Crowdequity: Should you invest in a company whose customer you are? – July 2022 – News – Stock market

More and more companies are turning to their customers to finance themselves. A complementary approach to traditional fundraising, motivated by both financial and commitment reasons.

Crowdequity, or crowdfunding in shares, has been very common in Anglo-Saxon countries for several years. It experienced a phenomenal growth of +77%(1) between 2020 (€57 million raised) and 2021 (€101 million). For example, Finary, Qonto, Goodvest and Wecasa raised millions from their customers in record time. The first three named decided to go through British crowdfunding platform Crowdcubeon whose account there are more than 1,300 transactions.

Good luck on your way

In March, fintech Finary raised €2.17 million in 21 minutes from 983 investors, and a month later, neo-bank Qonto raised €5 million in 6:30 with 1,800 clients entering capital. According to Goodvest co-founder and CEO Joseph Chueifati, their campaign was closed after the €250,000 goal was reached in just two hours. These successes encourage these companies to resume operations, and they would be wrong to deprive themselves of it.

Added value in the long run

The a priori formula is also a win-win for investors. This is evidenced by research data from France Invest and Grant Thornton(2)according to which investing in non-listed companies would yield an average annual return of 11.7% over a 15-year horizon. That’s more than double the 5.4% annualized return the CAC 40 served up over the same period.

A priori, the initial investment is relatively affordable: the share price is set at 1 euro for Wecasa (home services platform), 10 euro for Goodvest and 138 euro for Qonto. However, this practice creates the risk of capital loss: “90% of startups fail, 10% of them within the first year,” Claude Calmon, founder of fundraising consulting firm Calmon Partners, said in an interview with MoneyVox.

A notorious problem

In addition to the financial aspect, all these companies promote the concept of customer-shareholder obligations. Customers can become a PEA to be shareholders. Investing in a company of which you are a client “is first and foremost a commitment decision, not a funding one,” Pauline Pham, director of Crowdcube in France, told Les Echos. “The companies we work with in France […] confident in the key role their communities play in their development.”

Joseph Shueifati, for his part, sees this as a “strong publicity problem”: “the main channel of engagement is customers who recommend us. A shareholder customer is an even more loyal and engaged customer.” He adds: “For our customers, this is an opportunity to participate in a project they believe in.”

Fanny Knusmann, Wecasa’s brand manager, believes that “it’s also a way to go beyond simple consumer status”, while reminding that “this approach is not at odds with more traditional fundraising, it’s complementary”. Indeed, “it is also important for us to be accompanied by institutional and experienced investors who can provide us with strategic expertise”, confirms Joseph Choifati.

(1) “Barometer of crowdfunding in France 2021”, produced by Mazars for Financement Participatif France”.

(2) 35th edition of the France Invest and Grant Thornton barometer on the activities of French players in private equity funds and infrastructure funds.