Because raising equity via CF only applies to projects that "speaks" to a subset of the general public.
Because raising equity via CF implies your deck of slides immediately end up in the hands of your competitors (I know that once you've started your roadshow you have to assume everything is public but you can expect a little bit of latency and/or release some information at latter stages).
Also, probably because I am only familiar with smaller investment/startup communities (Paris and especially Brussels), every information is traded between large investors (both funds and individuals) and once you're "in" you hear about "largish" rounds (or companies going out of business) by grapevine sometimes weeks in advance.
It's already hard enough to raise with noise around, it's hard enough to manage a business, don't get on a soapbox and reveal your strenghts and weaknesses publicly...
In France, lending CF is growing. I invested a few euros on one of the platform just by curiosity. They are mostly industrial companies looking for sub 500k loans to acquire/replace equipment. The rates are outrageous, up to 8%. You get a detailed market and financial analysis, you see companies 20 years+ old, with stable numbers, doing like 2 or 3M a year in sales. Why the hell didn't their bank lend them 200k at 4 or 5%?
French bankers usually don't play their role anymore, which is lend capital, take some risks, and push good projects towards friendly VCs (I must say that we're very lucky/happy our banker has the opposite behavior :) )
> In France, lending CF is growing. I invested a few euros on one of the platform just by curiosity. They are mostly industrial companies looking for sub 500k loans to acquire/replace equipment. The rates are outrageous, up to 8%. You get a detailed market and financial analysis, you see companies 20 years+ old, with stable numbers, doing like 2 or 3M a year in sales. Why the hell didn't their bank lend them 200k at 4 or 5%? French bankers usually don't play their role anymore, which is lend capital, take some risks, and push good projects towards friendly VCs (I must say that we're very lucky/happy our banker has the opposite behavior :) )
Ex-banker here. 8% is not a bad rate for such a loan. Most banks, in the US at least, don't want to do term loans for equipment for small companies because the transactions costs are high (same amount of work for a $5m loan, often less), there's usually a customer concentration problem, the borrower is usually overlevered already, the asset recovery process is just as expensive as a larger loan, and the collateral liquidation values are low. So if you're an established, small industrial company a bank will gladly give you either a real estate loan or a line of credit at 4 or 5% collateralized by your receivables, but that's about it.
Edit: There are specialty finance companies that have sprung up in the past few decades that make equipment term loans, and their rates are 5-12%. There are also "hard money" guys lending at 15%+ to riskier borrowers.
Never thought of it that way but makes perfect sense. My view was distorted by the fact that my banker easily opens lines of credit for my company where the collateral is virtually non existent (SaaS startup). I compared that to industrial companies where, to me, assets are more liquid:a truck or whatever industrial equipment probably can probably be sold more easily at an auction than the software IP of a company. While true, I neglected the fact that the auctionned truck will go for probably 25% of its original value and the bank will not refer its funds...
My banker is not trying to earn something on our lines of credits, he is betting on the fact we will do a lucrative exit and that it will, in the end, be beneficial to him.
Because raising equity via CF implies your deck of slides immediately end up in the hands of your competitors (I know that once you've started your roadshow you have to assume everything is public but you can expect a little bit of latency and/or release some information at latter stages).
Also, probably because I am only familiar with smaller investment/startup communities (Paris and especially Brussels), every information is traded between large investors (both funds and individuals) and once you're "in" you hear about "largish" rounds (or companies going out of business) by grapevine sometimes weeks in advance.
It's already hard enough to raise with noise around, it's hard enough to manage a business, don't get on a soapbox and reveal your strenghts and weaknesses publicly...
In France, lending CF is growing. I invested a few euros on one of the platform just by curiosity. They are mostly industrial companies looking for sub 500k loans to acquire/replace equipment. The rates are outrageous, up to 8%. You get a detailed market and financial analysis, you see companies 20 years+ old, with stable numbers, doing like 2 or 3M a year in sales. Why the hell didn't their bank lend them 200k at 4 or 5%? French bankers usually don't play their role anymore, which is lend capital, take some risks, and push good projects towards friendly VCs (I must say that we're very lucky/happy our banker has the opposite behavior :) )