The Alternative Finance Market in France

By Henry Thomas on Tuesday 28 July 2015

Savings and Investment

Equity Crowdfunding Platforms:

  • Anaxago offers investments on an 8 to 36 months horizon with a profitability target of between 8% and 12%. They platform has facilitated €22m Euros of investment.

  • FinanceUtile has raised €6.6m in the process of financing 25 new companies since its founding at the end of 2009. The platform boasts a 96% success rate

  • SmartAngels has raised €2.6m  and has a 60-70% success rate for projects listed

Marketplace Lending

  • Pret d'Union is a P2P consumer lending company and by far the biggeset lender in France, and the second biggest in Europe, outside the UK. It is the only platform accredited by the French Central Bank. The lender has granted over €200m in credit.

  • Lendix offers P2B loans. Allowing investments from €20 to €1000, the platform has provided €3,000,000 in loans and paid €9,875 in interest to investors. Projects return at beteen 4% and 9%.

  • Unilend offers P2B loans. To date, the platform's 5248 lenders have received an average interest rate of 9.16% a year on an average investment of €229.

France - according to the AltFi Liberum Index - is the fourth biggest marketplace lending market in Europe - behind the UK, Germany and Sweden. It makes up almost 21% of the European market (not including the UK) with total volume at €200M

According to a recent report by Cambridge University and EY, Equity crowdfunding has grown rapidly since its French inception in 2008 - beginning with just 2 platforms. Marketplace lending didn't enter France until 2013. By January 2015, however, the alternative finance industry has grown to 70 platforms, with the composition:

  • 36% reward based crowdfunding

  • 9% donation based crowdfunding

  • 25% peer-to-peer lending

  • 20% equity crowd-funding

Regulation in France is carried out by two bodes: the AMF (Financial Markets Authority) and the ACPR (Prudential Control Authority and Resolution). Regulation for the industry was published in October and a survey, carried out by Cambridge University and EY, 42% of respondents feel that current regulations were appropriate, whilst 33% believed them to be too strict.

The government is supportive of the industry: in January 2013 the Public Investment Bank (PIB) was set up. The French embassy states that one of its three aims is to lessen the impact on market failures that handicap SMEs' funding. To this end, the PIB supports the development of alternative finance platforms.

The rise of alternative finance is partly fuelled by support in the media. Charles Egly - CEO of Pret d'Union - commented: "the media and consumers don't like banks. The media likes crowdfunding."

According to the report, as the market has developed in France, peer-to-peer lending has grown significantly faster than equity crowdfunding, and rewards/donation based crowdfunding controls a significant market share:

  • P2P consumer lending €80m

  • Reward based crowdfunding €35.4m

  • Equity crowdfunding €18.9m

  • P2P business lending €8.1m

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