French VC scene approaches year-end with fundraising surge

Over the summer, unquote" sounded out key names within French private equity on whether the industry's revival in the country was here to stay. The uptick in activity, a number of them pointed out, was also being felt across the venture capital space; a sign of change after the dormant post-crisis years.

Felix Capital founder Frédéric Court hinted of a rise in the "ambition and quality" among venture houses, while Isai managing partner Jean-David Chamboredon highlighted the "bolder" mood in the French startup landscape, increasingly well linked to the worldwide scene.

One month later, an EY report underpinned this sentiment with figures: at 244 deals, H1 2015 produced 30% higher venture dealflow than the 188 transactions recorded for H1 2014. Meanwhile, French startups harvested €759m from investors in H1 2015; a remarkable 70% uptick on H1 2014 figures.

As the French startup scene attracts more attention, the country's venture capitalists appear to be catching on and speeding up fundraising processes so as to secure a piece of the action. Competition is particularly rife within the digital space, by far the most popular among startup financiers in H1 2015; all six funds featured below come with a focus on the digital economy.

 

SNCF Digital Ventures (Launch)
Fully financed by SNCF, this €30m fund was launched by the French state-owned railway giant on 15 October. The vehicle comes in response to SNCF's Plan Digital, a digital investment scheme revealed by the corporate in February 2015.

Managed by VC investor Hi Inov, which recently closed its own fund (see below), SNCF Digital Ventures will write €500,000-4m cheques for predominantly European software, internet-of-things, drones and big data companies; investments in the US and Israel will be considered.

IrisNext (Launch)
As is the case with SNCF Digital Ventures, IrisNext is managed by names from the VC space – Iris Capital and Capnamic – but boasts mainly corporate-sourced capital. The fund is financed by long-acquainted co-investors Orange and Groupe Publicis, which have each committed €75m and vowed to enlist additional European multinationals as LPs.

Targeting a first close in 2016, IrisNext will seek companies operating in the big data, cloud, artificial intelligence and robotics segments. In recent times, the Orange-Publicis-Iris trio has backed Scality's $45m and Netatmo's €30m rounds, among others.

Elaia Delta (Launch)
Managed by Parisian VC Elaia Partners, this €120m fund was launched in early November. Its LP base, featuring a mix of institutional LPs, corporates, family offices and business angels, will provide the commitments needed to back 25-30 early-stage digital startups, both in France and abroad.

Elaia, which recently took part in a €6m injection into online hospitality service Zenchef, is aiming to hold a first close in Q1 2016; the addition of entrepreneur Marc Rougier as its fourth partner is also foreseen for that period. 

Innovacom Île-de-France (Launch)
The fourth fund of the list is an initiative by the Île-de-France authorities, which announced plans for an externally-managed €50m regional fund in September 2014. Two months later, French VC Innovacom was chosen from a number of candidates and work was soon underway for a launch in early 2016.

According to an unquote" source, a €15m state-funded contribution was secured for the post-seed vehicle, after which talks were established to recruit banks and insurers. Once up and running, Innovacom Île-de-France will finance 15-20 deals for Parisian digital companies past the €250,000 revenue mark. 

HI Inov 1 (Final close)
Having initiated fundraising in spring 2013, HI Inov 1 closed on €40m in early October. The vehicle's main sponsor is the Dessentrange family, owners of the holding behind HI Inov and responsible for a €15m commitment; they are followed by insurers, corporates, family offices and entrepreneurs.

The fund writes €500,000-4m cheques for established digital startups where sales in the €500,000-1m range have been attained. The approach has already been put in practice with the fund's current five portfolio companies, including media agency Geolid and digital marketer TagCommander.

Breega Capital Venture One (Final close)
Launched with a €40m target and €50m hard-cap, the last of selection held a €10m first close in March 2015. After recently breaking the €35m mark with the help of a €11m injection from BPI France, there are expectations for a final close by March 2016.

Speaking to unquote", a source close to Breega explained the seed- and series-A-focused vehicle has already deployed €8-10m of its capital after financing eight deals for the Parisian VC. Breega Capital Venture One deploys €500,000-1m tickets for funding rounds in the €500,000-2.5m region.

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