Fund in Focus: Citizen closes second fund on €43m

This week, Paris-based VC Citizen Capital held a final close for its second venture fund on €43m, after less than two years on the road.

The vehicle, which launched in 2015, closed slightly below its €45m hard-cap, after the subscription period finished at the end of November 2016. A first close had been held by the GP in June 2015 on €37m, following which the fund began making investments, a source familiar with the matter told unquote”.

Structured as a Fonds Professionels de Capital Investissement (FPCI), the fund has a 10-year lifespan and a two-year extension period. It has a hurdle of 6% and carry of 20%, half of which is based on financial performance and half on social and environmental performance, according to the same source.

Double down
The current fund is twice as large as Citizen Capital I, which closed on €22m in 2012. It is now fully invested, with three or four divestments yet to be made, the source said. Two divestments – Trace, and G2J – have already brought around 30% IRR to investors – a factor that encouraged a large number of investors to recommit to Citizen Capital II, according to the source. Other investments from the maiden vehicle included online homeware specialist Camif.fr, provider of mobile of services for the elderly Bazile, and food delivery service Eat Sushi.

Citizen Capital invests in companies focusing on social or environmental needs, helping vulnerable people or people in need. These companies can, for example, focus on unemployment, elderly care, circular economy or assistance to the disabled. Around 10 funds in France currently focus on that type of investment, the same source told unquote".

Citizen Capital currently has around €65m assets under management with a team of seven investment managers.

Back for more
Around 90% of the fund’s subscribers are institutional, the source told unquote". A large part of those, including BPI France, AG2R La Mondiale, CNP Assurances, Amundi, Agrica and others, were already committed to the first fund, and are this time joined by new investors such as the European Investment Fund, Natixis subsidiary Mirova, employment funds and others.

A number of family offices and private investors are also part of the pool, including Bridgepoint’s Benoît Bassi, Eurazeo/Afic’s Olivier Millet, and ex-Activa Capital member Jean-Louise de Bernardy.

Between 10-12 investments are planned with Citizen Capital II (compared to seven with the first fund), as the GP prefers giving privilege to long-term holding periods for fewer businesses than multiple investments spread across a large number of portfolio companies. Target companies will have a turnover of at least €1m and maximum of €50m.

Equity tickets will range from €1-4m, with €2-3m for first rounds, the source told unquote". The average ticket in Citizen Capital's previous fund was around €1.5m. Sectors targeted by the fund include education, healthcare, digital HR, disabled- or elderly-focused businesses, agriculture, circular economy and cleantech.

A small number of investments have already been made with the fund, including a €5m round for rewards-based crowdfunding platform Ulule in September, and a €6m round alongside BPI France and Alven Capital for online education courses platform OpenClassrooms the same month. Further deals are in the pipeline to be completed in the near term, according to the GP.

People
Citizen Capital – Laurence Méhaignerie (CEO, co-founder).

Further reading

• France

Citizen Capital et al. exit Trace in €40m trade sale

• 27 Feb 2014

• France

Citizen Capital et al. inject €5.2m into Camif-Matelsom

• 24 Jun 2013

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