The Quebec crowdfunding platform La Ruche, which is celebrating its tenth anniversary these days, is increasingly becoming one of the missing links to help young people from across the province get started in business. Good news, and less good news for Quebec entrepreneurship.
In fact, Quebec has one of the lowest rates of new business creation by its young adults in Canada. This is a situation that has lasted for at least 30 years. And even if we talk about it, the organizations to which entrepreneurs naturally turn to finance their projects continue to neglect their youngest clientele.
This is obviously an opportunity for companies like La Ruche to seize. This is a Web platform on which people who want to launch a new product or service, or even a new business, can make their project known to Internet users. Those interested can offer money, which will then be transformed if the project achieves its financing and marketing objectives into a small stake in the company thus created. If the project fails, everyone gets their money back.
It is a crowdfunding formula similar to those popularized internationally by sites like GoFundMe, Indiegogo and Kickstarter. The difference is that it slightly reduces the risk of losing their money for individuals who invest in it. “We don’t work quite like Kickstarter,” explains Duty the CEO of La Ruche, Frédéric Auger.
“First, we limit the amounts that can be raised on our site to $250,000, whereas on Kickstarter, it can amount to millions of dollars. Then, we contact the people behind each of the projects presented on La Ruche to ensure that it is feasible. We put up some ramparts to help entrepreneurs and visitors. Our success rate is 80%, which isn’t perfect, but it’s very high. »
More than love money
La Ruche first saw the light of day in Quebec, before extending its activities to other regions of the province. Today it goes as far as Abitibi and covers 15 of the 16 regions of Quebec. She has a good idea of what new entrepreneurs look for when trying to get into business.
“Is funding a problem? The answer is yes. Banks and governments have financing criteria that are often too strict for them, which makes things difficult,” says Frédéric Auger. Thanks to social networks, young people are also very familiar with crowdfunding. This is an avenue that appeals to them quite early in their entrepreneurial process.
It is often the second source of financing considered after close friends and family, what is called, in the jargon, the love money. “This money that comes from friends and family is important, but it remains risky. We then extend this to the entire population of the province. We believe the public is part of the solution. »
La Ruche also goes a little further by putting its young entrepreneurs – it calls them its “promoters” – in contact with young business incubators in their region. “Young people don’t always know where to start, and that’s normal. We try to place ourselves at the center of the ecosystem to help them find the help they need to get started,” says Frédéric Auger.
Two for one
The formula seems to hit the mark. In any case, La Ruche convinced the Quebec government to entrust it with the reins of a new matching fund with a total value of $5.7 million, which will allow it to double the stake obtained by the projects present on its platform that achieve their crowdfunding objective.
The Growth Access Fund will provide one dollar of additional financing for each dollar raised by new entrepreneurs, for projects of at least $50,000 and up to $250,000.
This new fund already has three beneficiaries: Aliments Green Brothers, which produces vegan foods, including sausages on sticks which are said to be excellent, Hot Poc, which manufactures reusable hand warmers, and Bromont Campervan, which wants to add vehicles to its fleet of electric recreational vehicles available for rental.
“The loans normally available are not always sufficient to ensure the full growth of projects like these, so the government decided to add one dollar for each dollar obtained on La Ruche,” explains Frédéric Auger. A way to accelerate support for young entrepreneurs throughout Quebec.
For La Ruche, it’s a great way to celebrate its tenth anniversary. It is also a new financing option for young Quebecers who dream of going into business.