My current thinking is that it could be key to the different business models. A P2PVenture platform gives access to a "virtual" fund: The sum of the potential investors that are connected to the platform and whose savings allocated to venture investments is potentially available for actual investments once a project has been selected. To make it simple, we can think that there are several ways to equate a €200M fund. 2M potential investors ready to invest on average €100, 200.000 potential investors ready to invest €1000,...., 2000 potential investors ready to invest €100.000.
We see that depending on the average amount per investor, we are dealing potentially with different profiles. Depending on the number of investors necessary to equate a €200M fund, we are also dealing with reality constraints (is there this number of available investors in the actual population for this amount?), then there is a sizing issue (sizing of the platform, of the means to get the investors connected,...).
In fact, it made me realized that the vast amounts of money available for institutional investors (pension funds, insurance companies) are usually the result of money collected on a very large number of individuals and accumulated on a long period of time. I suppose that the choice of the target profile of investor population is key in the strategic process. Once the population is defined, the type of projects that can be funded may possibly be deduced from this population ability to screen and contribute (in cash, knowledge and network) to the project. -- FredericBaud
Well, yes but the other hand is also possible: you screen projects that require to be funded and then look for investors. Actually this is the most common way already under process. Yes there can be various business models and we ll to find various win win models for investors and projects and solve the chicken and egg issue. PatrickLardant
I think a potentially powerful and disruptive part in the P2P concept applied to venturing, is in the distributed screening process. If we screen before presenting to investors (beyond minimal screening of junk), the platform will incur costs similar to those of Banks, BAs or VCs. On the other end, the matching process could create a powerful filter where really interesting projects would emerge from the distributed screening of the potential investors. Then, when a project gathers interest and that investors interested have a profile you value, you might be interested in investing yourself. -- FredericBaud
Yes indeed, very interesting subject, but Frederic, I m wondering...why do we write here in english instead of french as far as we are both french guys ? Moreover should'nt we first target local (french or european) start up, BA etc. ? -- PatrickLardant
Patrick, this is a good point. I don't have a clear answer to that yet. I agree that the P2PVenture will be implemented differently in different contexts (US, Continental Europe, EuroLand, France,.. see the corresponding question in the Q&A). But I'm also trying to attract English-speaking professionals here to get more momentum behind the movement. So, if in a couple of weeks, we have indeed only French-speaking people writing in English, we should probably stop this awkward situation. But it may be worth trying a little longer (I know for a fact that some English-speakers already bear with my poor English and are aware of what we are doing). What do you think? -- FredericBaud
Frederic, I'm french so my opinion is that yr english is perfect ! ;o) PatrickLardant
I think that a disruptive part of the P2Pventure model could be the ability to screen companies or projects as soon as they start and to strenghen them, to help them tp be more open minded and structured and then to fund them with seed money from BA's or from other sources. So you could say: "Yes but this is already done within BA clubs and associations" . Actually not at all. When looking for BA's, project and startup founders show their powerpoint bizplan but very often, this bizplan has not been reviewed by any advisor and there are many problems: lack of management, inadequate bizmodel, inadequate ramp up and cash flow analisys, lack of barriers for competitors, lack of strong board members etc. I believe P2P-venture could solve all those issues. Even more, BA's club are "associations Loi de 1901" and they are not authorised to give financial advices such as a fair value for the investment nor any keu advice within each vertical sector. You remember I went last Thursday to a bizangel meeting where 4 projects were asking for seed money. I saw at least 2 interesting cies but both of them should rethink their business model (my opinion ;o) ), the third one had a good idea but not enough market segmentation, the fourth had a slide starting with "We are The #1 worldwide company of blabla " and of course they "no competitors" within a "huge market" ;o)... Well well well...as you can understand we could find easily an interesting model bringing a lot of added value to those projects in order structure them first, fund them and then bring them to the market. -- PatrickLardant
I totally agree with you. And this falls also in the Investor Profile question. What is the technical and business knowledge that we seek in the investor population so that they can actively contribute to the "incubation" of the project? Interestingly, I think that we could find some correlation between those skills and the level of investments (€1000, €10.000, €100.000,...). I think that part of this conversation can also happen within the Prototype sub-space. -- FredericBaud
Sorry I was not aware of the prototype. This will be our added value: why will we find easily money for our French cooking team? well...because we will provide to our cook not only money for buying and cooking his food thanks to his know how, but also salt and pepper, a nice place to serve the meals, nice waitresses, a restaurant located near people in love with french cooking, a connection to local newspapers to advertise about him, a nice cash register, a board with stars going to his place and we ll provide him a lot of best practices so that he will be the new 3* Michelin or Zagat rated guy! and then we ll bring him to venture funds in order to do franchises ! ;o))) PatrickLardant
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