French government launches €3 Billion late stage fund for mid-sized companies

Sep 17, 2013
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The French government’s capital risk investment arm BPI France announced this week the creation of a 3 Billion euro fund, ETI 2020, which will invest between 300-500 Million euros per year between now and 2017 in Entreprise de Taille Intermediaire(ETI – “mid-sized companies”), defined in France as companies with more than 249 employees and less than 5,000 employees. Investments will start at €10 Million and will only be of minority participation, and the goal is to co-invest with other funds, giving a boost to the French market’s ability to follow company growth beyond early stage.

Today, ETI make up just 3.3% of French companies, leaving a large gap between the Grandes Entreprises – Dassault Systemes, Thales, Orange, EADS, etc. – and PME (petites et moyennes entreprises – “SMEs”). BPI France is still just getting started, after having been formed in the consolidation of several different government investment agencies; however, the group reports it has already invested nearly 1 Billion euro into companies, including through the use of Credit d’Import Recherche – “Research tax credits.”

In the same announcement, BPIFrance also launched loans for companies looking to go digital, go international, and looking to commercialize R&D innovations. These types of loans have existed before in the past under different agencies – for example, receiving funding to explore new markets through Coface – but by putting all of these various government funding subsidies & loans under one roof, companies looking to grow may find it easier to turn to the government for help.

For the moment, the French private sector lacks the large late-stage funding for startups that the US & UK can offer via funds like Accel, Sequoia, Tiger Global Management, Greycrosft, Greylock, and others; however, this new fund may enable smaller funds to back up their money with public money, which may in turn jump start the existence of late-stage funding in France – at least, that’s the theory.

For now, much of the public funding money is in heavy transition, both due to the economic crisis and pending budget cuts, as well as to the consolidation of various agencies into BPI France. Startups may find it more difficult in the short-term to get their fingers on where exactly the money they are eligible for is hiding; however, the log-term result should prove fruitful. Despite its shortcomings, the French government has a good track-record of putting its mind towards simplifying something and getting it done in a timely manner (such as paying taxes online, which can be done in roughly 15 minutes) – however, there are as many exceptions to the rule as their are examples.