The Rebirth of French Venture Capital

May 19, 2015
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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:

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.