The use of crowdfunding as an alternative way to finance small businesses in France

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Couffinhal, Benedicte
Issue Date
MBA in Finance
Dublin Business School
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ABSTRACT The global financial crisis of 2008 has led to a sharp decline in granting loans to businesses by financial institutions in France while the financing stage for the creation or development of a small business or a start-up is the most important phase. In addition, it’s important to know that the French economy landscape is built by more than 95% of small businesses. The recent advent of crowdfunding also called “finance participative” in French can be considered in one of the solutions by an entrepreneur regarding the lack of traditional sources of funding support. The purpose of this dissertation is to provide a general definition of the new concept of crowdfunding and whether it is a solid and sustainable alternative of funding for French entrepreneurs. The other objective of this research is to contribute to the French literature on this subject because it is very limited today. Moreover, the results of this study can be used by both entrepreneurs and investors as a user guide, as the author gives several recommendations to start a business or invest via crowdfunding platforms. To implement this study, data were collected from two types of sources: primary and secondary data. The primary data were obtained through four interviews with French people directly related to crowdfunding: two entrepreneurs, one investor and one market expert. The secondary data come from multiple reliable supports (books, academic journals, official reports). The literature review aims to give a comprehensive definition of crowdfunding, explain its main characteristics and show its level of development in France. The results indicate that crowdfunding is still an option for French entrepreneurs and not a strong enough alternative and recognized means of financing. This way of financing is experiencing an exponential growth in France and in the rest of the world and according to expert forecasts crowdfunding will become a major player in funding industry in the coming years. Crowdfunding development in France is supported by the current government who has initiated a reform to make a more flexible regulation and increased the investment amount for small companies via crowdfunding. The results also show that a crowdfunding campaign is a full time job and creating a community around the project is essential to attract investment crowdfunders. Author keywords: Crowdfunding, France, small businesses, financing, funding, entrepreneur, start-up, internet platform, SME, qualitative study, crowdsourcing, alternative economy