According to estimates by the Governor of the Banque de France, savings with the pandemic increased by 110 billion euros in 2020 alone. 318 billion euros, here is the gross savings of French households in 2020, according to the ‘Insee. Consuming restrictions (restaurants, sport, culture, etc.), but also fear of the future have led many French people to save. Is it time to talk to your loved ones?
Confidence has gradually settled in France towards autoentrepreneurs and start-ups. The family entourage no longer sees entrepreneurial adventures as a dangerous incident but as a possibility of success and gains. However, from there until your family and loved ones decide to invest in your project, the step to take will require you to acquire the talents of a diplomat but also a professional behavior worthy of the greatest investors. Some practical tips for accessing love money.
It’s not always easy to find funds… Many entrepreneurs break their teeth at the door of investment funds and other networks of business angels. The solution that looms, therefore, is to seek financial assistance from family and friends. This type of financing by entry into the capital of money from relatives is called love money (or love money for English speakers!). A leverage effect that allows a large number, if not most, of entrepreneurs to get started… provided they know how to convince those close to them!
Show you have your feet on the ground
The challenge is therefore to convince your uncle, grandmother or old friend of the family that he has everything to gain by investing in your project. For that, you don’t have to try to make him believe that you are the future Steve Jobs and that your invention “will literally re-vo-lu-tion-ner the market”! The important thing is to reassure the person by showing him that you have your feet on the ground and that your project meets a real and quantifiable market need.
Give numbers, numbers and more numbers!
Everything will be a question of enthusiasm… but also of figures! Your relatives may not have the same experience in analyzing executive summaries as the prestigious New York investment funds, but that’s not why they will be easily fooled! So, to convince them, nothing better than presenting them with convincing figures, which will often speak louder than all your monologues about your “super innovative solution”!
Your clear explanation will be the mother of efficiency
Do not forget that your relatives are not investment professionals! Present them with clear arguments and explain them if this is not the case. If they feel completely lost when you tell them about the project, you can be sure that they will be afraid to trust you.
Significant financial benefits
To succeed in convincing the last reluctant to follow you in your project, mention the tax exemptions to which they will be entitled thanks to this investment in the capital of an SME in creation. The argument of the tax reduction linked to the Madelin law should greatly play in your favor!
Indeed, “the Madelin law” receives a boost. The Finance Committee of the National Assembly adopted this week an amendment to the 2018 finance bill which strengthens the tax advantage granted to people investing in SMEs. Indeed, following the abolition of the ISF, and as a consequence of the ISF-PME reduction, support for SMEs is maintained thanks to the reinforcement of the system, known as Madelin-PME, provided for in article 199 terdecies -0 A of the CGI.
The advantage of Love Money is its taxation and in particular its tax reduction for the investor: indeed, it is around 18% of the amount of the investment (provided that certain criteria are met)
Succeeding in convincing those close to you also involves addressing upstream and clearly all the situations that could arise. It is easier to trust an entrepreneur who considers solutions to remedy the worst than one who opts for the policy of the ostrich!
So approach the possibility that the loved one loses his money. And talk frankly about the risk of seeing relationships fall apart to avoid this situation. Take him on your adventure, the taste for risk is an adrenaline necessary for each and everyone. And have him read all the experiences of entrepreneurs published in Dynamique. You will definitely convince him that he might miss the opportunity of his life!!!