250 million euros in January for Ankorstore, a marketplace that connects retailers and independent brands. 450 million euros in the same month for BackMarket, a start-up specializing in the reconditioning of electrical and electronic appliances. 53 million euros in February for the Padoa occupational risk prevention platform. Obviously, judging by the fundraising held by a handful of French startups in early 2022, it is now easy for young people to find money to fund their projects.
a unique phenomenon
More than 10 billion euros were raised by French start-ups in 2021, according to KPMG, and half of that amount already in the first quarter of 2022. The movement is accelerating and growing. “It is something unprecedented. Currently, there is a lot of money available in the market”, recognizes Jean-Pierre Valensi, partner, head of Capital Markets Advisory at KPMG. These colossal amounts are explained by the carrying out of large fundraising operations – fourteen operations in excess of 100 million euros since the beginning of the year against just three in the same period last year –, with emphasis on three mega significant fundraisings. “More than a billion euros were raised by three companies, namely Payfit (€256 million, payroll software), Qonto (€486 million, neobank) and Exotec (€335 million, robots)”, notes Stéphane . Villard, Corporate Finance Advisory Partner at Deloitte.
If these mega fundings multiply, it is notably due to the presence of large foreign investment funds – American, Anglo-Saxon or Japanese – and the arrival of new players such as the hedge funds (The American Tiger Global entered the capital of Qonto and Spendesk). “Start-ups are no longer restricted to French investors. France is seen as an international market for Asian and American investors, which changes the funding dynamics,” notes Stéphane Villard. But beware, if French start-ups have managed to regain investor confidence after a difficult 2020, Covid demands, this rain of billions may not last. “This situation is partly due to underlying developments such as the fall in technology stocks in the United States and rising interest rates,” warns Jean-Pierre Valensi.
in the weather
Among the sectors that led the fundraising dance in 2021, we find e-commerce, software, Fintech and new technologies, automation, artificial intelligence, health and e-health , which have seen spectacular growth after the pandemic and, finally, all the deeptech sector (creation of start-ups based on technology transfers from public and private research laboratories), which is beginning to find its market. “We are seeing a fundamental movement in the notion of sustainability that is now taken into account by investors. This phenomenon is quite new”, notes Jean-Pierre Valensi.
In addition to belonging to a sector considered strategic by investors, start-ups wishing to raise funds must meet certain requirements. “This flow of money does not mean that all start-ups manage to raise funds. More and more projects are submitted. The files are analyzed carefully”, explains Jean-Pierre Valensi. Golden rules to be followed: have a product or service that is starting to adapt to the market; having first customers in different universes (BtoB/BtoC) and different geographic areas; position yourself in a sufficiently defined and broad market to allow significant conversion potential; having a real business aspiration without already being profitable. “If the value of the team has always been a key element of a project, today it is essential to convince to have a team already formed, that works well with at least three pillars (CEO, marketing, technique), to reassure investors” , reports Stéphane Villard .
Therefore, it is better to wait to have this corporate maturity to raise funds than to rush with your only project for all the luggage at the risk of being left blank.