Attack of the MyMajor Clones – a French Malady?

Seems everyone these days wants to be another Groupon, Foursquare – or even Chatroulette. And I can’t blame them. When a model works in one country or industry, why not just modify it a bit, apply it to a new market and hope for it to take off? Sounds like a game plan to me.

Enter MyMajor.

In France, one group of clones has sprung off of the success of MyMajorCompany (MMC). For anyone who doesn’t know, the company is essentially a participative music label. Translation: crowd-sourced funding for music production. Yes, that means any old nobody with a bank account and a minimum of €10 can essentially become a music producer once the total funding for an artist hits €100k. And to make a long story short, the model took off in France, is now distributed by Warner Music France and has produced some local best-sellers, like Grégoire (don’t ask my opinion on his music please). FYI: this is yesterday’s news in France, as the company has been around since 2007 and started making headlines shortly after.

Cut, copy, crowd-fund.

So OK, I’ve seen a lot of clones of all types of companies and to be honest, I’m not against it. Plus, for the crowd-sourcing/crowd-funding models, I actually think they often capture the beauty of the internet/web 2.0 – and I’m fairly certain this trend is unique to France as a direct result of MyMajor’s success. Another French company that has done a brilliant job in leveraging the crowd via internet is MyFab (obviously a slightly different model). But now I see this model being applied left and right to every last product or sector you can think of – from furniture to start-ups. A majority of the ideas are actually quite interesting but seriously, what’s next? 

MyMajorVC?

I’ve recently seen several companies try to pitch the MyMajor model for crowd-funding start-ups (I told you French companies were creative with funding) and I’m particularly skeptical of this idea. For music, the model works because it’s more or less a B2C market; consumers know what they like so by funding, they are essentially pre-selecting and confirming a future purchase. Oh, and the ROI is not too shabby. But for a silly bypasser betting €10 on a random B2B start-up – I’m just not sure that would amount to anything other than, well, €10. Then again, with all the ISF funding floating around in France, I’m not sure it’s really all that different.

YouFund, iFund?

Still, I actually think that this model could be refined for a specific type of product or start-up and work very nicely. It just needs to be well-implemented and not addressed to all start-ups as a whole. Crowd-fund something small. Like an app. Perhaps this model could give KPCB’s iFund a run for it’s money? Oh, and that’s $200 million, to be exact.

Advertisements

Smart Money: French companies get creative with funding

I’m considering starting a weekly tradition where I give a shoutout to a French company that is doing something I find particularly innovative. Well, this week that company is Lyon-based Regioneo – who launched a user-investment campaign, which I detailed in TechCrunch Europe.

Why is there no translation for “bon appétit” in English?

In case you are unfamiliar with Regioneo, they’re essentially the French equivalent to Foodzie. I thought the idea behind Regioneo was dynamite even prior to this week’s innovative investment initiative, because obviously local artisanal foods in France have an appeal and quality that their American substitutes don’t.

Have your cake and eat it too.

But as much as I like their platform, I’m applauding the innovative way they decided to raise funding this week – which brought them to just under €50,000 in 5 days. Plus, not only did Regioneo raise money, but it brought together a group of high-profile entrepreneurs (or “ambassadors”) to support their cause. Money plus marketing. Yum. Translation: they can have their cake and eat it too (avoir du beurre et l’argent du beurre, en français).

Keep your friends close and your investors closer.

This is not the first company, however, that is leveraging social means for funding. In fact, FriendsClear is another example of local company that is putting a new spin on investment; the P2P lending platform is oriented specifically towards investors and entrepreneurs. Maybe something for Sprouter to consider?

Investitude.

Surely if Ségolène Royal was allowed to make-up words during the last presidential campaign, local entrepreneurs can also invent their way out of roadblocks. In Silicon Valley where it rains VC money on Sand Hill Road, entrepreneurs are possibly less-likely to get creative with funding. And while funding in France is not the monstrosity that everyone makes it out to be, the local VC scene is simply less developed. Which is why I’m sure we’re likely to see more innovation in this space along the lines of what Regioneo and FriendsClear are doing.

Le Seed: FCombinator and the TechEtoiles

Last week, Zlio’s Jérémie Berrebi and Iliad’s Xavier Niel announced the launch of their new seed fund, Kima Ventures, which I wrote about in TechCrunch Europe. Kima’s aim is to invest between €5,000 and €150,000 in 100 start-ups within the next 2 years.

Uh, that’s a lot of seed.

There’s been a lot of whispering about whether or not this is a good idea. How on earth do they plan to manage 100 companies, let alone make that many investments? With something like 52 weeks/year, Kima would need to make roughly 1 investment per week to reach their goal.

A dime a dozen.

Personally, I don’t really understand the criticism. It isn’t exactly raining seed money in France. And while Niel and Berrebi may be more occupied with making investments than actually managing them, entrepreneurs will have the added benefit of working with 2 of the hottest names in French tech – and their networks. What’s not to like about that? And the relationship comes with a check – better than lining-up at OSEO, no?

Two of a kind.

Funny enough, Marc Simoncini of Meetic announced the launch of a similar seed fund, Jania Capital, only several months before (be sure to check out their gorgeous website). If nothing else, I think France’s seed situation is about to dramatically improve.

FCombinator and the TechEtoiles.

The one model that seems to be locally MIA, is the YCominator or TechStars-type model: also known as mentorship with seed money.  Obviously there is Seedcamp, which is pan-European, but what about a YCombinator program for France? The Founder Institute, which just launched its Paris program, offers the mentorship component without the seed. So until someone decides to put this system into place, Kima and Jaina are essentially the next best thing for seed funding in France.

The Truth: French VCs ARE on Twitter

One of my first posts was called “France, Meet Twitter” where I happened to very slightly criticize French VCs for their absence on Twitter.

Well, I take it back.

I discovered some very high-profile French VCs on Twitter, namely Guillaume Lautour (@G_Lautour) of AGF Private Equity. Even though I haven’t come across the Twitter accounts of anyone from Partech International, Sofinnova or Innovacom, it’s nice to see that there are French VCs making the move. Still, after the Founder’s Club event I went to on January 26th, only 2 of the 7 VCs I met had Twitter accounts (either personal accounts or accounts for their firm).

But wait, there is another pleasant surprise: the young VC.

Now here is where I get really impressed. There seems to be a younger generation of VCs in France and this generation is definitely active on Twitter. I’ve stumbled on youngsters from 360 Capital Partners, Alven Capital and Ventech for the moment, and I’m sure there are more to come.

So we can trash 2 stereotypes.

First, of the French financial services sector being over hierarchical and second, of there being no French VCs on Twitter.

Check out my French VCs list on Twitter and feel free to make suggestions for VCs to include.

French start-ups that got VC funding in January 2010

I think the VC community in France had a promising start for 2010. The month of January included the launch of the Paris Founder’s Club and tech innovation cluster System@tic launched its investment club with 17 VC firms.

In addition,  quite a few start-ups got funding, including (and obviously not limited to):

eYeka (@eyekafr)

 This company likes to call itself the “leader in consumer engagement”, which translates to leveraging user-generated content to advertise for large brands. Their clients include big names like Coca-Cola, Nike, FootLocker and they have offices in the UK, France and Singapore. They scored €3 million from I-Source and their original investors (which include Ventech :p). More info on the round of funding can be found here.

Spartoo (@i_love_spartoo)

The “French Zappos” – and European leader in internet footware sales – got €12 million from Highland Capital Partners, Endeavor Vision and their former investors. The company, funded by 3 youngsters, gets over 4 million monthly uniques.

More info on their series B and their quest to be the next Tony Hsieh can be found here.  

IJENKO (@Ijenko)

If anyone’s familiar with Silicon Valley-based iControl, you can almost think of IJENKO as a eco-version. The company was founded in 2008 and is finally out of beta. Their platform helps individuals be more eco-friendly at home, by allowing them to keep track of their energy consumption while at home and away.

The company scored €2 million from I-Source, Direct Energie and Bouygues Telecom Initiatives. You can find more details in French here.

Would a company like Twitter get funded in France?

Yes, it happens. French companies get funded, regardless of what Silicon Valley may like to think. Hot start-ups like Deezer, Eyeka, DailyMotion, Streamezzo, MXP4, etc. can all vouch for this.

But would someone like Twitter ever get funded in France?

French VCs tend to position themselves as different types of investors than their American or British counterparts, characterized as more  patient, investing less and sitting on a company for longer before an exit. In other words, it’s likely that a company like Twitter would’ve had a hard time getting funding from VCs in France – although now the sentiment has likely changed.

Not such a bad thing.

Last night’s first Founder’s Club event in Paris, which included speakers from leading French and European VC firms, also underlined the positives of the more timid French approach to investment. French VCs aren’t looking for serial entrepreneurs, per say, but rather an entrepreneur who can stick with a company, is passionate about the product and really develop a loyal clientele and partner network.

And when it comes to the exit, some French VCs claim to be open to the idea of companies getting acquired before becoming profitable but it’s definitely not in their blood. The general sentiment is that they also tend to see smaller exits than across the Atlantic – although Vente-privée may soon change that.

Did some French VCs bypass the economic crisis?

The local VC community went into a bit of a venture slump in 2009, with investments plummeting between 30 to 50 percent depending on the industry. Yet, some French VCs, like Innovacom, disregarded the economic recession and closed the same number of deals in 2009 as the year before.

Seed funding where you least expect it.

For French entrepreneurs, particularly in the social media space, French VCs may be a little less likely to be seed investors. There are VCs, like 360 Capital Partners, that do more early-stage investments in order to build a stronger relationship with a company. Still, seed funding definitely doesn’t run like water and most entrepreneurs tend to look to the government for their initial investments – namely OSEO, the “public bank” that supports start-ups and SMEs. OSEO has also been hosting an annual seed funding competition since 1999, providing between €45,000 and €450,000 to very early stage companies. Plus, now that the French government allows French taxpayers to invest in a start-up and reduce their wealth tax by 75%, business angels are much easier to come by.

But who is to say Twitter wouldn’t get funded in France?

While French VCs may not throw themselves at a company without an initial business model, like Twitter, given the various additional sources for funding there’s no reason why Twitter wouldn’t have found funding in France.

The Founder’s Club event in Paris included speakers from leading French and European VC firms: François Tison from 360 Capital Partners, Guillaume Lautour from AGF Private Equity, Dennis Champenois from Innovacom, Jean-Yves Quentel from Go4Venture and Grégoire Aladjidi from Demeter Partners.

Looking for funding? Why not ask Sarkozy…

Through January 28th, start-ups and entrepreneurs can apply to receive between €45,000 and €450,000 from the government and OSEO (French parapublic SME support organization).

And you don’t have to be French to score funds.

The contest is open to entrepreneurs of all nationalities (although the company needs to be set-up in France). If you’re just a Francophile with a good idea, it might be worth a shot. The online application can be found here.

France’s government financially supporting tech companies: not a new idea.

Believe it or not, this Concours national d’aide à la création d’entreprises de technologies innovantes has actually been around since 1999. That makes this the 11th annual contest.

Additionally, the government offers tons of financial assistance and subsidies to help fund new tech companies and start-ups. They also – as part of an initiative to boost local entrepreneurship – the auto-entrepreneur regime, to help soften the fiscal burden for independent entrepreneurs and start-ups. In 2009, this helped over 300,000 entrepreneurs put their ideas into practice.

Le Fonds stratégique d’investissement = the French government’s €20 billion VC fund.

The money is meant to support fast-growing companies and start-ups that are important for the French economy. Thus, the FSI has invested millions of euros in companies like DailyMotion, Avanquest Software, Gemalto and more.

More information on the FSI and VC in France (including a lovely VC Directory) can be found here (in French).

So if you’re looking for a little funding in France…

Angels and VCs may be one answer. And Sarkozy may be another.