As previously reported, Financement Participatif France (FPF), the French crowdfunding association, and France Fintech merged in June of this year.
Last month, EuroCrowd, the pan-European advocacy group for online capital formation, posted an Op-Ed questioning the impact of this move on the emerging securities crowdfunding industry. EuroCrowd has long been a vital advocate and intermediary with policymakers, ensuring a viable regulatory environment has emerged.
When FPF announced its intent to join France Fintech, the group said it was in need of renewal and a broader sounding board.
“Because the subjects that we address are increasingly transversal with other Fintech players, because the platforms are developing in various activities, because our issues are also becoming European, because the context is complicated and together we are stronger, the rapprochement of our two associations makes much sense.” [translated]
France Fintech reported over 350 members and 100 partners operating in the Fintech sector. FPF claimed 150 members – spanning the spectrum of the crowdfunding ecosystem.
EuroCrowd said that some see the merger as progress while others believe it is “a potential threat to the sector’s autonomy.”
To quote EuroCrowd:
“For years, FPF has been the primary voice advocating for the crowdfunding sector in France, successfully shaping key regulations that defined the industry like no other national crowdfunding association in Europe. One might say, FPF has been the most relevant national crowdfunding association over the past decade in all of Europe. However, by merging with France Fintech, which represents a vast array of financial technology companies, crowdfunding could lose its distinct voice.”
Authored by Oliver Gajda, the longtime Executive Director of EuroCrowd, he expressed his opinion the merger could be emblematic of a decline in the development and influence of the sector, as seen in other jurisdictions. Gajda touted the vital role EuroCrowd has played in crowdfunding’s development:
“As the leading voice for crowdfunding at the European level, EuroCrowd has played a crucial role in advocating for the sector’s unique needs and ensuring that it remains on the EU’s policy agenda. Unlike national associations that may be absorbed into broader Fintech organizations, EuroCrowd has, for now, remained focused solely on crowdfunding, providing a platform for the sector to collaborate, share best practices, and advocate for supportive regulatory frameworks. However, unlike all national associations, we have so far also remained independent from our members’ financial contributions and influence—avoiding a sell-out to the next best Fintech association.”
Fintech and crowdfunding clearly have overlapping missions. Online capital formation is a key component of the developing Fintech ecosystem. As for the ongoing relevance or diminishing influence of the securities crowdfunding industry, that will be determined by industry participants and their degree of success. To maintain relevance, all three stakeholders must succeed. Investors must be able to earn a risk-adjusted return on their money, private firms must be able to effectively raise the growth capital they need, and platforms must generate enough revenue to achieve profitability. One of the ways platforms can become more sustainable is by providing more services and features, boosting the value they create.
Some insiders believe institutional money and partnerships with other financial service providers are the path to success. The ability for platforms to scale is vital for growth and relevance.
It should be evident that industry participants must work together to encourage policymakers to support crowdfunding, updating rules as the industry develops. Online capital formation is an essential part of the digital transformation of finance. As the industry remains in its infancy, the future is not certain. But it should be clear that advocates like EuroCrowd are vital to the crowdfunding industry’s success.