Venture Capital: Investment Growth in France, but Startup Funding Lags

By March 26, 2014
capital risque

Venture capital funding rose in France during second-half 2013 but major investors seem hesitant about getting involved with startups.

The year 2013 saw a significant increase in venture capital investment in France, with a 16% spurt in the second half of the year. Paris-based fund-raising consultancy Chausson Finance’s latest indicator shows investment reaching a total of €911 million for the whole of 2013, with especially positive figures for the second half bucking the trend of previous years. However, Chausson Finance’s infographic indicates that, while investor activity has been picking up again, startups are not finding much favour with the main venture capital players.

Investors go for more mature firms

With €88.8 million euro invested in second-half 2013, state-owned investment bank Bpi France was the most active investor in the country, pumping in more than twice that of the second-ranked investment firm, Sofinnova Partners, which put up €41.4. However, these financiers do not seem inclined to take risks in brand-new companies. Seed funding only accounted for 6% of overall investment while, out of a total of 367 firms completing funding rounds, only 82 were tapping the market for the first time. Maturer firms appear to hold more appeal for the big investors: 72% of capital invested was in second or subsequent funding rounds and none of the major investment funds took stakes in more than ten first-timers.

Health and Connected Objects sectors have investor appeal

For the first time in three years the second half 2013 saw the Internet and E-commerce sector cede pride of place to Healthcare, which is now the main attraction for investors. Some €134 million were invested in the Health sector during the six-month period, a rise of 43%.  On the list of largest individual amounts of funding raised, Software solutions provider Talend came top with €29 million, followed by Health sector player ObsEva on €26 million and Connected Objects developer Withings, which raised €22 million. The Île-de-France, which includes Paris, was the most attractive region for investment, accounting for over half the total venture capital invested in France during the period.

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