Entrepreneurial spirit helps French VC fundraising rebound

Greg Gille
01 November 2017

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Research by industry trade body Afic and data compiled by unquote" show that French venture fundraising got off to an auspicious start in 2017. Greg Gille reports

The latest edition of the French private equity activity barometer published by Grant Thornton and trade body Afic spells good news for the country's thriving startup ecosystem. According to the study, which polled Afic members directly, the proportion of capital raised by French funds and earmarked for venture investment opportunities grew threefold in the first half of 2017 compared with the same period in the previous year.

Looking at fundraising figures from unquote" data (which exclude the retail fundraising activity that would typically be included in the Afic study), 2017 has indeed proven fruitful for French venture players. So far this year, unquote" has recorded 14 closings for venture-focused funds, for a total of €1.56bn – with two months left in the year, the overall commitments already match those recorded for the whole of 2016, with the number of closes up slightly on last year's already.

Partech Ventures was among the standouts, holding a final close for its seventh venture vehicle, Partech International Ventures VII, on its €400m hard-cap in July. The fund represents a significant step up from the GP's previous vehicle, Partech VI, which closed on €130m in 2013. Partech International Ventures VII will mostly focus on series-A and series-B rounds, covering the technology sector for the most part. Investments across the Partech platform range from €200,000 in seed funding up to €40m in growth funding, aiming to meet all types of financing needs for startups, regardless of their development stage. The fund has already completed 10 investments in Europe and the US.

The volume of early-stage and expansion deals is already up by nearly 40% compared with full-year 2016 figures

Also around the half-year mark, Cathay Innovation, Cathay Capital Private Equity's venture capital arm, closed its first investment vehicle with $320m in commitments. The vehicle exceeded its target, a source familiar with the matter told unquote" at the time. Initial commitments will amount to $3-15m, mostly through series-B rounds aimed at helping companies grow globally.

Another noteworthy first foray into venture came courtesy of BlackFin Capital Partners, which held a first close on €100m for its first VC fund, BlackFin Tech Fund 1, launched last year with a €120m target. The fund's target has also been increased to €150m. Meanwhile, French GP Raise recently launched its venture structure, aiming to raise €100m – the vehicle will make investments between €500,000-7m to support French and European startups.

Even large overseas corporates are eager to get in on the action: in late October, Korean internet giant Naver committed a further €100m to its K-Fund I vehicle, managed by French venture player Korelya Capital. The fund, which now has €200m under management, has a mandate to back European technology companies.

How to spend it
The fact that venture fundraising is continuing apace – and that the space is enticing more generalist players to try their hand at launching dedicated vehicles – will be welcome news for the country's increasingly ambitious entrepreneurs. France is now regularly hailed as a hotbed for innovation, particularly in the technology sector, and the rising number of transactions at the seed and early stages shows that the supply of investment opportunities is not lagging behind demand.

According to unquote" data, early-stage and expansion investments have also staged a rebound in 2017: the volume of such deals is already up by nearly 40% compared with full-year 2016 figures, while the €1.95bn invested overall is close to matching last year's €2.2bn.

Companies that raised standout rounds in recent months include internet-of-things network specialist Actility, which raised €75m from a large consortium of VC firms and strategic and corporate investors, including Idinvest, BPI France and Creadev. More recently, growth investor General Atlantic backed French DIY website ManoMano (founded just four years ago) in a €60m series-C funding round. The round was also backed by previous investors including Partech Ventures, Piton Capital and BPI France, the French government's investment vehicle.