Paris Business Angels: The Startup Trap


Being a first time entrepreneur is like walking blindfolded through a minefield: you only know you’ve taken a wrong step when you lose a limb. In France, it’s even worse, because there are only so many people who have walked through that minefield before, and they often keep the information to themselves. One of the bear trap-sized mistakes I repeatedly hear startups talk about is having gone to Paris Business Angels, just one of many Angel Associations in France.

PBA – How the 4 month Pitch Process

At first glance, PBA must sound interesting – after all, it’s a bunch of business angels around a table. Here’s how it works:
Startups apply continuously with a two-page pitch, and every other Wednesday, from 4PM-6PM, 10 startups are selected to pitch an elevator pitch (5 minutes + Q&A) to whichever angels are present. Afterwards, angels discuss which startups they are interested in confusing with, with only the startups who are championed by one, or ideally two angels, moving on. What follows is a series of one-on-one meetings pick apart your entire business model, essentially trying to gauge how risky the model is.
After this is finished (4-6 weeks minimum), the BAs deliver either a positive or negative result to the other angels and the startup. If it’s negative result, they will explain why they do not feel it is a good fit for the association, if it is positive, startups will present in a longer presentation (30 minutes), followed by a Q&A. Then the angels decide if they want to invest. Each angel can choose how much they put in, thought individual tickets are usually 10-20k per investor. Thus is requires 10-12 angels backing you in order for you to receive funding – oh yes, did I mention that rounds raised here are generally under 250k, and optimally 150k.
What follows are standard negotiations on what kind of shares, how much dilution, etc. – if the startup raises money, PBA takes 2% commission.

The Problem – PBA Lacks Startup Culture

Already, I imagine a few things set off buzzers in your mind, at least the thought “oh, I didn’t expect that.” I spoke to a serial entrepreneur and former member of PBA, who left after 3-4 years, feeling there wasn’t a good fit between him and said of the angels “not my kind of team – those people are just different.”  He wished to remain nameless, but I wanted to summarize his thoughts, mixed with a bit of mine:

  • Angel Profile: Like any investment opportunity, you have to make sure that the people you are seeking investment from are going to bring value beyond their wallets – after all, once you bring in outside investors, you have to report to them, regularly. You want someone who has the same vision, can make use of their experiences and network to help you over the humps and hurdles. The angels in PBA are not entrepreneurs. They have money, and that is good, but they are ex-CxOs of big companies, not serial entrepreneurs.

“it’s a group of people – consultants, bankers, larger companies – there’s hardly anybody who’s grown a startup from nothing. They don’t have the entrepreneur mentality.”
-Former PBA member.

  • Investment Size: This week is France Angel week, and I was lucky enough to come across an article(FR) in which Philippe Gluntz, the head of France Angels, the largest angel association which regroups all other angel associations, shares a bit of numbers: 4,500 angels investing €45 million in the past year. The math is perfect: 10,000€ average investment for angels. What Angels do you know of in the international startup scene who invest tickets of €10-20,000? The only reason you would do this is for tax rightoffs, in which case you’re not concerned,or even familiar with the startup’s vision. For French startups to compete on an international level, they can’t be running around begging angels for 10-20,000 – they need to be raising €500,000 -€800,000, from people who will use thieir network & experiences to help them grow.
  • The real Angels have their own network: the face remains that the Angels that are really investing in startups – Jacques-Antoine Granjon, Marc Simoncini, Jeremie Berrebi, Xavier Niel, etc. – are doing it through their own network, and they’re sharing deal flow. Word on the grapevine is that if you want JAG to invest, he’ll tell you ‘If you get Marc to invest, I’m in.’ The number of Angels who are qualified to be startup angels is small enough that there’s no need for a network, at least not for internet startups.

Now, I must anticipate comments by saying that there are obviously some cases where PBA is a good choice: after all, they are actually investing €45 million into companies. That being said, I don’t think PBA has had their hand in any of France’s recent global successes, not like Idinvest has. A few startups also told me that, while PBA was a waste of time, investment wise ( “you’re just too risky”), it was great pitch practice, and they learned to answer stupid investor questions.
I think in order for startups to grow quicker, there needs to be more clarity about where you can go to get money, and frankly, PBA is not a big contributor to the startup ecosystem. Share your story below, anonymous or otherwise, and let people know that Angel Associations are not helping web startups grow – they’re helping the French elite efficiently select tax breaks.

15 Responses

  1. Eli Curetti

    Great article. The whole article is really well summarized in the last sentence: “it was great pitch practice, and they learned to answer stupid investor questions”

    • Martin Waddell

      I have been involved in startups for very many years. I have spun many companies out of UK universities and licensed much technology, as well as raising and running small VC Seed Funds in the UK. I have lived in France since 2007. I recall being asked by Thales Venture Capital Fund (Yes they do have one) as far back as 2001 if I would be interested in setting up a Tech Business Incubator in the UK for them. The problem was that although they (Thales) had the money, resources and technologies to invest in, their incubator in France lacked access to the entrepreneurial mentor skills, that the best Angel’ s bring with their money.
      It’s clear for me in my time here that very litte exists in France to truly support entrepreneurs. The punishing start up costs, the social charges and tax burdens falling on the pre-profit and profits and salaries of young people trying to be entrepreneurial here make it near impossible to build business. Where in the UK one might need 2 to 3 sizeable rounds to get to profitability, the regimes here would easily multiply that by 2 to 3 times, given the proportion of investment moneys that will be washed through to the public purse.
      My best recommendation for any aspiring entrepreneurs is move to the UK and do it there. The sheer variety and availability of start up funds and Angel Networks, both public and private sector swamps anything that is avialable across nearly all Continental countries collectively.
      My admiration for entrepreneurs who have made it here is boundless. How the hell did you do it you clever people?

  2. Youssef Rahoui

    Great to have the courage to state your opinion. I really think that France (and Europe) miss a website like The Funded.

  3. Sophia Burnett

    Hi Liam. This article hits the mark with me, I’m so glad you looked into this. When I was incubating Mapenda at The Milestone Lab, I received one of the PBA’s. He was extremely agreable, and gave me an hour of his time explaining their process in detail. He showed me an example of a company they’d recently invested in, a wine and spirit wholesaler, and this added to the (probably mutual) sentiment that we were from different planets. It seemed an overwhelming amount of time and effort to put into (possibly) raising such a small amount, which is why I never followed up.
    I remember telling Jonathan just after how frustrated I felt because the man, however kind his intentions, didn’t know what the heck I was talking about, he simply wasn’t brought to life by the same stuff. And Mapenda isn’t rocket science, it’s simply that PBA is a long established group of very maturely aged angels who think Geek Culture is a typo about life in Athens.
    This is a BIG problem with French funding. SImoncini, Berrebi et al are over solicited and few Paris VC companies have funds dedicated to seed rounds.
    Angels are wonderful creatures. Angels who understand what you’re trying to achieve are even better.
    Longue vie to you RB.

  4. Jean-Baptiste Feldis

    Great article Liam. There’s a positive side to that kind of trap the startupper can feel lost in and you have stated it wisely: we learn all the time 🙂
    Of course, aside from that “famous” Angel network there are real investors but you don’t find them that easily.
    It’s pretty much what we’re trying to show in Startups From Hell with the first VC. He’s right there in front of you, so it’s an easy step to get to him but he asks 3 times for different things just to tell you… no 🙂

  5. Philippe MÉDA

    On the spot for me as well. I was actually preparing a similar blog post on the consanguinity of French funding playground.
    Although I’m afraid that the lack of smart money is not only felt at the BA level (which are essentially retired non-active people that don’t have the culture or the network to adequately support an emerging tech-business, that should play golf or bridge).
    The lack of new venture / risk culture is felt an all french ecosystem, including the technology clusters, incubators (that still require 5-years BP for startups not even incorporated), and even the new regional tech-transfer giants (SATT). And it makes sense. These are more or less the same people.

  6. Leo Peek

    So what are the solutions then ? What can we do to raise money and make the best decision to make our startup grow under good conditions ?

  7. Antoine Angot

    Hello Liam,
    I’m curious.
    Who are “France’s recent global successes” according to you (and who are not ?)
    Btw, great article. Please, more articles like this one !

  8. patrickhannedouche

    Hi Liam, it is time for a business angel to join the debate !
    And I hope you will let Paris Business Angels staff answer to your article with their facts and figures.
    As an angel, I could easily speak about some startuppers stupidities listened during the pitches in Paris Business Angels and other places, but there is a
    « betisier » for that (last issue on
    No, what I regret is you are joining the french favourite occupation = criticism. Right after the #geonpi movement, there is a real risk to kill the seed investment (mainly represented by angels) in France with high capital gain taxes. So please, don’t oppose startuppers and business angels.
    OK, business angels (as startuppers) have defauts as for example :
    – As most of us are not digital native (I am 55), we are not instinctive with the new economy and we are volunteer to learn. And we have also a lot to
    teach, about entreneurship for instance.
    – All the business angels don’t get Niel, Simoncini or Granjon incomes. Where is the problem ? Don’t you think that « 4,500 angels investing €45
    million in the past year » is a good beginning ?
    As you can read, Liam, I am militating for a better cooperation between startups and business angels. I am sure it is also your purpose and I invite you to write
    an article with your ideas on
    Bloggerly – Patrick

    • Liam Boogar

      First, I think the assumption that there have not been any business angels in this debate is very naive, but I understand your intentions. The aritlce was composed with the advice, facts & figures given by former members of PBA.
      The attitude of “at least we’re trying” that you evoke in your “Don’t you think it’s a good beginning?” segment is the exact attitude that holds France back from becoming an international startup scene. This kind of complacency for mediocracy is never going to help France grow – and WORSE, it’s wasting people’s time.
      Time is the most valuable resource for entrepreneurs, not money – and PBA is wasting it.
      I will repeat what I said to the DG of PBA: If I have misrepresented or left out any facts or figures about PBA that you feel should be included, I am happy to discuss the matter in a recorded video chat.
      I am willing to admit when I make mistakes – I have made them in the past and I will make them again – I’m wondering if PBA is willing to do the same?

  9. Sébastien Burlet

    Have a look at my startup : ! A kind of Paypal that concentrate on Smartphone person to person mobile payment

  10. dominique

    Hi Liam,
    For my experience I think that Business Angels are great for a very first seed round (200K/300K) and IF you are experienced and know very well you business and market. My startup has been funded by Logoden and Armor Angels (Brittany) and those guys are great former entrepreneurs. But you are right, now for our second round, 600K at least, there is a black hole in France! People don’t understand that in an innovative digital startup you need several rounds of seed money — no we are not cash-flow positive yet !-) — and yes some Angels in your own company can hold you back!

  11. Youssef Rahoui

    100% right! And I experienced it 4 years ago. Sad it did not change!

  12. Tobias

    I think a large part of this problem is miscommunication and a misunderstanding of different investment profiles.
    Not every startup needs to offer a x20 ROI, or become a global giant in a winner takes all dynamic. However, until business angel groups are more honest about what they can bring to the table and what their expectations are, there can be a huge amount of time-wasting – as well as the danger that young entrepreneurs become saddled with investors that are more of a liability than an asset.
    In my experience, many of the participants in these groups are indeed senior or retired CXOs who seem to be voyeurs on the startup scene. Their investment and risk profile is basic and ideally suited for small-scale models. However, they project an interest in everything, by curiosity and in order to generate volume for their regular meetings.
    Furthermore, the group dynamics seem very negative – investment by consensus rather by individual conviction. You can sense that if any one member expresses a negative view that the others will gravitate towards that view rather than saying “I’m going with my gut on this one, I believe in this opportunity”.
    There are exceptions, and perhaps Rude Baguette could compile reviews of entrepreneur experiences with these groups to help inform startups as to where to focus their energies.
    For now, the institutional systems promote all angel groups because they are visible (together with umpteen 5-15K€ grants that take months to obtain) and seem safe and structured. However, there are actually a large and growing number of excellent investor-entrepreneurs in France, and I have had a very good experience with investors in my company. I would assert that most entrepreneurs with a clear, compelling vision will find they can network into contact with this emergent generation of top angels fairly quickly. The question for the entrepreneurs is therefore what kind of investment opportunity do you really offer to angels, and how can you best use your time.

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