How to invest in startups?
Updated on 30 July 2026
To invest in a startup, an individual can go through equity crowdfunding, subscribe to units in an FCPI (Fonds Commun de Placement dans l'Innovation, a French venture-capital fund investing in innovative SMEs) or an FIP (Fonds d'Investissement de Proximité, a French regional investment fund), or invest via a publicly listed venture capital fund. This guide compares these three routes, their 2026 tax treatment and their risk of capital loss.
- Since 21 February 2026, only FCPI funds focused on young innovative companies and FIP funds investing in Corsica or French overseas territories still qualify for a 30% income tax reduction.
- Loan-based crowdfunding pays a fixed interest rate that ranks ahead of shareholders in the event of bankruptcy, while equity crowdfunding gives investors shares in the startup.
- Some venture capital funds, such as Altamir or Saratoga Investment Corp, are publicly listed and accessible without a high minimum entry ticket.
- In the United States, close to half of young companies close within 5 years, a risk of capital loss to factor in before investing.
- Finary One supports investors with €500,000 in investable assets in structuring their venture capital allocation.
What is the shareholder's return?
Individuals who invest in startups in exchange for shares can earn a return in two ways: through dividends or through capital gains when reselling their shares. Dividends are a share of the cash paid out to the company's owners. The first option is rare for young companies, which need to reinvest every euro of cash to fund their growth. The second option requires finding a buyer willing to acquire your shares at the desired price. That involves a complex valuation exercise, in the absence of a market capitalisation or recurring revenue.
The lack of dividends and the illiquidity of startup shares are structural features of this asset class, just as they are for private equity as a whole. According to the three-factor model developed by researchers Eugene Fama and Kenneth French, an authority in academic finance, small-company stocks outperform large-company stocks on average over the long run, alongside the value and diversification factors. That research covers small listed caps, but its lesson extends to startups, whose growth potential comes with a higher risk of failure than that of mature companies.
Some angel investors have made fortunes by betting early on future startups that became tech giants: that is the case of Peter Thiel, who turned a $500,000 investment in Facebook in 2004 into more than $1 billion in proceeds from the 2012 IPO. But these success stories should not obscure the reality of the competitive landscape: in the United States, close to half of young companies close within 5 years, and about two-thirds within 10 years. Long reserved for private equity professionals, investing in startups has become more accessible with the rise of the internet, which reduced the number of intermediaries and the associated fees, without erasing the risk of capital loss.
How to invest in a startup through crowdfunding?
A first way to invest in startups is through crowdfunding platforms. Platforms such as Wiseed, Crowdcube or Sowefund have flourished online in recent years and let individuals invest in startups with an entry ticket accessible to every budget.
Several financing methods should be distinguished. Crowdfunding is a loan granted to the company in exchange for interest payments; equity crowdfunding gives the investor shares in the company in exchange for their investment. The first carries a different risk profile from the second because, if the company goes bankrupt, creditors rank ahead of shareholders for repayment of their claim. Note, however, that many startups, particularly in the software industry, hold few tangible assets. Their liquidation value can therefore be close to zero, causing an outright loss for both lenders and shareholders.
The return on the second financing method is more uncertain, as it depends not on the firm's financial ability to honour its debts, but on its overall valuation. A company that survives financially can therefore enrich its creditors while leaving its shareholders empty-handed. The reason: insufficient cash to pay dividends, or no progress to justify a higher valuation. Conversely, if the startup's profits take off, shareholders reap the rewards of their investment. Creditors, for their part, only receive the fixed interest rate agreed when the loan was taken out.
Do FCPI and FIP funds still qualify for a tax reduction in 2026?
Yes, but on narrower terms since 21 February 2026. Fonds Communs de Placement dans l'Innovation (FCPI) and Fonds d'Investissement de Proximité (FIP) are two vehicles for investing indirectly in startups or unlisted SMEs. Only FCPI funds invested in young innovative companies (JEI) and FIP funds investing in Corsica or French overseas territories still qualify for a 30% income tax reduction; standard FCPI and FIP funds, invested more broadly in innovative SMEs or mainland regional SMEs, have lost that upfront tax benefit.
For an FCPI focused on young innovative companies, the contribution cap for the tax reduction is €75,000 for a single person and €150,000 for a married or civil-partnered couple, outside the overall cap on tax loopholes. For an FIP investing in Corsica or French overseas territories, the cap remains €12,000 for a single person and €24,000 for a couple, within that same overall cap.
In practice, after selecting the fund that interests them, the investor acquires units through their broker or bank. These units are locked in for a period set by the fund's managers, most often 8 years. FCPI and FIP funds remain long-term, illiquid investments carrying a risk of capital loss; gains or losses are only realised once the lock-up period ends.
Investing in startups and Finary One
Investing directly in startups (FCPI, FIP, business angels, equity crowdfunding) offers favourable tax treatment but an extreme dispersion of performance. Finary One supports investors with €500,000 in investable assets in this high-risk, long-horizon allocation.
- Selection of suitable vehicles (FCPI JEI for the income-tax reduction, FPCI (Fonds Professionnel de Capital Investissement, a French fund reserved for sophisticated investors) for experienced investors, institutional venture funds) with a personalised analysis of fees and track record.
- A dedicated private manager who sizes your venture pocket in line with your wealth, your risk tolerance and your tax-reduction strategy.
- A 360° view that integrates your venture positions into your overall allocation, manages liquidity and measures consolidated net performance.
Learn more about Finary One → Reserved for investors with €500,000 in investable assets. Investing carries risks, including the risk of capital loss.
Venture capital funds
Venture capital funds specialise in taking stakes in unlisted companies (private equity), most often startups. The goal of these funds is not to support these companies through to maturity. It is rather to seed them, then sell them as soon as the business plan translates into solid, fast-growing revenue.
Some venture capital funds are publicly listed, such as Altamir (Euronext Paris), which invests alongside the Seven2 and Apax Partners funds and manages around €1.3 billion in assets, or Saratoga Investment Corp (NYSE: SAR), a business development company (BDC) specialising in financing US middle-market companies. Others are eligible for the PEA (a French tax-advantaged equity savings account), such as the Dutch holding company Prosus, which holds stakes in Tencent and Udemy alongside unlisted startups; it sold its historic stake in Delivery Hero to Uber in 2026. The French fund Eurazeo, also listed in Paris, manages close to €40 billion in assets under management, up 9% year on year. Over the long run, venture capital and private equity more broadly have historically delivered returns above listed equity markets, in exchange for significantly reduced liquidity.
Non-contractual document for promotional purposes. Finary One is Finary's private wealth management offer, reserved for investors with at least €500,000 in investable assets. Investing carries risks, including the risk of partial or total capital loss. Finary SAS, 58 rue de Monceau, 75380 Paris 8, under the supervision of the AMF and the ACPR.
Startups: a high-risk bet, sized with care
Whatever vehicle is considered (crowdfunding, FCPI, FIP, venture capital fund), a thorough review of the startup or the fund is essential: the soundness of the project, the integrity and track record of the management team, and whether institutional investors are present in the capital. Once that due diligence is done, all that is left is to let time do its work in the hope of, perhaps, generating a capital gain, with no guarantee of success.
Frequently asked questions
What is the minimum amount to invest in a startup?
There is no single legal threshold: equity crowdfunding platforms such as Wiseed or Sowefund let you invest from a few hundred euros, while FCPI, FIP and institutional venture capital funds usually require a higher entry ticket, with no guarantee of liquidity for several years.
What is the difference between crowdfunding and equity crowdfunding?
Loan-based crowdfunding pays the investor a fixed interest rate that ranks ahead of shareholders in the event of bankruptcy. Equity crowdfunding gives you shares in the startup: the gain depends on its future valuation, with a higher potential for capital loss.
Do FCPI and FIP funds still let you reduce your taxes in 2026?
Since 21 February 2026, only FCPI funds invested in young innovative companies and FIP funds investing in Corsica or French overseas territories qualify for a 30% tax reduction. Standard FCPI and FIP funds, invested more broadly in SMEs, have lost that upfront tax benefit.
Can you invest in venture capital through a PEA or the stock market?
Yes, some venture capital and private equity players are publicly listed, such as Altamir or Saratoga Investment Corp, or eligible for the PEA, such as the Dutch holding company Prosus. These vehicles offer daily liquidity, unlike FCPI, FIP or unlisted funds.
What is the main risk of investing in a startup?
The main risk is the total loss of invested capital: in the United States, close to half of young companies close within 5 years. Investing in a startup is also illiquid, with no certainty of finding a buyer to resell your shares.
From what level of wealth does Finary One support a venture capital investor?
Finary One is designed for investors with at least €500,000 in investable assets. A dedicated private manager helps select suitable vehicles (FCPI JEI, FPCI, venture funds) and size this high-risk pocket within the overall allocation.
Sources
Bpifrance Création, tax reduction for subscribing to fund units (FCPI and FIP)
LendingTree, analysis of Bureau of Labor Statistics data on the survival rate of US businesses
The Motley Fool, Peter Thiel's investment strategy
Corporate Finance Institute, the Fama and French three-factor model
Saratoga Investment Corp, company profile
Prosus, sale of its residual stake in Delivery Hero
Eurazeo, first-half 2026 results
AMF, PSCA whitelist, Finary SAS
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice. This investment carries a liquidity risk (resale not guaranteed, long horizon) and a risk of capital loss. Income and valuations are not guaranteed. Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser. Finary SAS, an investment firm authorised by the ACPR (no. 19283), member of AMAFI. Insurance broker registered with ORIAS (no. 21001279), member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
