Thousands of French people have invested in the startup Bricks, but the authorities have said no
The startup that raised millions of euros “in 5 seconds” is pinned down by the authorities. Bricks, in Montpellier, has just announced the corrected amount of its fundraising.
The startup which intends to revolutionize real estate investment, from 10 euros, will not be able to take advantage of the 20 million euros raised last April. The AMF, the policeman of the French financial markets, was surprised by the surge in crowdfunding which had led Bricks.co to find 5 million euros in a record time of only 5 seconds.
— Bricks (@Get_Bricks) April 21, 2022
A community of 50,000 retail investors had hurried to take advantage of the opportunity to invest in a promising French nugget. In ten days, she had raised her target to 20 million. Shortly after, she recognized, in collaboration with the authorities, that it was not viable to take advantage of such an amount in view of the regulations.
Four months of waiting and a reduced amount
This week, Bricks.co finally announced that it had completed a €13 million funding round. In detail, crowdfunding is reduced by €8 million. The rest comes from business angels. Among them, basketball star Tony Parker. The amount remains quite exceptional. But faced with such an original fundraising, it will have taken time before Bricks can take advantage of this fresh money.
“There is a legal vacuum on royalties which are not a financial security which falls within the jurisdiction of the AMF”, said the authority last May. Initially, the boss of the Montpellier startup explained that he had opted for a different model than classic shares so that individuals could more easily resell their shares without difficulty – a strategy that follows that of the platform model for investing in real estate.
Putting 10 euros on the platform, to take advantage of the benefits of a real estate investment, does not work on Bricks as it usually does, when you own part of a real estate property. Bricks.co users are not direct owners, but have “bricks”, this title (which has no legal status) which allows them to receive remuneration in the form of royalties in exchange.
Thus, the benefits are not of the order of property income, but of movable income. A one-off flat tax of 30% (flat tax) is therefore to be taken into account in the tax declaration.
Maximum amount to derogate from the rule
Why 8 million euros? Finally, the flip side is that Bricks had to settle for crowdfunding of around 8 million euros as it is, in the legislation, the maximum amount to derogate from the rule advanced by the Autorité des Marchés Financiers. With hindsight, the company would certainly have preferred to do things like Qonto, a neobank for French pros, which also raised funds through crowdfunding, via the British platform Crowdcube.
It is will act, for the authorities, in an important scenario which must be questioned. Faced with such a performance, although the capital of individual investors is at risk, it would be a shame to curb French startups and put a spoke in their wheels. Especially at a time when it is becoming increasingly difficult for projects to find funds from institutional investors.