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FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.
Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).
Introduction
Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms
Crowdfunding is defined as “the practice of funding a project or venture by raising money from a large number of people who each contribute with a relatively small amount, typically via the internet” while crowdlending and crowdinvesting are respectively defined as a means of funding through loans given by the public or through equity and debt. These new services offer less traditional funding solutions.
Indeed, in order to diversify funding mechanisms, the French legislator adopted many laws that aimed at helping the implementation of crowdfunding, crowdlending and crowdinvesting.
The first regulation, law n°2014-559, adopted on March 30th, 2014, created numerous protection mechanisms that aimed at securing and protecting donors, which helped boost their trust in crowdfunding platforms. This eventually led to a growing recourse to such platforms by entities requiring funds for a specific project.
It is important to note that a label has been created and will be given to platforms that follow the law above and the decree that followed through, decree n° 2014-1053 adopted on the September 16th, 2014.
Moreover, another label has been created in 2017 by the Ministère de la transition écologique (The French ministry of ecological transition) in partnership with Financement Participatif France (French non-profit organisation which purpose is to the collective representation and the defence of the rights and interests of crowdfunding actors, and overall, of all the actors having an ancillary activity or supplemental or common interests with the crowdfunding) aimed at promoting crowdfunding platforms that fund "green" projects. The label will guarantee the transparency and the ecological aspect of the project.
The authorities’ response to the growing use of such platforms, specifically through the internet, showcases a friendly approach in regulation when it comes to crowdfunding and other crowd-oriented financial solutions.
This friendly approach to crowdfunding can be seen on the European level too. The European regulation 2020/1503 completed with the directive 2020/1504 relating to crowdfunding in the European Union (Regulation (EU) 2020/1503) created a unique status for crowdfunding service providers on the European market that came into force on the November 10th 2021. According to article 12 of the said regulation, this unique status will provide a European passport to the registered providers giving them the opportunity to offer services outside of France on the European Union territory. The license or registration is given by the competent national authority (the list of registrations or licenses shall be reported to the European Market Supervision authority afterwards).
Legal affairs
Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above