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January 17, 2008
A View From Paris on French VC Trends
We checked in with Pascal Mercier of Aelios Finance, a corporate finance advisory firm in Paris, for his view on early stage venture trends in France.
Aelios did 20 transactions last year, many of which are listed on its website.
One thing notable is the size of the early stage rounds it helped to raise for companies like Kayentis, AirinSpace, BlueKiwi, and 24:00h (all of which we've covered in these pages). It also advised Criteo on its €7M round announced this week with Index Ventures as the lead investor.
Here is what he said on capital available in France...
The French venture funds raised a very high amount of capital last year. The FCPI- type of funds typically raise about €30M every year, but in 2007 we saw firms raising €50M and €70M. Regular “LP GP” funds, such as Ventech or Alven raised large amount of Capital also based on their good performances. [FCPI investors receive a tax break and are similar to VCTs in the UK].
That Means It is Easier for Founders to Raise Capital?
Yes but even with a lot of liquidity in the market, there are still high hurdles to qualify for capital.
What are VCs Looking For?
Internet related ventures. They know that France has some great entrepreneurs in the Internet industry, and a good ecosystem with a lot of success stories.
The software sector is another story.
Within the Internet category, online advertising-related ventures are of interest, as are companies that can provide Web 1.0 companies with next generation or Web 2.0 innovation. A typical transaction that illustrates the point is Expedia's acquisition of TripAdvisor. They paid a lot of money for that startup.
And music industry related Internet ventures. It's the size of the market that is attractive and the knowledge that business models are changing. There will be new business models.
Another area where we see interest from investors is in companies that provide Web and eCommerce know-how to brands.
Just three years ago, it was taboo for good brands to sell via the Internet. Now Dior and Louis Vuitton are online. The others will follow and many are too small to do it themselves.
Beyond the Internet?
Everybody, including early VCs are looking for cleantech investments, but they need to find companies that have a capital requirement cycle similar to the life of a VC fund. There are not a lot of such ventures, typically they are long on R&D, and are selling into markets with very long product design or implementation schedules. As a result we don't have many such transactions, yet. Biotech and medtech remain good business areas.
How would you characterize the past two years [of venturing] in France?
2006 was the year of online video
2007 was eCommerce
And how do you see the coming year?
2008 will be more ecommerce and advertising innovation, particularly firms that can make advertising less costly than it is now.
Posted on January 17, 2008 08:17 AM | Posted to Venture Capital | Permalink
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