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Equity-based Crowdfunding : Economic and
regulatory challenges ahead
September 2015
Co-investment / SmartAngels case study
Benoist GROSSMANN
Managing Partner
1. IDINVEST PARTNERSLEADER IN EUROPEAN MID MARKET PRIVATE EQUITY
Founded in 1997, Idinvest Partners is an independent pan-European PE manager focused on
the small / mid-market segment
€6 bn of Assets Under Management
3500+ SMEs financed
• May 2010: successful spin-off from the Group
• International team headquartered in Paris: 55 people dedicated to investment and support (vs. 25 in 2010)
• Sustained growth of assets under management: €6bn (vs. €2.8bn in 2010)
€1,800m
€370m
€450m
€1,300m
€2,000m
+ 188 funds (+106 GPs)
+ 48 companies
+ 47 secondary transactions
+ 150 companies
+ 116 companies
Primary fund investments
Secondary transactions
Equity Co-investments
Private Debt
Growth Capital
1. IDINVEST PARTNERSSuccessfully investing in European best-of-breed companies
Idinvest Partners as a specialist in direct private equity investment
A clearly defined investment strategy…
• Covering 3 sectors: Media/Internet/Information Technology, Cleantech and Healthcare
• European companies with hyper-growth potential and worldwide reach
• €2m to €10m per round, €10m to €15m per company
• Lead and active investor (board seats)
A team of 5 investors, with deep sector expertise having worked together for 10 years
2. CROWDFUNDING TODAY
Banking desintermediation (direct access to capital
market products)
Regluatory policies (Loi Macron in France)
Seek for higher-return financial products due to
low-rate environment
$40bn Global crowdfunding market in 2015
60,00
0
Projects crowdfunded in France in 2015
50% Percentage of Business and Entrepreneurship Projects
Favorable Environment
Changes in technology (network effects,
marketplace funding models, mobile accessibility)
Social networks (word of mouth, investors club,
lower COCA)
Technology & Socialization
Behaviors change
Easy access to SMEs capital
Transparency
Reinvention of SMEs financing
HUGE MARKET AND FAVORABLE CONDITIONS
3. TRENDS AND KEY DATA
Total funds raised by crowdfunding platforms worldwide Worldwide market share by category
Volume of equity-based fundings is skyrocketting Business lending overtook consumer lending in Europe
CROWDFUNDING: $1 TRILLION BY
2020
4. INVESTMENT IN SMARTANGELS
Registered by the AMF as a CIP (new French crowdfunding status), SmartAngels enables startups, early stage
and growth companies to issue equity and bonds (launch in S2 2015) within the legal framework of public offering
exemption
French non-listed equity and bonds: market$10bn
WE CHOOSE EQUITYWE TAKE
MEASURABLE
RISKS
WE HAVE A
LONG-TERM
VIEW
WE
UNDERSTAND
BUSINESSES
REPUTATION
COPYRIGHT &
INTELLECTUAL
PROPERTY
RISK CONTROL PRIVACY
8
COMPLIANCE &
ACCOUNTING
SOME CRODWFUNDING PLATFORMS INCLUDE SCORES OF RISKS…
5. CROWDFUNDING POTENTIAL ISSUES
SCAMMERS
AND LACK OF
TRUST
INADEQUATE
DUE DILIGENCE
LACK OF
ACCOUNTABILIT
Y
LACK OF
FINANCIAL
MATTERS
LACK OF
COMMUNICATIO
N
9
…AND INVESTORS ON SUCH PLATFORMS ARE SCARCELY EXPERTS
6. WORKING WITH EXPERTS TO LIMIT SUCH
RISKS
IT MAKES IT ESSENTIAL TO INVEST WITH SERIOUS AND PROFESSIONAL CO-INVESTORS
TOP VENTURE CAPITAL FUNDS TOP ANGEL INVESTORS
XAVIER NIEL MARC SIMONCINI JACQUES-ANTOINE
GRAJON
??? ? ?
10
7. STRONG CO-INVESTORS BENEFITS
XAVIER NIEL MARC SIMONCINI JACQUES-ANTOINE
GRAJON
LIMIT THE
RISKS
SOURCING
NETWORK
EXPANDED
STRONG
EXPERTISE
BUSINESSES
GAIN
TRACTION
MORE
TRANSPARENC
Y
PIERRE KOSCIUSKO-
MORIZET
JEAN-DAVID BLANC FREDERIC
MONTAGNON
11
STARTUPS
SMEs
Individuals
Institutional players
COMPANIES INVESTORS
Looking for
investors
Looking for
investments
Direct financing model without holding management
EQUITY BOND
8. HOW SMARTANGELS WORKS
12
The first crowdequity institutional fund
€5-10m
Principles
• Crowdequity fund between €5-10m
• Rechargeable
• Over 5 years
• Automatic matching of Allianz
client’s investment
Benefits
• Gains insights about Fintech
disruption model
• Highly diversified asset management
• Enlarges its CSP+ customer base
• Reinforces its branding in the startup
ecosystem
For Allianz For Allianz
• New strategic offer designed for
institutional players and funds
• Secures volume of transactions in
the next year
• Reinforces its branding
• Boosts the dealflow and attracts
startups with higher stage of maturity
9. ALLIANZ & SMARTANGELS
2012 €9.2m12k 19
Established as a
pioneer of equity
crowdfunding
Members in June 2015, x3.5 since
the last 12 months, with no
marketing expenses
Raised through the platform
since inception, 2012-2015e
CAGR of +55%
Employees and experienced
board members (P. Robin, X.
Lazarus, R. Le Moal)
13
20
Backed projects including
Canibal (€1.7m), NUMA
(+€1m)
Scalable business model: low
structure cost with no holding
management
First crowdfunding investment fund in
Europe with Allianz launched in April
2015
One vision: from Equity
Crowdfunding to Capital Marketplace
for non-listed companies
10. SMARTANGELS KEY
DATA