AECM Annual Meeting 2014 - 2

1. AECM Seminar 2014 – ISTANBUL
Assemblée Générale – 16 octobre 2014
New products :
Crowdfunding : Where to position guarantees?
Michel COTTET, Managing Director of SIAGI, France

2. Crowdfunding
Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET2

3. Crowdfunding, 5 segments of market
3 non speculative models
Free donation
1.2 bn €
2 speculative models
Social Lending
(no interest)
1.1 bn €
Donation
with reward
0.8 bn €
Peer to peer
lending
(with interest)
1.4 bn €
Equity
0.15 bn €
3Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

4. A fast growing market
x4 in the next 2 years
 2012
• 536 platforms
• 2.2 bn € collected
• 1.1 million projects
• 72% North America
• 26% Europe
 2013
• 800 platforms
• 5 bn € collected
• 2.2 millions projects
 2015
• 20 bn € collected
 2020
• 1 000 bn € collected
4Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

5. The French market
 2012
• 25 platforms
• 22 M€ collected
• 17 500 projects
 2013
• 75 platforms
• 80 M€ collected
• 50 000 projects
 2020
• 2.2 bn€ collected
• 1.5 bn € Peer to peer lending
• 1% of the French savings
market
5Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

6. Peer to peer model :
« the funding circle » UK
 Created in 2010
 5 500 enterprises financed
 32 000 lenders
 390 M£ cumulative lends
 100 M£ over the last 6 months
 From 5 000 £ to 1 M£
 Interest rate up to 10%
 5 Years monthly repayment
 Fees up to 4%
6Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

7. The French crowdfunding regulation
 2013/06 position from the supervisors (both savings and banking)
 2014/02 public announcement from the Government
 2014/05 publication of the 1st Order (ordonnance)
 2014/09 publication of the implementing legislation
 2014/10/01 the status comes into force
7Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

8. The French framework for lending
 A new type of body: IFP (Participative Finance Intermediary)
 Another body for equity as CIP (Participative Investment Advisor)
 Light regulation
• Listed on a register of insurance intermediaries
• Manager professional skill
 Double Limits
• Max 1 M€ by project
• Max 1 000 € by project by person
8Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

9. An example of criteria
 Target : very small and sme’s
 Minimum 2 balance sheets
 Growth project including working capital
 Maximum 5 years
 Interest rate from 4% to 10% according to an internal rating (before taxes
and losses)
 Up front fees 4% on the capital
 No collaterals
 30 days to collect funds from the crowdfunder
 3 days to provide funds to the enterprise
9Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

10. The potential role of
a mutual guarantee society
 Secure lenders
 Secure borrowers
 Secure the transactions
 Secure the platform ?
10Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

11. Secure lenders
 Datas
• Verify the informations and the sources of information from the
borrower
• Verify the consistency of the datas
 Analysis of the project
• Cross referencing with external datas
• Assessment process
 Risk mutualisation
• Diversification
• Selectivity rate
 Flows collections
• To be allocated to the enterprise
• To be allocated to the project of the enterprise
• To be allocated to the lenders (interest, capital, unpaid collection)
11Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

12. Secure borrowers
 Protection of datas
 Confidentiality of transactions
 Adequacy between enterprise, project and type of financing
 Adequacy between costs and return on (E, I etc..) ?
 Preliminary advices ?
12Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

13. Secure the transactions
 Individual basis
 Collective basis
 Proportional losses
 First losses
 Losses in excess
 Collaterals
13Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

14. Secure the platform ???
 Risk of reputation
 Legal prosecution from lenders and borrowers
 Insurance
 Money laundering
14Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

15. Guarantee positioning
Opportunities
• Fast growing market
• Unlimited resources (apparently)
• Securing transaction
• New type of mutualisation
• Revenues
• Bank complementarity
• Technique of securization
Threats
• Low volumes, low unit size
• Fragmented market
• Poor sensibilisation to risk
• Diversification vs Mutualisation
• Costs
• Bank generalization
• Finance generalization
15Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

16. Agenda SIAGI
 Understand the model
• Work on the inside
• Participate in the risk policy, in the individual decisions…
 Create an appropriate guarantee scheme
 Encourage « cross-financing »
16Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET

17. Thank you for your attention.
17Assemblée Générale AECM - ISTANBUL - 16 octobre 2014 Le CROWDFUNDING - Michel COTTET