the revenge of silent start-ups, Financing

Fundraising is an indicator scrutinized at French Tech. Start-ups are obviously the first to communicate the amounts raised to private and public investors. The government, through the tweets and LinkedIn posts of some of its ministers, when not Emmanuel Macron himself, participates in this celebration of almost free money.

This funding, which reached record levels in 2021, is essential for industries such as deeptech and biotech, which are expected to invest massively in R&D and will only see a return on investment (ROI) in several years. “In deeptechs, we are more attentive because the ecosystem is not yet mature,” Paul-François Fournier, executive director of the innovation department at Bpifrance, recently told Echos.

For another part of the tricolor ecosystem, fundraising is not considered an end, not even a means. Some chose not to, or very little, use investors. “Our focus is revenue. Earn money thanks to our customers,” says Wilfried Granier, founder of Superprof, a home-schooling platform that has never raised funds.

A “freedom” that doesn’t necessarily allow you to multiply your income by three every year, but that forces you to monetize your customer base from the start. “With resources, we could have developed much faster in the United States, that’s for sure, mainly because the cost of acquiring customers is higher there than in Europe”, admits the manager.

BtoC most affected by failures

But when fundraising runs out, as it has been for a few months, the young company with 21 million in revenue remains calm. It expects growth of 50% this year and the opening of new countries (Israel, Thailand, China, etc.). And above all, there’s no need to cut budgets, stop recruiting, or worse, lay off people.

Difficult situations in which many start-ups find themselves today that have raised a lot and quickly, to recruit a lot and quickly. Failures are multiplying, particularly for those offering products intended for the general public, activities that require large marketing expenses.

This one generation of entrepreneurs, for the most part, have never experienced a crisis in technology. “I find that people in their forties, fifties or who have created several start-ups opt for models that are more self-financing and calm growth”, observes Dany Rammal, European director of PSG, an American investment fund that participates. -ups that are profitable or about to be.

The new profitability trend

The profitability! This is a term that was long shunned at French Tech, which swore only by hypergrowth. But since the turn of the cycle, investors have been asking young people in their portfolios to find their way to profitability as quickly as possible.

Self-funded start-ups have always had just that word in their mouth. “Being a profitable start-up means showing that we can survive, that we are resilient”, underlines Alexandre Berriche, founder of Fleet, an IT equipment rental platform and investor in several start-ups.

Resilience pays off. And it also allows you to grow, expand internationally or make acquisitions… Since its creation in 2011, Superprof has acquired sixteen companies thanks to the money it earns, but also to bank loans. This funding tool is not common among unprofitable startups as a banker requires multiple balance sheets and looks at more “traditional” indicators such as Ebidta (while an investor looks at annual recurring income, ARR).

Recently, Superprof made loans at 1.90% and no deposit. A luxury that young shooters who have not yet found a viable economic model and who are counting on the next fundraiser cannot claim.

Switching from one model to another?

If self-funded start-ups ever decide to give in to the siren of investors in the face of an overfunded competitor, they could be more commercially aggressive, expand internationally more quickly or even accelerate their technological development. But is the opposite approach possible? ” Not all startups that raise will be able to switch to a self-funding model “says Danny Rammal. “It’s not easy because you chose to build a rocket”, adds Alexandre Berriche. And with a rocket, landing is never safe.

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