According to the estimates of the Governor of the Banque de France, the savings with the pandemic increased to 110 billion euros in 2020 alone. 318 billion euros, here are the gross savings of French households in 2020, according to ‘Insee. Consumption restrictions (restaurants, sports, culture, etc.), but also the fear of the future lead many French to save. Is it time to talk to your loved ones?
Confidence is gradually settling in France towards autoentrepreneurs and start-ups. The family entourage no longer sees entrepreneurial adventures as a dangerous incident but as a possibility for success and victory. However, from there until your family and loved ones decide to invest in your project, the step to take is that you must have the talents of a diplomat but also a professional attitude worthy of the greatest number of investors. Some practical tips for accessing love money.
It’s not always easyto find funds… Many entrepreneurs cut their teeth at the door of investment funds and other networks of business angels. So, the obvious solution is to seek financial help from family and friends. This type of financing through the entry of cash capital 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… as long as they know how to convince those close to them!
Show that you are on the ground
So the challenge is to convince your uncle, grandmother or old family friend that he has everything to gain by investing in your project. For that, you don’t need to try to convince him 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 your feet are on the ground and that your project meets a real and measurable market need.
Give numbers, numbers and more numbers!
Everything will be a question of motivation… but also of numbers! Your relatives may not have the same experience analyzing executive summaries as prestigious investment funds in New York, but that doesn’t mean they’re easily fooled! Therefore, to convince them, there is nothing better than presenting them with convincing numbers, which usually speak louder than all your monologues about your “super innovative solution”!
Your clear explanation is the mother of excellence
Don’t 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 one who is reluctant to follow you in your project, discuss the tax exemptions to which they are entitled thanks to this capital investment in a creative SME. The tax reduction argument involved in Madelin’s law should play in your favor!
In fact, “Madelin’s law” received encouragement. The Finance Committee of the National Assembly adopted this week an amendment to the 2018 finance bill that strengthens the tax advantage given to people who invest in SMEs. In fact, after the abolition of the ISF, and as a result of the reduction of the ISF-PME, the support for SMEs is maintained thanks to the strengthening of the system, known as Madelin-PME, provided by article 199 terdecies -0 A in CGI.
The advantage of Love Money is its taxation and especially its tax reduction for the investor: in fact, it is around 18% of the investment amount (as long as certain criteria are met)
Attention!
Succeeding in convincing those close to you also involves resolving high and clear all situations that may arise. It is easier to trust a businessman who considers solutions to solve the worst than one who chooses an ostrich policy!
So talk about the possibility that the loved one will lose his money. And speaking frankly about the risk of seeing relationships fall apart to avoid this situation. Take him on your adventure, the taste of danger is an adrenaline that is necessary for each and everyone. And let him read all the experiences of entrepreneurs published in Dynamique. You can really convince him that he might miss the opportunity of his life!!!