Founders Future, a well-known venture capital firm in the French tech ecosystem, acquired an equity crowdfunding marketplace called Sowefund. While the terms of the deal have not yet been disclosed, Sowefund has been profitable since 2022 with around 20 employees.
Following this move, Founders Future now has two separate but complementary businesses. With its venture capital funds Founders Future raises money from limited partners, including professional investors and family offices, and then invests in promising startups. In other words, a typical VC.
With its crowdfunding platform, it connects retail investors with startups that want to raise money from its community of users or from personal finance experts who want to diversify their savings with risky but potentially rewarding investments. Going forward, Founders Future and Sowefund will continue to operate completely separately; there will be no synergy between these two activities.
So why would a venture capital firm acquire a crowdfunding platform?
“We noticed two main trends. The first trend, which you have surely noticed, is that there is a new generation of investors who want to have more participation, both in public and private companies. They want transparency and they want to invest in the real economy,” said Founders Future founder and CEO Marc Menasé.
“The second observation we have made is that our work with the fund is very professional and very disciplined in its daily approach. And we can bring these methods closer to a company involved in crowdfunding. And it is true that not much has been done about this,” Menasé added.
And Founders Future has already seen crowdfunding firms work with some of its portfolio companies; For example, Taster and 900.care raised Crowdcube, the British investment platform that expanded to France in 2022.
Raising the bar for equity crowdfunding
The two co-founders of Sowefund, Benjamin Wattinne and Georges Viglietti, will continue to lead the crowdfunding platform in the future. But Founders Future has a multi-million dollar investment plan to grow the Sowefund team over the next two years.
“What we want to do is contribute our knowledge to ensure that Sowefund becomes more professional and truly the reference platform for co-investment with professionals. That's really what we want to achieve,” Menasé said.
Since 2014, Sowefund has managed 103 crowdfunding campaigns. In total, the companies have raised €81 million from more than 110.000 retail investors (i.e. $86 million at current exchange rates); There is no information on the performance of these investments. Recent campaigns include Ekwateur, Agriloops, Lunii, Axioma, Extracadabra and Futura Gaïa.
More recently, Sowefund received an agreement to obtain certification as a European crowdfunding service provider. This means it can operate in other European countries in the future.
But the Sowefund team (and Founders Future) wants to go a step further based on regulatory changes. Over time, Sowefund would like to offer the opportunity to invest in funds, such as venture capital funds, impact funds, etc. But that is not yet possible.
Founders Future's move is also interesting because of where equity investing in general is at the moment. These investments have slowed in recent years around the world. With many venture capital firms still closing deals that would have made sense a few years ago, it's time for startup CEOs to find creative ways to expand their access to capital.
“The investment potential among individuals is enormous. Therefore, there are people who want to invest in companies that they know and use, or have a positive feeling towards these companies. And there are a large number of them,” Menasé said. "That's why I think the good thing about equity crowdfunding is that it is an alternative or a complement in a context in which financing is difficult for companies."
