Change is an important part of any ecosystem. A forest fire may seem like a natural disaster that only causes destruction; however, it is the disappearance of older, larger trees that allows for younger ones to receive sunlight, and for seeds to sprout up from the ashes.
Such is the Venture Capital ecosystem, and in France, the ecosystem is in the middle of a forest fire. In the country’s capital, the past 12 months have seen a whirlwind of changes. Let’s look at what’s burning:
- June 2014: Elaia Partners’ Marie Ekeland departs to launch her new fund, Daphni – their aim: bring an A16Z-style VC fund to Europe, crack ‘scalable VC.’
- October 2014: Xange’s Nicolas Debock departs to become Balderton Capital’s boots on the ground in Paris, which announced a new $305 Million Series A fund last April, where the London VC already counts Sketchfab as a portfolio company.
- December 2014: Partech Ventures opens the Partech Shaker, a 9-story building dedicated to startups, propelling them to the status of a Tier One European VC. The Firm also hires 5 new partners to manage the two new funds it is raising, a seed fund & a growth fund.
- April 2015: ISAI announces first closing of a €55 Million fund to invest in startups, its 3rd fund to date.
- May 2015: Xange’s historic LP La Poste sells off its majority stake in Siparex, a fund-management company – meanwhile, rumors turn that Rodolphe Menegaux may move from Xange to Alven Capital, where Nicolas Celier is rumored to be leaving to start his own fund.
- May 2015: Idinvest raised a new €140 Million fund; however, an increasing number of team members, including some associated with Idinvest’s most successful investments, will not be staying on with the new fund. Notably, Guillame Lautour leaves for Level-Up, a gaming fund.
It’s hard to tell what is ‘burning’ and what’s ‘being born’ – really, only time will tell – however, one thing is sure: the funds above are not the ones in trouble. Change, after all, is normal. The funds which are in trouble are those we aren’t hearing from – Truffle Capital & Seventure, for example. Even more successful funds like Serena Capital are seeing a need to reinvent themselves, as their former investment strategy of “we are big enough that everyone will come to us” is no longer 100% effective (they’ve missed out on a handful of growth stage investments), as an increasing number of funds raise growth stage funds, as well as competition from London.
I’ve been impressed in the past 12-24 months with how perception of various funds can evolve so quickly. I’ve already spoken of how Partech has reinvented itself, but let’s also give praise where praise is due, to both Iris Capital & Alven Capital. These two funds have cemented their presence in France as quick-to-move, boots-on-the-ground, entrepreneur-friendly & globally-minded funds. And what’s even better: they’ve got the money to back it up. Iris Capital is sitting on a decreasing pile of Publicis & Orange’s €500 MIllion fund; however, their investment in Lookout Mobile alone should pay that back in full, not to mention Netatmo, Adomik, PlaceIQ, mopub, Scality & more.
Alven Capital has shown itself quick to act, propelled by the trio of Jeremy Uzan, Nicolas Celier (potentially departing) & Raffi Kamber, who have moved quickly and gotten into investments in Algolia, Drivy, Happn, Capitaine Train, BIME, & Dataiku.
I won’t even go into the effect that Bpifrance’s evolving investment strategy has had on the landscape.
The Venture Capital scene will continue to grow – new flowers will sprout, ambitious startups looking for ambitious VCs – however, France’s VC scene is going through a rapidity of change that I think only happens once every fifteen years, and if you look at the last time there was a big change – 1999/2000/2001 – it seems that we may not see such a spring of funds for a while after this.
This is, of course, all good news for French startups, who are seeing increasing levels of capital available to them, and increasing participation not just from UK VCs, but German & American funds as well.