Who will fund your project?

People who want to apply for a crowdfunding platform ask themselves: Who will support my project on the crowdfunding platform? Which crowdfunding investors would be interested? These are more and more frequent questions at the time of democratization of these new means of project financing.

Studies have been conducted to establish a standard profile of investors on both crowdfunding platforms and business angels (1). They tell us about the typologies of investors, their expectations and their motivations.

So if you want to get into participatory finance, here are the people you will get in touch with.

Portrait of an Investor:

• More and more women may not be in the majority yet

Investors in crowdfunding platforms in France are now mostly male. 60% are male. An improvement compared to Business Angels because Fundme notes that 94% of Business Angels are male.

• More Age Variety

Crowdfunding is primarily a youth tool: half of Internet users supporting a project through a crowdfunding platform are under the age of 30. Some studies, notably the Alsace Business Angels, show the opposite that 68% of investors are between 41 and 59 years old and in a study of the Network of Business Angels in Rhne-Alpes (2), the average age is 55 (3).

The youthfulness of investors on crowdfunding platforms is explained by their affinity with new information technologies and their easy and frequent connections to the Internet.

• Greater socio-professional diversity

The socio-professional categories of crowdfunding funders are students, communication and design professions, liberal professions and executives. In comparison, Business Angel mainly comes from a top business school. He is a senior executive with some assets, a former business manager (3) or entrepreneur. The latter represent 52% of them, with top three big names such as Jacques Antoine Granjon (private selling), Javier Neil (Free), and Marc Simoncini (Metic).

Inspiration: Go Beyond Financial Investing

Finally, it should be noted that motivations differ little from those of Business Angels. The motivations of investors on the platform are:

• Mostly, because a project affected him. They are also motivated to help a loved one finance themselves.

• Investors say they want to participate and contribute to a project for 39%.

• They are ready to participate 74% and are promoting it fiercely through their network.

Then there are the financial incentives such as return on investment and tax exemption.

frequency of investment

• About 40% of the respondents have used crowdfunding once or twice during the year.

• Around 25% people have supported projects on these platforms time and again and we can say that their proportion is set to increase with the increase of crowdfunding. Most of the respondents said that they are ready to repeat the experience.

Risks / barriers to investment to be seen by investors

Four different types of brakes have been identified:

– Legal ambiguity due to lack of information about investment mechanism

– Decreased quality of files

– Too much requested amount

– Difficulty choosing a crowdfunding platform: no references yet!

Rewards platforms work best (Ulule, Kickstarter). Though equity platforms are preferred by the respondents, they are not used the most.

Does the right project exist?

The young start-up collects 56% of the investment intention in the area of ​​technology and innovation. “Green business” and new energies are also very much present: they alone represent over 25% of financing desires. The crowdfunder therefore invests for an entrepreneurial project, but also on an eco-responsible approach. Projects that lack urgency, for example a major R&D component, or “mass consumption” projects are avoided (less than 5% of the vote).

Crowdfunder is practical and ready to finance the prospect of a better future.

Business angels like to invest in sectors of the digital economy, ranging from e-commerce to software, cleantech, biotechnology and generally hi-tech.

The common point of Business Angel and Crowdfunder is the pursuit of quality of the project and team, which is the deciding element for investment.

entry ticket

Internet users enter corporate capital with an entry ticket of less than €500: the maximum that 78% of investors want to hold. For the rewards platform, the average ticket is very low, €45. 68% of investors hold less than €250 on these platforms. On the Business Angels side, the average ticket is much higher. According to Fundme, the average ticket for business angels registered on the platform is €39,000, compared to €16,000 for members of the Association of Business Angels.

Prices reported by Participant Finance

Community funding platforms call for individual participation, and as with all similar projects, some value must be clear not only to the investor but also to the creators of the project.

We have identified some key crowdfunding values. If we were to uphold the four values ​​considered fundamental, it would be: participation (for about 60% of respondents), trust (47%), transparency (46%) and sharing (43%). It’s worth noting that many respondents linked innovation and freedom as crowdfunding values.

Transparency, Trust, Innovation, Membership, Passion, Sharing

Now we have a more concrete picture of the crowdfunding platform and their actors. We believe that producers and investors share a vision for the project that should convey values ​​and meaning. Traditionally, value creation has a purely financial objective for companies and their shareholders. From now on, the notion of value(s) creation can aim to have a broader impact: creating meaning and value for a variety of stakeholders, from employee to customer, shareholder to supplier, even for the company itself.

(1) MIPISE in partnership with JUNIOR ENTREPRISE HEC, and Adocta (a marketing research organization) has conducted studies on participatory finance – or crowdfunding – with the aim of establishing an investor profile in France. Fundme, a platform that connects start-ups and investors, conducted a study aimed at building the profile of a business angel.

MIPISE and JUNIOR ENTREPRISE HEC focused their survey on the core values ​​stated by Participant Finance as well as on the nature and amounts that Internet users are willing to invest. The survey was conducted in the summer of 2013. http://www.mipise.com/fr/blogs

The aim of the AdoctA study was to analyze individuals’ reactions to corporate crowdfunding, their intentions, their motivations and any barriers to using this funding system as a financial investment.

The study conducted by Fundme pertains to 407 “Business Angel” investors registered on the Fundme.fr site.

(2) – http://www.alsacebusinessangels.com/qui-sont-les-business-angels.html

(3) This study was conducted over the Internet between December 2011 and February 2012 by Christoph Bonet and Peter Wirtz, teacher-researchers. The 124 respondents are members of the 7 network of Rhne-Alpes Business Angels affiliated with France Angels.

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