Or why an international VC fund thinks there is French momentum right now
After more than fifteen years of an exciting journey between investment banking, entrepreneurship, and fundraising for startups in Paris, London and New York, this summer I moved on from Rothschild, where I was leading the venture-related advisory effort based out of Paris, to join the fast-growing international VC fund, White Star Capital.
At White Star Capital, I am very pleased to be leading the firm’s effort in continental Europe alongside my colleagues Eric Martineau-Fortin, Elie Denfert-Rochereau, and Nick Stocks, and I will have a specific focus on France.
I have been an entrepreneur, but also an advisor to French and European entrepreneurs on fundraising and M&A topics over the past years. And now, after a period of focus on deal-making, I want to participate into this long-term journey that is to be an investor alongside with the entrepreneurs, more intimately involved at the board level, and tightly aligned on the scaling of our startups.
About White Star Capital
White Star Capital raised it first fund of $70m in 2014 and just recently closed a $180m second fund.
Our team, operating out of New York, London, Paris, Montreal and Tokyo, prides itself with helping to provide tremendous support to startups seeking to grow internationally, should they be initially based in Europe or North America. Our thesis is based on a strong conviction that often the most successful investments are led by talented entrepreneurs who proactively think about internationalisation, and as such focus on having an international business culture from day one. White Star Capital takes pride in being the preferred partner for fast-growing startups due to our (among other things) unparalleled access to international customers, talent and potential future investors.
We like to invest in fearless visionaries, with strong charisma and an appetite to succeed not only in their home country, but globally. This is already reflected by our current portfolio in France:
- Klaxoon, in which we invested at seed stage in September 2016, is a SaaS company focused on developing collaborative tools to make teamwork easier. The company recently announced a $50m Series B and has evolved from a France-focused startup into a European leader with US ambitions, having more than 200 employees now helping over 1 million users in 120 countries be more productive.
- Meero, in which we invested at Series A stage in September 2017, is an AI-powered photography marketplace. Less than ten months after its Series A, Meero has just announced a $45m Series B. They have grown to over 40,000 clients in less than a year, and are now actively looking to expand into the US with the imminent opening of an office in New York.
Why France and why now?
My relationship with White Star Capital and our co-founder Eric Martineau-Fortin goes back over ten years, and I have been able to witness the growth and scaling of the brand and franchise. It has built a strong reputation across its core markets, known for being very supportive of entrepreneurs, highly diligent and continuing to work extremely hard to become a trusted partner to the venture capital investment community as a whole.
In parallel, and just as importantly, we have also seen the French ecosystem evolve over the past few years to become a phenomenal location to invest for any venture capital fund wishing to double-down on the future of European tech. Several reasons lead us to be strongly convinced that, as the Financial Times recently put it, “There has never been a better time to invest in France“:
1. The macroeconomic and regulatory environment has evolved favorably for entrepreneurs and investors
France used to be famous businesswise for two things: its complex labor regulation and its heavy tax environment. On both topics, the recent reforms undertaken by the current government have led to clearer and more flexible business rules in terms of labor law as well as to more reasonable level of taxation, in particular on capital gains (one of the biggest concerns for startups entrepreneurs and investors) with a 30% flat tax replacing a complex legacy regime.
2. France is becoming the most powerful ecosystem for Tech startups in Continental Europe from an Education and Research perspective
From an education perspective, the healthy combination of traditionally well-known elite engineering schools (Polytechnique, Centrale Paris…) with top-notch tech-specific schools (EPITA, EPITECH…) and more recently innovative new models such as Xavier Niel’s Ecole 42, creates one of the country’s best competitive advantages. This is accelerated by more and more of their graduates now seeking an entrepreneurial route instead of joining traditional large institutional organisations.
Moreover, the recent decisions of a number of global Tech leaders to locate significant R&D resources in Paris is both a recognition of the quality and competitiveness of its technical talent pool, and of the overall attractiveness of its market. Over the past 36 months, Facebook has set up its AI-related R&D center, Google has launched an AI-focused lab, Rakuten has created the Rakuten Institute of Technology while Samsung will make France its third global research and development hub in artificial intelligence.
Hiring international talent in France has also been made easier by the French Tech Ticket. That will help startups to think global and hire the best possible talent regardless of their origin.
3. The French VC ecosystem is maturing on several fields
French venture capital firms raised close to €2.7bn in 2017, positioning Paris as potentially the biggest VC hub in Continental Europe. Local VC firms are now competing shoulder-to-shoulder with leading international players on some of the most prominent transactions, should they be French or European (and not only because of price but for their access, sophistication, incentive schemes for entrepreneurs, etc.). Large French corporates are also getting more familiar with startup environments (development of CVCs, M&A deals assessing startup value on appropriate, non-traditional metrics…).
Finally, and more importantly, we now have numerous role models of French entrepreneurs who are thinking global, surrounding themselves with top international C-level executives. Local champions now have the opportunity to select their investors, locally or from abroad, solely based on their value add.
4. Overall, the virtuous circle of “Thinking Big” has been triggered
- Significant recent M&A activity in the >$100M valuation range in both B2B and more recently B2C industries (Zenly, Chauffeur-Privé, Compte Nickel…) confirm that large companies can indeed be started and built out of France. These transactions also positively impact investors’ confidence in funding large Series A, B, C and D rounds.
- Moreover, the current business successes of OVH, Blablacar, Doctolib, Payfit, TalentSoft, OpenClassrooms, and a number of other potential unicorns, contribute to building the trust in France-based global champions.
- As a consequence, funding size has increased dramatically: the average of Series A deals in Paris, according to CB Insights, more than doubled from $4.4M in 2014 to $9.0M in 2017 (ahead of the average Series A size in other tech hubs such as London, Berlin, Toronto or Montreal, and similar to New York deals in size) while large Series B, C, D have been enabled by either French or international growth funds investing in France (General Atlantic, Vitruvian, Eurazeo, Partech, Idinvest…)
We are therefore convinced that the recent developments in France have made it one of the best hubs for investors and startups in Continental Europe.
Things we love / Things I love
To summarize what we, at White Star Capital, are looking for:
- Tech startups (ie scalable models vs. service companies)
- At Series A or B stage (ie having a proven and scalable business model with actual, analysable revenues)
- With a >€1bn addressable market (ie # of potential clients of the company x Current / Run rate revenue per client, NOT “1% of the Chinese market” ;-) )
- A desire to grow internationally in the short- to mid-term
- The ambition to build a global success
On my side, I have a specific interest in Proptech, Edtech/TalentTech, Food/AgTech and Mobility-related services. I do have genuine interest in investing in startups which have significant impact on the building of smart and sustainable cities. Over the years, I built strong expertise in these segments, advising several entrepreneurs, and/or investing myself on a personal basis before joining White Star.
Along with the rest of the White Star Capital team, I would like to help entrepreneurs grow their business internationally, helping them to get access to the best possible sources of funding and supporting their recruiting efforts in New York, London, Toronto, Tokyo and other regions of the worlds thanks our existing networks. I am looking forward to meeting ambitious entrepreneurs, so please feel free to contact me to start the conversation!
PS — we are looking at on-boarding a new Associate in Paris as soon as possible (ideally engineering or business Grande Ecole + 3/4 years of experience in Consulting — for example McKinsey/BCG/Bain — and a passion for Tech). Please feel free to send us your resume.