What lies behind the term crowdfunding or participatory finance?
The answer: a simple yet powerful idea — enabling anyone to directly finance projects they care about, through online fundraising platforms.
It’s a modern form of finance that combines solidarity, project realization, and profitability.
Crowdfunding takes different forms, each with its benefits and limitations. If you’re considering investing or launching a campaign, here’s what you need to know.
Crowdfunding: participatory finance that breaks the mold
Crowdfunding — literally “funding by the crowd” — is a collaborative financing model that challenges traditional systems.
Instead of relying on banks, crowdfunding allows individuals and companies to finance various projects: artistic, entrepreneurial, social, real estate, or environmental.
It offers project creators an alternative to traditional banking and gives contributors the satisfaction of giving meaning to their investment.
This connection happens on online platforms — the meeting point between project owners and contributors.
The growth of crowdfunding in France has been remarkable: according to the Financement Participatif France barometer, funds raised on crowdfunding platforms have multiplied by 12 since 2015.
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How does crowdfunding work?
The principle is simple: a project owner presents their idea on a crowdfunding platform. After a selection process, the campaign goes live for several weeks.
The public can then contribute by donating any amount of their choice.
If the funding goal is reached, the money is transferred to the project creator, who may provide symbolic or financial rewards, depending on the campaign type.
The different forms of crowdfunding
One of crowdfunding’s main strengths lies in its diversity.
There are several models, each adapted to contributors’ expectations and values.
The main types include:
- Crowdgiving (donation-based crowdfunding)
- Crowdlending (loan-based crowdfunding)
- Crowdequity (equity-based crowdfunding)
- Real estate crowdfunding
Donation-based crowdfunding (crowdgiving)
This is the oldest and simplest form of crowdfunding. It’s based on donations — with or without a symbolic reward — to support cultural, social, or humanitarian causes.
Examples include restoring a monument, funding an NGO project, producing an independent film, or supporting a local environmental initiative.
Platforms like Ulule and HelloAsso are well-known in this category.
Loan-based crowdfunding (crowdlending)
Crowdlending involves lending money to a company or individual for a fixed period, combining social utility with financial return.
Projects generally offer 5–10% annual returns, though there is a risk of capital loss if the borrower defaults.
Equity-based crowdfunding (crowdequity)
Crowdequity allows investors to buy shares or equity stakes in unlisted companies — typically startups or growing SMEs.
While potential gains can be significant, the risk is also high: if the company fails, the investment is lost.
This model mainly targets experienced investors ready to support innovation and growth.
Real estate crowdfunding: a booming sector
Real estate crowdfunding has surged since 2020, offering attractive returns for investors.
It allows individuals to finance construction or renovation projects via specialized platforms like Anaxago, Wiseed, or ClubFunding.
Investors lend money to a real estate developer in exchange for interest — 8 to 12% annually, over 12 to 24 months on average.
| Type of Crowdfunding |
Principle |
Contributor’s Return |
Expected Average Return |
Target Audience |
Main Platforms |
| Donation (crowdgiving) |
Support a social, cultural, or ecological project through a donation |
Symbolic (thank-you, product, invitation) |
No financial return |
Individuals, associations, patrons |
Ulule, HelloAsso, KissKissBankBank |
| Peer-to-peer lending (crowdlending) |
Lend money to a business or an individual |
Repayment with or without interest |
5–10% / year |
Individuals seeking meaningful investments |
Lendopolis, October, PretUp |
| Equity crowdfunding (crowdequity) |
Invest in the equity of a start-up or SME |
Shares, equity stakes, potential capital gain |
Variable (high potential, high risk) |
Experienced investors |
Wiseed, Sowefund, Tudigo |
| Real estate crowdfunding |
Finance a real estate development or renovation project |
Interest on the loaned capital |
8–12% / year |
Savers seeking short-term yield |
ClubFunding, Baltis, Anaxago |
Legal framework for crowdfunding in France
Since 2014, France has established a clear legal framework for crowdfunding.
Platforms must register as IFP (Intermédiaire en Financement Participatif) or CIP (Conseiller en Investissements Participatifs), under the supervision of AMF or ACPR.
They must clearly inform investors about risks and comply with fundraising limits.
Some also display official labels such as “Financement participatif régulé” or “Croissance verte”, ensuring compliance and transparency.
Why invest in crowdfunding?
To give meaning to your money
Many investors are drawn to crowdfunding because it aligns their moral values with their financial goals.
Supporting local, ecological, or humanitarian projects contributes to a fairer, more sustainable society.
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To diversify your portfolio
Crowdfunding offers a new way to diversify one’s investment portfolio — a key principle of long-term performance.
To target attractive potential returns
Depending on the type of crowdfunding:
- Crowdlending: 5–10% per year
- Real estate crowdfunding: 8–12% per year
- Crowdequity: high potential long-term gain but higher risk
Profits are subject to a 30% flat tax, though some investments may qualify for tax reductions (IR-PME, PEA-PME).
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To support innovation and SMEs
Crowdfunding helps finance technological innovations, small businesses, and local initiatives that might not receive traditional funding.
To promote the ecological transition
Many platforms now focus on green and sustainable projects — from renewable energy to circular economy and sustainable mobility.
The risks and limits of crowdfunding
As with any investment, crowdfunding carries risks.
Financial risks and capital loss
The main risk is project failure, leading to partial or total capital loss.
Unlike savings accounts, invested funds are not guaranteed.
Lack of liquidity and long investment horizon
Crowdfunding investments are illiquid — they can’t usually be resold before the project ends.
They should be seen as medium- to long-term commitments.
Platform reliability and project selection
Not all platforms are equal. Always check that they are registered with the AMF or ORIAS.
A reliable platform provides clear, transparent information about risks, returns, and project details.
| Type of crowdfunding |
Average annual return |
Average investment duration |
Risk level |
Main investor objective |
| Donation-based (crowdgiving) |
0% (no financial return) |
Immediate (one-time support) |
Low |
Support a cause or solidarity project |
| Peer-to-peer lending (crowdlending) |
5–10% / year |
1–5 years |
Moderate to high |
Finance an SME or economic project |
| Equity investment (crowdequity) |
Potentially > 10% / year (capital gain) |
3–7 years |
High |
Bet on the growth of a start-up or SME |
| Real estate crowdfunding |
8–12% / year |
12–24 months |
Moderate |
Seek attractive short-term returns |
How to run a successful crowdfunding campaign
Crowdfunding isn’t just for investors — it’s also a launch tool for entrepreneurs.
Define your project and audience
Start with a clear idea, a concrete goal, and a compelling story. Transparency builds trust.
Choose the right platform
Each has its specialty:
- Ulule, KissKissBankBank: cultural & social projects
- Wiseed, Sowefund: equity investment
- ClubFunding, Baltis Capital: real estate
- Lendopolis: business lending
Prepare your communication
Visibility is key. Videos, social media, newsletters, local partnerships — every action matters.
A lively, transparent campaign inspires trust and engagement.
Should you try crowdfunding?
If you want to combine social utility, meaningful impact, and potential returns, crowdfunding might be for you.
However, remember these golden rules:
- Diversify your investments
- Invest only what you can afford to lose
- Choose regulated platforms
- Study each project carefully
Crowdfunding bridges the gap between savers and the real economy — offering a more human, transparent, and impactful way to invest.
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