The following is guest post by Rodrigo Martinez, Early Stage Tech Investor at Point Nine Capital.
At the early stage of a startup, the funding available usually doesn’t allow the hiring of senior talents. Therefore, investors are looking for founders who are smart and quick to learn all the stuff required to build a big business.
At Point Nine Capital, we are on our third fund hunting for the best early stage SaaS companies across Europe and the U. And we’re especially bullish on France – where we have done 5 investments in the last couple of years.
With the goal to share the best practices among those founders and to connect (with) them, we’ve recently organized a small SaaS meetup in Paris with more than 30 founders of SaaS businesses – including the likes of Algolia, BIME, etc.
On the positive side, we’ve seen that you don’t need to be Paris based to build a successful software company. When BIME was acquired by Zendesk for $45M the majority of the team was still located in Montpellier. Companies like Lengow and iAdvize are also great examples of successful SaaS built outside of Paris.
Second you don’t need to raise millions of euros before testing the US market. Rachel Delacour, BIME co-founder, explained that in order to look bigger than they were and to start capturing the US market, they first hired a SF-based freelance PR who did a fantastic job getting coverage for them. Thanks to this tactic they manage to go under the radar of several big US customers and media without having opened a US office. They did open an office in the US later but in Kansas City.
On a tactical level, Nick Franklin (founder of Chartmogul) shared a couple of tips to get a more accurate understanding of your funnel. First by looking at trial-to-paid conversion in cohorts and second by attributing MRR growth to acquisition channels you can get a better understanding of which actions provide the most impact.
On a less positive side, a.k.a “things that we would do differently”, several founders explained that even if there are early adopters in France, being US-centric is still key for most SaaS businesses. In some cases, that means relocating the company on the other side of the Atlantic ocean. And instead of going through this hassle again, they would launch directly in the US from day 1.
Finally, there was a discussion about the bubbly environment and the common ground is that the table stakes are raising for SaaS companies, but startups are able to foster growth at the early stage by leveraging their data in more insightful ways and building efficient sales and marketing processes.
France has a long history of Software Successes
Historically, France has been a great hub for B2B software.
There are several unique traits of the country that allow it to win big in software.
The education system trains the talent that’s required. The great “Grandes Ecoles” bring very talented engineers to the market, which are key for B2B software startups that tend to rely more heavily on tech than its consumer counterparts.
Paris, being the #1 city in Europe in terms of multinational headquarters, creates a market and concentrates a critical mass of senior talents with industry expertise. Furthermore, French companies have been early adopters of SaaS in Europe – although still way behind the US.
And there’s something that is very hard to measure, but that has a profound impact on building a winner: we’ve noticed that the quality of French SaaS products is generally quite high with great UI and UX. That’s critical in the case of SaaS, where competition on product-quality is very often the number one reason to win.
In the first wave of French software companies (late 80s), France gave birth to billion dollar businesses like Business Objects, Dassault Systemes, etc. But as important, it created an industry with 100s of players.
More recently Criteo is a good example of the kind of companies that France is able to create and is, by the way, one of the very few European born software companies that has IPO’d in the recent years.
Paving the way for the future of French SaaS
We believe that 7 will continue to shape the SaaS industry for the year to come.
Looking at those trends with French lenses, on one side, we see that exceptional engineering and product talent is helping French companies to stand out in opportunities in markets like vertical SaaS, mobile first SaaS, Ai, etc. where the competition is global by nature.
On the other side, the sizable internal market of France is also helping some players get significant traction in the home country first, which is key in some horizontal SaaS or SaaS-based marketplaces to find product market fit and scalable channels for growth.
Without the purpose of being exhaustive on that list, what we are seeing now is a very unique and a real boom of french SaaS startups with global ambitions. It’s very exciting for us to see that there are great French companies in every one of those trends – sorry if I missed somebody.
- Vertical and Horizontal SaaS – there are plenty of examples of French companies like Algolia (from .9 family), Mention (.9) and PeopleDoc for horizontal businesses and Critizr (.9), Zenchef and Mirakl for vertical successful startups.
- Messaging Apps Transitioning to Platforms – like Birdly providing expense management and Talkus customer support on top of Slack
- Mobile First SaaS – it’s still an early trend, but sunrise has French roots
- Software AI and Automation (Bots) – easy-to-use AI from Craft
- Unbundling of SaaS – like what Email Hunter is doing for CRM
- Micro SaaS Businesses – like the proudly bootstrapped business of wisecash among plenty others (who don’t want to be mentioned ;-))
- SaaS Based Marketplaces – Star Of Service (.9) and doctolib
Speaking about SaaS in France, we should obviously mention eFounders who are fully devoted to launching a handful of SaaS startups per year. But we have seen SaaS talent coming from everywhere in France (including Lille or Nantes).
But not only that, France has exceptional talents coming from the mafias of its existing leaders. We will keep an eye open, looking at the future stars emerging from Exalead, Criteo, the Open source businesses, etc.