding Hub

How are Europe’s SMEs using crowdfunding? (UK excluded)

Source : University of Cambridge

• In 2015 a total of 9,442 businesses have raised €536Mn in capital

• Debt & Equity modelsaccounted for €508Mn amongwhich…

− €159Mn in equity (up 93%)

» France > Germany > Netherlands

− €349Mn in debt (up 156%)

» Netherlands > Germany > France

How are Europe’s consumers / investors using crowdfunding?

• Retail investors have pioneered crowdfunding, institutional investors starts pouring in

− 76% of platform investments had only retail investors in 2013

− 56% of platform investments had only retail investors in 2015

− Most institutional money goes into lending

• No need to be rich to invest in crowdfunding (logarithmic function)

Source : University of Cambridge

Why are consumers / investors using crowdfunding?

• Young consumers’ investment behavior is changing

− Millennials hold approximately 52% of their assets in cash, only 28% in stocks

− Millennials are more likely to participate in crowdfunding

» 47% have backed or are likely to back a crowdfunding campaign, compared to 30% of Gen-Xers, 13% of Boomers, and 4% of Matures

− Millennials more likely to accept a lower ROI or higher risk if the company has a positive impact on society & the environment

Source : US Trust

Crowdfunding:

Where are we heading?

Continuous growth of the market, globally

• Global crowdfunding market to grow at a CAGR of 26.87% during the period 2016-2020 (Technavio)

• Global crowdfunding market has the ability to deploy up to $96Bn a year by 2025 (World Bank)

• Questions arise :

− To what extent will the US and Asia out-grow Europe ?

» Will the UK players suffer from Brexit ?

» Will the rest of Europe catch up with the UK ?

− Will developing countries catch up ?

− How will institutional vs. retail investment be spread ?

− Will crowdfunding surpass Angel & VC investment ?

− How can Europe platforms be fostered ?

» Will we have a crowdfunding capital union ? Source : Technavio

Crowdfunding in Europe is encouraged but not facilitated (yet)

• National frameworks are seen as coherent :

− “National frameworks are broadly consistent in terms of the objectives and outcomes they seek to achieve.”

• No immediate plans to facilitate cross-border crowdfunding :

− “Given the predominantly local nature of crowdfunding, there is no strong case for EU level policy intervention at this juncture. […]. Given the dynamism of crowdfunding and the potential for future cross border expansion, it will be important to monitor the development of the sector.”

• Chicken & egg problem… Source : European Commission

Europe can be at the forefront of financial innovation

• Wealth management & robo-advisors

− Threshold to invest will keep lowering, moreinvestors can be reached by SMEs acrossEurope

• Blockchain & smart contracts

− “Mini-bonds” issues by French SMEs on theblockchain will be recognizes as financial instruments

» To be issues on crowdfunding platforms & be purchased by individuals & legal entities

» To be used by banks’ securities services in helping small companies access capital

Source : Crowdfundinsider

Further reading (EU)

“Crowdfunding remains relatively small in the EU but isdeveloping rapidly. It has the potential to be a key sourceof financing for SMEs over the long term.” (EC, 2016)

“The European alternative finance marketshould have ample room for continuedgrowth and expansion over the comingyears” (University of Cambridge, 2016)

“The alternative finance industry is avibrant industry that develops veryquickly” (CrowdfundingHub, 2016)

“The US has the highest total onlinealternative finance market volume percapita in the world, at $ 113.43 in 2015”(University of Cambridge, 2016)“This document explores specific strategies to drive

crowdfunding, the risks in crowdfunding and how tomitigate them, and the potential use of crowdfundingin the developing world” (World Bank, 2013)

Further reading (other)

“The more projects funded draw more entrepreneursand other creators to start campaigns on theplatform, creating a virtuous cycle of growth on bothsides of the marketplace” (Goldman Sachs, 2015)