French state launches €400m innovation fund

FCPR FSN PME is part of the wider Fonds National pour la Société Numérique (FSN) initiative, a €1.4bn program set up to foster what the French refer to as the "digital economy" – businesses, projects and infrastructures revolving around internet and computing.

The €400m FCPR vehicle will be managed by CDC Entreprises, an established GP that already manages several funds and funds-of-funds on behalf of the Caisse des Depots et Consignations.

It will look to invest €1-10m in young companies operating in eight areas of the technology sector, including cloud computing, e-education and network security. The fund can invest in equity, convertible bonds and other types of debt (both senior and junior).

FCPR FSN PME will not back businesses in the seed stage. Moreover, it will only co-invest alongside traditional VCs, contributing around a third of the company's financing needs. It will only take minority stakes of less than 30%, and won't invest in order to allow other shareholders to exit.

The fund is meant to look for profitable investments, although the details available at this point are scarce. Investment opportunities will have to be able to generate "sufficient IRR given the level of risk and the market standards".

Speaking at the official launch event, French industry minister Eric Besson expressed his wish to see the fund back 30 projects by the end of 2011.

This is the latest in a string of state-backed venture and growth capital funds across Europe, as recently reported by unquote".

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