The crowdfunding rules in France will become startup-friendlier in the coming months. The government announced today that companies will be able to raise up to €1 million per Kickstarter-like crowdfunding campaign. The same limit will apply to equity crowdfunding (also known as AngelList-style syndicates) — startups will be able to raise up to €1 million per year without having to notify the financial markets authority.
Previously, equity crowdfunding was limited to €100,000 and your company couldn’t be an SAS (the French equivalent of an Limited liability company - LLC). And if you raised more than €100,000, you had to work with a lawyer to produce hundreds of pages of legal documents. With the new law, as long as you raise less than €1 million in an equity crowdfunding round, you only have to file a short document of 3 or 4 pages.
Investors have been anticipating the new law for months. Back in September, the government presented a half-baked law with a very low limit of €300,000 — the government had to go back to the drawing board.
There are a couple of restrictions. When it comes to Kickstarter-style crowdfunding, individuals won’t be able to invest more than €1,000 in a campaign . This will prevent, or at least limit, potential disappointment from over-promising campaigns. This only applies to French crowdfunding platforms, such as Ulule, KissKissBankBank and My Major Company.
Until now, many French companies chose to create an LLC to launch a Kickstarter campaign in dollars. It might change with the new rules, especially for French companies that don’t plan to sell 3D printers or other expensive items.
Banks, regulators and consumer associations all took part in the making of these rules. But today’s announcement is just the beginning. First, the law will be passed around June. Every six months after that, all the key players of the crowdfunding space will meet again to see if they should raise or lower the €1 million limit. The government will also nominate a new crowdfunding official to take care of these questions. Overall, it’s great news for French startups.
