S1 2022 Highlights 💥

This one is different.

After 12 years of continued growth, only interrupted by the outbreak of COVID in 2020, the Venture Capital market is experiencing its first slowdown since the 2008 crisis. It seems to be the case in Europe and in France even though it’s not obvious by the numbers yet. It’s worth keeping in mind, however, that because of the time between when a TS is sent and when a deal is closed and publicized, we will have to wait 1 or 2 quarters before seeing the real impact on the market.

Much has been said and written in the past few weeks on this matter. We did, nonetheless, want to highlight some aspects of the new market environment, before writing about Bpifrance DV’s activity during this semester.

Business fundamentals remain healthy so far, with cloud investments increasing from SMB to Enterprises. Tech companies are still growing rapidly, while many of those who have gone public are generating massive FCF. Funds’ dry powder has reached a record high in 2021, meaning this money will be invested in the next months.

On the other hand, the macro environment is quickly deteriorating. Inflation, the war in Ukraine, increased interest rates, a looming recession in the US and the impact of climate change are major sources of uncertainty for the months and years ahead. As a result, an important market correction has been observed since early 2022 in the US. It’s impossible to predict how long this downturn is going to last or how serious it will get. What we do know is that after the last market corrections (the burst of the internet bubble and the 2008 financial crisis), it took 2–3years before the venture market started growing again.

The consequences for startups’ financing are real: capital is now scarcer and more expensive. However, startups of different growth stages aren’t affected in the same way.

👉Growth stage companies (Series C+) are the most impacted, with fewer deals currently occurring. With US tech public multiples down 70–80% since January, most growth investors froze their investments while waiting for things to settle.

👉Series A and B rounds are still being rolled out, but with higher selectivity, smaller rounds and reduced valuations.

👉Seed stage financing is the least impacted, so far. It’s a good time to build !

Although action should be taken on a case-by-case basis, all of our startups have adapted to: 1) reforecast to lower the burn and extend their runway; and 2) focus on growth efficiency.

Behind these short-term decisions, we consider it important that management teams and boards take some time to reflect on their equity story and what this new normal might mean for companies in the long-term.

If you are looking for more sources, we recommend the following:

• The Great VC Pullback of 2022 — Matt Turck
• Fundraising guidance for founders — Cherry Ventures
• Hyper-growth is great, but don’t die while trying — Christoph Janz
• A Framework for Navigating Down Markets — Justin Kahl, David George
• State of Current Market — Logan Bartlett

Despite the turbulent beginning of the year, Bpifrance Digital Venture remained very active this semester with 9 new deals. We are also happy to share good news from our portfolio companies with 3 great follow-on rounds despite the slowdown of growth investments. Finally, 4 of our portfolio companies were acquired this semester as several markets enter a consolidation phase.

Welcome to 9 new portfolio companies 🌟

• Konect is building a platform where gamers can connect their community to all their content in one place (you can see it as the “Linkedin for gamers”). We led their 800k€ pre-seed round with great Business Angels
• K-Ryole offers a large range of electrical trailers for last-mile delivery and for use on construction sites. We co-led their 10M€ round alongside Quadia
• Silvr is the emerging European leader in Revenue Based Financing. We participated in their 18M€ round alongside XAnge and Otium
• Alice&Bob is taking up the challenge of building an ideal Quantum Computer. We co-led their 27M€ Series A round along with Supernova Invest
• Tracktor — is the 1st B2B marketplace for construction equipment rental. We co-led their 12M€ Series A round along with Axa Venture Partners
• Flowdesk is developing the new standard for market-making and crypto-financial technology. We participated in their 30M$ round led by Eurazeo and Aglaé Ventures
• Dfns — is a web3 cybersecurity company that offers crypto custody as an API. We participated in their 12,5M€ Seed round led by White Star Capital
• Siteflow is building a software to boost digitization of field operations in strategic and complex industries. We led their 10M€ Series A round

And 1 undisclosed deal

3 follow-on rounds 🚀

• Intercloud raised a 100M€ Series D round led by Aleph
• Scintil Photonics raised a 13,5M€ Series A round led by RBVC
• Strapi raised a $31M Series B round led by CRV

Last but not least, 3 exits and 2 mergers 🥂

• Bonitasoft, a state-of-the-art, open-source platform for Digital Process Automation, has been acquired by Fortino Capital
• Javelo, the HR platform to optimize interviews and engage employees, is joining forces with PSG-backed Sympa and Recruitee. Together they aim to provide an full stack suite to support the digitization of HR teams!
• Ubble is joining forces with Checkout.com, the global leading platform in digital payments.
• Kactus joins forces with Bird Office to become the number 1 player to help companies organize B2B events.
• Pixpay merges with GoHenry to become the leading teen banking solution in Europe.