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AECM Seminar 2014 – ISTANBUL Assemblée Générale – 16 octobre 2014
New products :
Crowdfunding : Where to position guarantees?
Michel COTTET, Managing Director of SIAGI, France
Crowdfunding
Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET 2
Crowdfunding, 5 segments of market
3 non speculative models
Free donation
1.2 bn €
2 speculative models
Social Lending
(no interest)
1.1 bn €
Donation with reward
0.8 bn €
Peer to peer lending
(with interest)
1.4 bn €
Equity
0.15 bn €
3 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
A fast growing market x4 in the next 2 years
2012
• 536 platforms
• 2.2 bn € collected
• 1.1 million projects
• 72% North America
• 26% Europe
2013
• 800 platforms
• 5 bn € collected
• 2.2 millions projects
2015
• 20 bn € collected
2020
• 1 000 bn € collected
4 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
The French market
2012
• 25 platforms
• 22 M€ collected
• 17 500 projects
2013
• 75 platforms
• 80 M€ collected
• 50 000 projects
2020
• 2.2 bn€ collected
• 1.5 bn € Peer to peer lending
• 1% of the French savings market
5 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Peer to peer model : « the funding circle » UK
Created in 2010
5 500 enterprises financed
32 000 lenders
390 M£ cumulative lends
100 M£ over the last 6 months
From 5 000 £ to 1 M£
Interest rate up to 10%
5 Years monthly repayment
Fees up to 4%
6 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
The French crowdfunding regulation
2013/06 position from the supervisors (both savings and banking)
2014/02 public announcement from the Government
2014/05 publication of the 1st Order (ordonnance)
2014/09 publication of the implementing legislation
2014/10/01 the status comes into force
7 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
The French framework for lending
A new type of body: IFP (Participative Finance Intermediary)
Another body for equity as CIP (Participative Investment Advisor)
Light regulation
• Listed on a register of insurance intermediaries
• Manager professional skill
Double Limits
• Max 1 M€ by project
• Max 1 000 € by project by person
8 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
An example of criteria
Target : very small and sme’s
Minimum 2 balance sheets
Growth project including working capital
Maximum 5 years
Interest rate from 4% to 10% according to an internal rating (before taxes and losses)
Up front fees 4% on the capital
No collaterals
30 days to collect funds from the crowdfunder
3 days to provide funds to the enterprise
9 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
The potential role of a mutual guarantee society
Secure lenders
Secure borrowers
Secure the transactions
Secure the platform ?
10 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Secure lenders
Datas • Verify the informations and the sources of information from the
borrower • Verify the consistency of the datas
Analysis of the project • Cross referencing with external datas • Assessment process
Risk mutualisation • Diversification • Selectivity rate
Flows collections • To be allocated to the enterprise • To be allocated to the project of the enterprise • To be allocated to the lenders (interest, capital, unpaid collection)
11 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Secure borrowers
Protection of datas
Confidentiality of transactions
Adequacy between enterprise, project and type of financing
Adequacy between costs and return on (E, I etc..) ?
Preliminary advices ?
12 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Secure the transactions
Individual basis
Collective basis
Proportional losses
First losses
Losses in excess
Collaterals
13 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Secure the platform ???
Risk of reputation
Legal prosecution from lenders and borrowers
Insurance
Money laundering
14 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Guarantee positioning
Opportunities
• Fast growing market
• Unlimited resources (apparently)
• Securing transaction
• New type of mutualisation
• Revenues
• Bank complementarity
• Technique of securization
Threats
• Low volumes, low unit size
• Fragmented market
• Poor sensibilisation to risk
• Diversification vs Mutualisation
• Costs
• Bank generalization
• Finance generalization
15 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Agenda SIAGI
Understand the model
• Work on the inside
• Participate in the risk policy, in the individual decisions…
Create an appropriate guarantee scheme
Encourage « cross-financing »
16 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET
Thank you for your attention.
17 Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET