No surprise. Raises from French venture capital and growth players fell in 2023, after three extraordinary years. According to a France Invest study, 3.6 billion euros were raised by management companies in these two segments, i.e. 35% less than in 2022 and 50% less than in 2021. But it is 32% more than in 2019, the pre-covid year. “Growth” is the one that suffered the most, with 50% less fundraising (-21% for venture capital).
This overall decline is mainly explained by the drop in fundraising above 100 million euros. “However, fundraising of less than 300 million remains at high levels in terms of amounts collected and number of funds,” underline the authors of the study, who also observe a boom in new funds. “These are companies which have launched specific strategies, in a sector for example, and which have therefore made smaller fundraisings,” explains Simon Ponroy, director of economic and statistical studies at France Invest.
Surprise, however, on the side of fund investors, the “LP” in the jargon. In 2023, the main subscribers were wealthy individuals (including a majority of entrepreneurs) and family offices, with 26% of fundraising, or 960 million euros. They have surpassed the public sector (22% of fundraising, 794 million euros).
Industrial commitments on the decline
“Family offices and entrepreneurs are increasingly attracted to the world of private equity. The world of tech entrepreneurship is dynamic and has seen some great adventures. Entrepreneurs are happy to reinvest in their own ecosystem,” indicates Bertrand Rambaud, president of France Invest.
For Partech’s fourth seed fund, closed at 120 million euros, 100 tech entrepreneurs – including 35 financed by Partech – put in the pot. “The Americans have been in the ‘give back’ for a long time. It’s a phenomenon that we now find in Europe,” Romain Lavault, associate director at Partech, told “Echos” at the time.
Commitments from manufacturers and funds of funds saw a sharp decline in 2023 (respectively -64% and -63% compared to 2022). And insurers’ subscriptions represented only 7% of fundraising in 2023 (455 million euros), compared to 13% in 2022.
Mutual funds and insurance companies will be expected in the future with the Tibi 2 initiative which made it possible to commit 7 billion euros, compared to 6 billion for Tibi 1. The funds, which will be deployed over three years, will be invested in “late stage” and “early stage”. ” We are confident. It is a program that has become a reference. Even if there is a bit of a label effect, this will support in the 2025-2026 period,” estimates Alexis Dupont, Managing Director of France Invest.
Lack of growth funds
Capital raised abroad by French venture capital and growth funds halved last year, as did their share in total fundraising (17% in 2023, versus 21% in 2022, and 38% in 2021), linked to the absence of large lifts.
“What we are really missing today are larger growth funds. Because on the early stage, there is a real financing offer,” believes Bertrand Rambaud. It is to fill this hole in the racket that five Member States of the European Union as well as the EIB group, made up of the European Investment Bank (EIB) and the European Investment Fund (EIF), have mobilized 3 .75 billion in 2023 for a new fund of funds.
Objective: reach 10 billion euros, including 5 billion from private investors (insurers, banks, etc.). But this would be a drop in the ocean compared to the United States, which has around forty “growth/late stage” venture capital funds with an average fund size of $2 billion.
Another gap in the ecosystem according to France Invest: secondary funds, which ensure liquidity for investors. “When American capital was very present in 2021, there was more liquidity possible. When they are not there, it is more complicated,” underlines Bertrand Rambaud, who also hopes that management companies focus more on deeptech and in the regions.
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