Last week, my cofounder wrote about how the French government’s may potentially be slowing the deal for Yahoo to acquire 75% of Dailymotion (currently 100% owned by Orange). This morning, Les Echos confirmed that the government is indeed looking for alternative solutions, and, essentially, refuses to let foreign companies buy a majority stake in Dailymotion. The French government currently maintains a 27% stake in the Orange’s parent company via the French sovereign wealth fund FSI, and thus has a bit of power over this deal, unfortunately.
The Irony of it all….
In the aforementioned article, Les Echos states that the government wants to “give Dailymotion what it needs to grow” – what a bunch of bulls$%t. The Dailymotion executives stated that, in visiting Fleur Pellerin last week, they said that they were looking to raise 50 Million euros (despite being profitable for the last 2 years), in order to expand into new countries (Brazil, Spain, Japan, etc.), as well as make acquisitions and invest in R&D. The French government’s response: Don’t worry, we’ve got tax payer’s money. You can have it all.
The French Government = Dumb Money
The French Government is the embodiment of dumb money. Dailymotion is currently valued at 300 million euros – the new BPI (Banque Publique d’Investissement) will have 400 million euros to invest in startups – and the French government will likely empty its coffers in order to keep Dailymotion ‘Made in France.’ What the French Government doesn’t realize is that when companies want to go global – take fellow French startup Criteo, for example – they seek for investors that have more than just wallets, but have experience in the markets, a network they can take advantage of. In Criteo’s most recent round of funding, they raised from Yahoo! Japan – likely to enter the Japanese market.
Like a parent who hugs their child so hard that they suffocate them, the French Government has already shown that it’s willing to pick winners. Imagine an investment fund that invested half of its round in one company – no hedging of bets, just an uneducated desire to maintain what works moderately well.
Dailymotion has an opportunity to work with a global internet portal that is still undervalued, and being led by someone who knows Google inside & out. If Marissa Mayer thinks she can create value out of Dailymotion, the best thing for Dailymotion is to explore that possibility.