The truth about Series A in France
The recent wave of huge rounds and IPOs in the US has generated lots of misconceptions about the fundraising ecosystem in France.
At Chausson Finance, we know how complex this process still is. In this perspective, we decided to disclose some of our insider observations, hoping that it will give a clearer picture to all the start-ups seeking funding.
Here is an answer to the top five questions entrepreneurs are asking about fundraising:
1. “I read that 2014 has been a great year for venture capital in France, is it true?”
Yes. With about one billion euros invested in start-ups and innovative companies in 2014, the venture ecosystem sets a new record, with investment levels which had not been reached since 2000. We could go on and on about how many companies got funded and by whom, but for that you might want to check this here.
2. “So, this means that raising money is not hard anymore”
Not quite. 80% of this billion euros was reinvested in existing portfolio companies, or in B/C rounds of companies which have already received funding from a VC.
It is still pretty hard to get your first round of financing, as the number show: in 2014, less than 200 companies received first time funding for a total of about €200m.
We know from the VCs that they receive over 2000 applications a year, which means that the fund raising success rate reaches a mere 10%.
3. “Uber has raised a billion dollars, so raising 2 to 3 millions euros for my Series A should be a piece of cake”
Sadly, no. As shown by our analysis of the companies raising money from VCs for the first time:
- 33% of the newly funded companies received less than €500k in funding
- 52% received less than €1m
- 75% received less than €2m
- Less than 30 companies (<20%) received between €2 to 5m
- Less than 10 companies received €5m or more for their first round
Therefore, the actual chances to raise more than €2 millions in a first round is about 2%.
4. “If French VCs don’t get me, then maybe European VCs will”
Probably not.
To our knowledge, there was no Series A involving a European VC and a French company in 2014. European VCs only invested in a handful of B to E rounds: Drivy (Series B with Index Ventures and Alven), Novapost (Series E with Accel Partners and Alven), Sigfox (Series C with Intel Capital, Id Invest, Elaia and Partech), and Blablacar ($100m with Accel, Index, Isai).
Balderton, Wellington, Point9, DN Capital or Endeavour Vision, absent of the scene in 2014, have invested in France in the last five years, but never more than once a year, and mostly in B to E rounds.
In fact, since 2010, cleantech and biotech aside, European VCs invested in less than 40 French companies. Among them, less than 10 Series A:
5. “I should discuss my upcoming fundraising plans with an expert”
Of course. Wink. We’d love to meet you and discuss your projects.
At Chausson Finance, we match smart money with great companies. In 2014, we helped 9 carefully selected companies to raise between €1.5 and 5 millions for a total of €26m.
In 2014, our clients accounted for 5 of the 40-ish Series A over €2 millions.
Want to get in touch and get counsel for your upcoming fundraising? Book a meeting at Ladurée with me or add me on Linkedin
… and if you liked what you read, please let me know by pressing the recommend button below, or join about 250 other venture capital enthusiasts and be notified when the new post is out: http://eepurl.com/bjjkiD — See you soon! ❤
Sources : cfnews, Indicateur Chausson Finance
