This year’s issue of the Barometer of Crowdfunding in France, published by Mazars and the French Crowdfunding Association (Financement Participatif France, FPF) shows that crowdfunding reached a new high in 2022. More than €2.3 billion was collected, a 25% increase versus year prior. Real estate crowdfunding remains the main driving force. Growing at a 40% rate year on year, it represents 2/3 of the overall funding, followed by the environment and renewable energies.
Crowdfunding is proving itself as a financial solution that speaks to the largest numbers through its simplicity, its transparency, and the service it provides to the local economy and to projects that are meaningful for retail investors.
Fund collection channels are increasingly diversified. While the direct approach remains predominant (66% of the collection), indirect channels such as financial advisors (15%) and investment funds (8%) are ramping up. In an economic context troubled by the war in Ukraine and the ensuing energy crisis, crowdfunding demonstrated its resilience as a credible and reliable asset class for investors.
Real Estate as a Driving Force
Real estate crowdfunding grew much faster than the overall sector. It reached a record €1.6 billion in 2022 compared to €1.1 billion in 2021. The number of funded projects increased from 1,346 in 2021 to 1,628 in 2022. The market remains overwhelmingly oriented towards residential property financing, which represents 71% of projects.
Property trade financing dominates (56%), while real estate development is down (35%). The market is driven by the renovation of city centers and the restructuring of larger urban areas. In 2022, 562 projects repaid €382 million in capital and interest.
Sustainable Finance Pervades Crowdfunding
The social or environmental dimension is an essential component of many development projects. This year again, the figures for sustainable finance remain high, with 61,891 projects showing a social or environmental dimension, not counting the real estate sector that increasingly promotes a “green and sustainable city” offering.
In total, €552 million was collected for social or environmental projects. In addition, three-quarters of the crowdfunding platforms take environmental, social, and governance (ESG) criteria into account when selecting projects.
A Decline in Donation Crowdfunding
Although below previous years, donation crowdfunding remained at a high level, with 116,155 projects funded, this has changed. The volume of donations collected declined to €107 million due to, among other items, the impact of the inflation on household budgets and the backlash of the outpouring of solidarity during the Covid years of 2020 and 2021. The social sector is the sector most affected by the drop, while the cultural sector continues to concentrate the vast majority of donations.
Crowdlending Breaks Records Again
Crowdlending experienced a significant increase in 2022, passing the €2 billion mark in inflows, against €1.6 billion last year. The bulk of the loans is going to small- and medium-sized businesses. Most loans are issued as bonds, in particular in real estate crowdfunding. But small businesses and very small businesses are increasingly keen on raising money through interest-bearing loans.
Small but Growing Sector of Crowdinvesting
With €150 million collected in equity or royalties, compared to €104 million in 2021, this sector continues its strong growth. One-third of the volume raised goes to financing environmental and renewable energy projects.
Damien Guermonprez, President of PFP and chairman of Lemonway, commented on the report:
“Crowdfunding meets the needs of all types of sectors, as evidenced by its sustained growth […] in France. The year 2023 is a pivotal year for lending and investment platforms as the European Crowdfunding Regulation[ECSPR] comes into effect. Crowdfunding platforms must now obtain approval as ‘crowdfunding service providers.’”
Bertrand Desportes, Partner at Mazars, said that despite an uncertain economic context, there is a real craze for crowdfunding fostered by the increased diversification of fundraising channels.
“Crowdfunding takes hold among French people as a reliable money management solution that supports meaningful projects.”
Therese Torris, Ph.D., is a Senior Contributing Editor to Crowdfund Insider. She is an entrepreneur and consultant in eFinance and eCommerce based in Paris. She has covered crowdfunding and P2P lending since the early days when Zopa was created in the United Kingdom. She was a director of research and consulting at Gartner Group Europe, Senior VP at Forrester Research and Content VP at Twenga. Torris is currently engaged with wealth optimization firm LaBienveillanceFinancière. Torris is also a graduate of INSEAD.