France startups raised nearly €1 billion in 2015 to catch up with Israel, Germany and UK

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French startups are catching up and seem like they’re ready to play with the big boys in Tel Aviv, London and Berlin. That’s according to the new report by Tech.eu which confirmed the Western European country is as much a tech titan as its tripartite allies Germany and the United Kingdom.

Tech.eu reports that the majority of that activity is happening in Paris, accounting for approximately 80% of all the startup funding in the country. But France, which accounted for 8% of deals raised in Europe, is seeing ecosystems grow in other cities like Lille, Montpellier and Toulouse, the home to Sigfox and its blockbuster 2015 deal for €105 million.

The biggest deal of the year went to BlablaCar, France’s answer to Uber, which raked in €182 million in venture capital last year. Of the moderately sized deals, three of them were by hardware startups in the €30 million range: Netatmo, Prodways and Aledia.

The majority of deals were by French investors. BpiFrance signed onto 21 deals while Alven Capital hooked into 14. BpiFrance had the most recurring investment partnerships: three times with Alven, thrice with Iris Capital, twice with Serena Capital and two times with Idinvest Partners. While more than half of France’s top 20 rounds involving a foreign investor, the most active investors were domestic. That’s a definite sign of concern for French tech as the only non-French VCs were Accel Partners and Intel Capital.

 

French tech means Paris tech according to Tech.eu, but there are other cities with tremendous potential (image, Tech.eu)
French tech means Paris tech according to Tech.eu, but there are other cities with tremendous potential (image, Tech.eu)

Herein lies France’s strength and its weakness. Nearly 40% of funding went through seed rounds in 2015 and the next largest chunk came through Series A. According to Tech.eu, that leaves them in a “distant fourth position” to Israel, the UK and Germany.

But it wasn’t completely barren: With 33 non-Franco firms in all putting assets into 21 French startups, international investment was healthy. All in all, eight American companies acquired French startups in 2015. BlaBlaCar got international investments from Insight Venture Partners, Lead Edge Capital and Vostok New Ventures (Sweden) in their €182 million round. Sigfox’s colossal round included German-based SK Telecom, Intel Capital, NTT Docomo and Telefonica.

Low foreign investment means low exit value

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France is catching up in overall venture capital, but M&As dropped from €18.6 billion in 2014 to about €900 million. There was only one French IPO (Showroomprive) and obviously there were no €1 billion exits. The biggest exit was French video company DailyMotion (yeah, they’re French) at EUR 217 million in a buyout by Vivendi. That being said, Francotech made strides in Enterprise SaaS and media, particularly with big exits in adtech: MobPartner (€54 million), SocialMoov (€17 million) and MakeMeReach (€12 million). Other notable exits included fintech company Leetchi at €50 million, hardware startup Kolor’s acquisition by GoPro and Rue du Commerce going for €20 million.

All signs point up in 2016

“What seems certain is that France will experience a significant increase in both the amount of investments and total funding volumes in 2016,” the report stated, noting France scored 77 funding deals in the first six weeks of the year alone. Those included music-streaming service Deezer (€100 million), Navya (€41 million) and Cedexis (€22.8 million). “This, coupled with the fact that several local and high profile investment firms closed large new funds in 2015 (Partech Ventures, Idinvest Partners, ISAI or Elaia Partners) and the increased interest in French companies from foreign VCs, points to a probable exponential increase within the country’s technology ecosystem and its core areas (hardware, sharing economy, transportation services, telecoms and adtech).”

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