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A new way to finance the growth of startups : bonds ! (Part 1)

The topic of financing startups’ growth is a recurrent one on this blog; simply because it’s a problem that many entrepreneurs are faced with and that they don’t always solve. Today we’re interviewing  Jean Carvajal, President and Creator of Investbook. Investbook is the first crowdfunding platform approved by the AMF (French regulatory body) for bonds investments.


IntoTheMinds : Banks are cautious. This is not new. Therefore a new source of financing called “crowdfunding” has emerged in recent years. What are the crowdfunding approaches currently available on the market for SMEs?

Jean Carvajal : In France, there are two main types of crowdfunding methods for business financing, particularly for SMEs: financial securities (stocks and bonds) and loans.

  • Stocks (equity): companies increase their capital by issuing shares.
  • Bonds (financial securities representative of a loan): companies contract a debt by issuing bonds with an interest rate (coupons) and a repayment schedule.
  • Loans, which since October 1, 2014 no longer fall within the banking monopoly. Companies take out conventional loans.



ITM : What are the benefits of crowdfunding using bonds?

JC: Beyond crowdfunding, issuing bonds to finance a company provides many benefits, including:

  • Funds raised through a bond issue are can be used flexibly. The purpose is to finance a company’s general needs (General Corporate Purpose as is frequently written on debt contracts). Sometimes referred to as quasi-equity, bonds can be used to finance all of a company’s needs (tangible and intangible investments, operations, salaries, R&D etc.).
  • This method of financing is non-dilutive, as Investbook suggests “straight” bonds, which means that they cannot be converted into shares. Straight bonds represent a debt; there is therefore no link to the company’s capital so the shares are not diluted.

Bonds also provide flexibility and versatility:

  • Financing can be obtained without guarantees, privileges, liens on assets or other guarantees.
  • Debt profiling is specific to each company. Debt may be repaid with constant annuities or lower annuities for the first few years, depending upon its needs.
  • Bond financing provides a greater market depth than that offered by the banks, which may have financial commitment limits, while the bond market offers a wider range of lenders. It’s also a way to diversify, which is key for stable business financing, particularly when banking relationships are vulnerable or when there are recurrent or multiple cash requirements.


ITM: How do you select projects to present to the investors? To what aspects are you particularly attentive when you scrutinise an SME’s project?

The selected projects are subject to a thorough analysis. This is a comprehensive analysis that encompasses 3 components:

  • The human component: systematic meetings with the leaders, office visits and/or inspection of production tools, analysis of governance and organisational structure.
  • The non-financial component: analysis of the environment and the competition, study the business model as well as the company’s strengths and weaknesses, and identification of risk factors.
  • Financial analysis: analysis of historical accounts, the ratios and the business plan. We also have an internal rating model and a stress test to evaluate each company’s risk profile.

Each project is presented to our risk committee that approves, adds conditions or rejects the crowdfunding projects that we consider proposing to our investors.

We are above all attentive to a company’s consistency. The leader, the organisation, its management and its financial results must all be clear and consistent, which means that nothing should reveal gaps, uncertainties or misunderstandings. Furthermore, we prefer healthy companies with steady sales over time, profitable results or at least close to being balanced. The basic point is to evaluate a company’s ability to repay its loan.


Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)

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