Archive for the 'finance' Category

Sustaining Crowdfunding, A French Manifest

Introduction

The text below is an approximate translation in English of the original French text.

In straight line with the publication of this Manifest, we’re organizing an event on the 26th of March 2012 in Paris to propose a series of amendments to French law in order to sustain the growth in crowdfunding in France. We’re also organizing a crowdfunding campaign to help us cover part of the logistics.

If you’re organising similar initiatives in your home country, or if you want to coordinate our efforts to act at the European level, please contact us through the comments below.


Sustaining Crowdfunding, A French Manifest

Object of this manifest

Actors involved in Crowdfunding wish to bring the attention of public representatives and of all the citizens to the opportunities offered by a more direct and local support in project developments. This new mode of financing complements the existing models by mobilizing small individual amounts, it benefits to the development of entrepreneurial projects which are social, at an early stage or in a development phase.

This manifest brings together entrepreneurs looking for financing, operators of web platforms, individual investors, business angels; and more generally citizens who wish to keep a better control on the use of their savings, who want to contribute to entrepreneurial projects they feel close to, and who want to follow their development and monitor their impact.

What unites us?

We wish that reliable modes of financing develop to complement existing channels.

We witness the growing desire of citizens to be involved more directly in small enterprises they feel close to, we see the success of Internet platforms, business angels’ networks or investment clubs, despite an unfavourable legal framework, these observations demonstrate the feasibility of this new mode of financing.

Today, thanks to the investment of a  wide audience in France (approximately 35,000 Internet users), Crowdfunding  platforms have gathered more than 6 million of euros in cumulated financings and allowed supporting close to 15,000 entrepreneurs in France and around the world.

We are convinced that the diversity in Crowdfunding models (donations, loans bearing an interest or not, investments in equity) and the variety of actors and projects are a positive condition for a creative and innovating entrepreneurial activity, which is vital for our economy.

Direct financing allows citizens to be actors in the projects they want to see developing and is providing the transparency to let them freely and easily make use of their savings.

Collective knowledge and mobilization of communities to finance projects directly is a favourable condition for the development of trust and is a guarantee for success, usefulness and positive impact for the project which have been financed.

What is our proposition?

We propose the definition of a legal and regulatory framework that clearly sustains the possibility of direct financing, which will pay attention to the particularities of this new mode of financing and which will acknowledge the fact that the Internet modifies and enlarges the fields of possibilities and the notion of community.

Concretely this means:

–          Easing the collection and pooling of small amounts in order to finance projects

–          Softening the rules concerning public offerings of financial securities to adapt them for small individual amounts, with the acknowledgement that a community can outgrow 100 individuals when each amount is sufficiently small

–          Softening the regulation concerning direct loans between private persons

–          Softening the legal requirements concerning the collection of funds

–          Adapting the level of information and transparency required from the issuers (or the neutral intermediaries that the Web platforms are) to incorporate the reality confronted by the financed projects, and the exact level of protection necessary for savers who want to have an active use of their funds

–          Allowing intermediaries, notably Internet platforms, to be neutral actors, facilitating the connection between projects and funders; without requiring from these operators inadequate amount of information that practically greatly reduce the development of projects.

All these modifications should be implemented in the context of transparent and easily accessible information provided to savers on the possibility of not recovering the totality of their funds in the case of loans (bearing interests or not) or for investments in equities, and information on the outcome of projects.

 

Advertisements

Refounding Finance

After the shock that the crisis created and the quick – but not cheap – measures that were passed, it seems that the debate is currently moving on the terms of a longer term solution (see posts in Javelin Strategy or The Bankwatch for example). And there, things do not look good either.

It is obvious that free market created a lot of wealth (that has not been equally distributed), but was unable to stabilize the deep imbalances it generated. Furthermore, it’s now obvious that the wrong mix of regulation and laissez-faire created serious flaws in the incentive mechanisms. Regulation prevented competition to come and erase unfair rents that some actors were extracting. Laissez-faire meant than no-one had the authority to correct these undeserved appropriation.

But going back blindly to regulation is certainly the wrong answer. It is interesting to see that people who considered Alan Greenspan as a genious, treat him now as the villain who made all this possible. The truth is simpler: Alan Greenspan is certainly a very smart man, but there’s no single human being on this planet who can master a complex evolving system like the financial system. So regulation is not the answer in itself.

I think we should think of the problem in deeper and wider terms. It’s a real refoundation of significant part of our financial system that we must address. And to do this, I don’t believe that tinkering the current system through new regulations will do. We must get back to the roots of this industry which aims at providing a service to people looking for an opportunity to save and to people looking for means to get access to current resources.

We will be discussing this subject – and many others – in London on Feb 14, 2009 at BarCampBankLondon2 and in San-Francisco on Apr 25, 2009 at BarCampBank SF2. Anyone interested in putting back innovation as a solution and not a problem to the current financial woes should certainly consider joining us.