Finance : Bpifrance
Bpifrance the French state bank for investment supports French startups financially during their pre-IPO funding stages. Pre-IPO funding is called private equity and includes the different types of funding as the company grows: business angel, seed funding and growth capital stages. If the startup is successful, these stages will take it through to an eventual Initial Public Offering (IPO) when the company offers its shares to the public and is quoted on the stock exchange. When a successful startup goes public through an IPO the private equity investors can cash in on their investment.
Bpifrance either funds directly startups or invests in private venture capital firms which in turn invest in startups. Venture capital is a type of private equity which occurs after the seed funding round. In addition, the French state bank and these venture capitalists can also co-invest in promising startups. It is not well known abroad that Bpifrance helps to finance no less than 90 venture capital funds in France. These partner firms include Partech and ISAI.
This method used to build up companies is bearing fruit with a number of recent global successes including BlablaCar, Sigfox, Withings, Sarenza, Teads as well as Criteo and DBV both of which eventually went public successfully on the NASDAQ. The action of the state bank is praised because its presence incites venture capitalists as well as third parties like insurance companies and banks to join it in putting money in startups.Bpifrance CEO Nicolas Dufourcq is playing an important role, in partnership with private venture capitalists, in creating US style, large late stage venture funds. In 2013, Bpifrance created such a fund of its own called ‘Large Venture’ of €600 million. The CEO’s objective is to help create, in the short term, a number of French venture-backed private companies valued at $ 1billion or more known as ‘unicorns’.
The increasing success of French startups backed by French world class engineers, developers, mathematicians and others having algorithm savvy are attracting American investors to France. These include venture capital firms like Index ventures, Accel Partners and recently Cisco, the internet network hardware maker which is investing $100 million in French startups. John Chambers the Chairman and CEO of Cisco was impressed by the fact that France had more startups than any other European country at the Consumer Electronics Show (CES) in Las Vegas this year and won many top awards. He decided that the time to invest in France was now. The CES is the world’s largest “Internet of Things” showcase.
At the French state bank, there is an increasing number of French startups that apply for funding every year and a good number of them could be potential world leaders. Bpifrance only selects one percent of them and would prefer to fund at least twice as many. France would therefore like the large American growth funds which left Paris after the explosion of the Tech bubble 15 years ago to come back. Bpifrance is ready to invest its equity in these US funds provided they allocate part of their funds to France to finance French companies. It is already in contact with tech funds in the Silicon Valley as well as biotech funds in Boston which could soon invest in the fertile breeding ground of French startups.
Sources : lesechos.fr, bloomberg.com, bfmbusiness.fr
Video source : https://www.youtube.com/watch?v=x58ybZat3xo
Online publishing, February 23rd, 2015