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.

Advertisements

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.

Invest in a Start-up = Reduce your Taxes

Yes, that’s right my friends; while Silicon Valley was over there spreading rumors that it’s impossible to score VC money in France, the French government got a little creative.

Since 2007, French tax payers can lower their wealth tax (ISF) by investing in a company.

French taxpayers can now reduce their wealth tax by up to 75% via making an investment of €50,000.

In the beginning, it wasn’t obvious if any magic had been made; were French tax payers going to go knocking directly on the doors of companies they wanted to invest in? And how were emerging start-ups to sniff out the money?

Et voilà, le VC: what’s mine is yours, what’s yours is mine.

That’s right, who better to play the intermediary than a VC.

And now for a little name-dropping.

One example of a company that was recently funded this way is Proxi-Business.com, a French e-commerce solutions platform, which scored €1.15 million (I might cry if I convert this to dollars) at the beginning of this week from a company called Audacia.

Audacia has also funded companies like French organic e-commerce site, Brindilles.fr, IT security company, ASP 64, and a few more.

And they’re not alone. France’s darling start-ups DailyMotion and Deezer – which both scored funding in October 2009 – have received funding from AGF Private Equity, who raised over €35 million in June 2009 through an ISF campaign. Not too shabby if you ask me.

So who is laughing now?

Ok, ok. Maybe this scheme hasn’t dramatically changed the investment practices of local VCs (yet!). But it certainly looks like VCs aren’t agnostic with regards to this new resource (here is a non-exhaustive list of French companies that received VC funding in 2009).