Tag Archives: France

What makes an entrepreneurial ecosystem by Nicolas Colin

Great analysis by Nicolas Colin (The Family) in his article What makes an entrepreneurial ecosystem? If the topic interests you, it is a must-read.


in a nutshell, the entrepreneurial ecosystems need 3 ingredients – I quote:
– capital: by definition, no new business can be launched without money and relevant infrastructures (which consist of capital tied up in tangible assets);
– know-how: you need engineers, developers, designers, salespeople: all those whose skills are necessary for launching and growing innovative businesses;
– rebellion: an entrepreneur always challenges the status quo. If they wanted to play by the book, they would innovate within big, established companies, where they would be better paid and would have access to more resources.

This reminds me of two “recipes” I often mention. First the “5 needed ingredients of tech. clusters”
1. Universities and research centers of a very high caliber;
2. An industry of venture capital (i.e. financial institutions and private investors);
3. Experienced professionals in high tech;
4. Service providers such as lawyers, head hunters, public relations and marketing specialists, auditors, etc.
5. Last but not least, an intangible yet critical component: a pioneering spirit which encourages an entrepreneurial culture.
in “Understanding Silicon Valley, the Anatomy of an Entrepreneurial Region”, by M. Kenney, more precisely in chapter: “A Flexible Recycling” by S. Evans and H. Bahrami

Second, Paul Graham in How to be Silicon Valley? “Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like. Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people.” He also added about failed ecosystems: “I read occasionally about attempts to set up “technology parks” in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don’t the French realize these aren’t startups?”

Many toxic friends of entrepreneurial ecosystems have not understood this. But for those who have understood, building lively ecosystems remains a real challenge: bringing the rebellion, the culture, diminishing the fear of risk taking without stigmatizing (not rewarding– here I disagree with Colin) failure remains highly challenging whereas finding know-how and capital is not easy but feasible with some hard work…

Finally, I copy his diagrams which show ideal and less ideal combinations of capital, know-how and rebellion, adding my exercise for Switzerland.


Switzerland is probably 80% Germany and 20% France…


(A short addition on Oct 29, 2015) – The best description of Switzerland was given by Orson Welles. It explains a lot of things…

“In Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock.” in The Third Man, said by Holly Martins to Harry Lime.

The (sad) state of high-tech IPOs on the Paris Stock Exchange

I just read an excellent article in the newspaper Le Monde: Investors get tired of IPOs.

The first reading could suggest positive news, as shown in the following charts:
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I looked in more detail at the IPO prospectus of 11 of these strat-ups. For reference, the 11 companies studied are:
Ask http://www.ask-rfid.com
Awox http://www.awox.com
Crossject http://www.crossject.com
Fermentalg http://www.fermentalg.com
Genomic Vision http://www.genomicvision.com
Genticel http://www.genticel.com
Mcphy energy http://www.mcphy.com
Supersonic Imagine http://www.supersonicimagine.fr
Txcell http://www.txcell.com
Viadeo http://fr.viadeo.com/fr/
Visiativ http://www.visiativ.com
and here I let you discover the 11 capitalization tables.

I show you here the two most successful and Supersonic Viadeo:

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Click to enlarge

Why did I feel the need to use the term “sad” situation? Because:
– Valuations do not exceed €200M
– Amounts raised do not exceed €50M
With such numbers, neither entrepreneurs nor investors can not be compared with their U.S. counterparts. (I refer you to my summary of U.S. IPOs, if you are not convinced).

And if you’re still not convinced, I refer you to an excellent debate on France Culture including Osamma Ammar, founder of The Family: Is France heaven or hell for start-ups? Osamma Ammar describes the historical weaknesses of the French system, too much government intervention, IPOs (like those Viadeo rightly) that are so low that they would not take place in the USA (whereas a French start-up such as Criteo could be quoted on the Nasdaq). There is much to say from the 11 IPOS, but I leave you to think about what they mean …

France: a New Deal for Innovation?

It can be said: France is trying hard to change its innovation culture. After many months of thinking (I was part of an expert group, the Beylat-Tambourin mission), French Minister for Innovation and the Digital Economy, Fleur Pellerin announced a New Deal for Innovation. Some will smile, another state decision! But if you read my posts about Mariana Mazzucato’s The Entrepreneurial State, you will understand my interest.

Fleur Pellerin, à Paris le 30 octobre 2011

In a nutshell, Fleur Pellerin and her team are focusing on:
additional resouces: money is the fuel of innovation, far from sufficient, but critical. A new €500M fund, Large Ventures as well as €30k grants for new entrepreurs (about €10M per year). It’s important to cover seed funding as well as later stage.
attracting talent with a “New Argonaut” policy. there are 50’000 French people in Silicon Valley, they have experience to bring.

Exactly what Paul Graham says in How to be Silicon Valley: you need nerds and rich people. And it is not just the state. Xavier Niel, the most succesful French entrepreneur in recent years is launching 1000start-ups, a huge and ambitious initiative in the heart of Paris with a lot of money…

Yes, France is trying hard!


You can have a look at the following references, but you need to read French!

L’innovation, c’est un projet de société” in La Tribune
Nous avons une vision trop idéologique de l’entreprise” in Le Monde
Une nouvelle donne pour l’innovation (A New Deal for Innovation) with a 25-page pdf (in French)


Criteo files to go public

The latest French success story, Criteo, just filed to go public on Nasdaq. You can find all the details in the SEC F-1 document. I had tried to build Criteo’s cap. table, one of my favorite exercises, in What’s Criteo worth?


I was not too far from the truth. The numbers are different because there was a 2-for-5 stock split and probably other little things, I consider minor. You will see my cap. table again at the end (figure 3), but first here are Criteo’s impressive numbers (profit & loss – figure 1) as well as the current shareholder structure (figure2):

Figure 1 – Criteo’s P&L – click on picture to enlarge

Figure 2 – Criteo’s main shareholders – click on picture to enlarge

Figure 3- Criteo’s “old” cap. table – click on picture to enlarge

Neolane, the latest French success story

France is often criticized for its apparent weakness in entrepreneurship and of its start-ups, but it is clear that the reality is not as negative as the perception; Kelkoo in the past, Criteo probably in a few months as well Deezer. And last week Neolane. I hear the critics say: “Yes, but this is the web.” It would mean you forget Parrot, Soitec, Envivio, Sequans Ymagis, Qualys, Inside… France is quite impressive (at the European level) for its start-up scene.

Neolane is the story of three friends who met at Centrale (one of the top French engineering schools). They co-founded a first start-up just out of school, which they sold before the Internet was really born. They launched a new one, Neolane, in 2001, with the support of Auriga Partners in 2002. Neolane raised more than €15M before being acquired last week by Adobe for €460M. It should not be very far from the largest M&A value of a French start-up. Again the acquirer is from the USA, as it is mostly the case with start-up acquisitions. Let us hope the jobs will not disappear, but it is certainly good news for France and Europe to enjoy such success. And sincere congratulations to my friends at Auriga Partners (I am not sure if they will appreciate or not this article…) Comments welcome!

The founders of Neolane. From left to right, Benoît Gourdon, (Director of Operations for Europe), Stephen Dietrich (President of North America), Stephane Dehoche (CEO) and Thomas Boudalier (CTO).

As you can imagine if you know my blog, I had to build the capitalization table. I decided to focus here on the VC returns, i.e. both multiples on the investments and IRR. This is an interesting exercise as they were many rounds including partial sales. I have always been confused by the difference between multiples and IRRs. Multiples are what matters but IRRs also count as a relative measure of return (if compares with other assets).


NB: all data come from French register of commerce. Some numbers were missing so it is a best effort exercise and it was not the easiest I had to do…


French start-ups (again)

I am attached to France for obvious reasons. And recently, I have read a lot about French innovation. It’s not as bad as the general public may think but it is not as good as I would like. Still there are reasons for hope. Let me comment two recent works:
– an article from Le Monde newspaper, entitled Heureux comme un patron de start-up en France
– a report from OSEO (the French Innovation Agency) which I had mentioned before in You have to go global, and right from the start, but which I had read too quickly!

The article from Le Monde is about French Accelerator Le Camping. The article is optimistic (maybe a little too much), but you should read it if you understand French. What I noticed was:

– “The Hexagon can also count on experienced funds such as Partech (but also Idinvest, Apax) who continued to irrigate the area after the bursting of the Internet bubble in 2000. About fifteen venture capital funds finance about a thousand start-ups and inject 200-300 million euros per year in the digital field, said Philippe Collombel. The French industry is one of the best in the world, judges Christopher Bavaria, president of Idinvest. And there are many areas where a little “Frenchy” managed to make a name alongside the leading Anglo-Saxon player: Dailymotion vs. YouTube, Viadeo behind LinkedIn , Deezer on the heels of Spotify …” I think this is dangerously optimistic but nice! We should not be just a copy-paste version of the USA though.

– “Another asset of the Hexagon: its serial entrepreneurs. The first generation began with the Minitel, has launched the digital era in the late 1990s, and overcame the bubble. They include Marc Simoncini (iFrance, Meetic), Jacques-Antoine Granjon (ventre-privée), Patrick Robin (Imaginet, 24h00), Xavier Niel … Twenty years later, they play the “business angels” for the younger: PriceMinister, Dailymotion, Criteo, or Deezer.” Quite true.

– However, “the Business Angels do not support enough entrepreneurs” […] “There are not enough funds enbling jumping from start-up to that of medium-sized companies.”

[You may also be interested about an analysis of the Acceletor trend from the Financial Times, which is also quite good: Start-ups put their foot on the accelerator. “In the past they could have been labelled an incubator, which is apparently different from an accelerator.” […] “Probably the first accelerator was Paul Graham’s Y Combinator in Silicon Valley. Since 2005 it has fostered almost 500 start-ups, including big successes such as AirBnB and Dropbox.” […] “This method of building new companies at warp speed is fascinating. The philosophy is to try lots of different ideas, fail fast, and pivot if something does not work. I like the sense of urgency, the work ethic, the high-pressure environment that helps drive rapid progress, and the incredible opportunities to network and cross-fertilise.” […] “However, in general, I think start-ups take a long time to become viable – years not months – so trying to achieve so much in such a concentrated period of time feels unrealistic.” […] “There are now an estimated 123 accelerator programmes around the world.” […] “Some veterans think many will close, just as many of the projects they incubate will fail. But all this frantic activity will surely boost entrepreneurship, stimulate jobs, and – in the long run – create wealth, so it deserves applause”]

You can find (in French) the OSEO report by clicking on the picture. I was wrong in my previous post, I learnt a few things! And it has more depth than the good Le Monde article. The first one is about the fears and difficulties of entrepreneurs.

Click on picture to enlarge.

Click on picture to enlarge.

Fear of failing with its attached stigma remains high. Finding customers is the biggest challenge, higher then finding investors. Interesting. Then there is an interesting lesson about the age of founders, which you can compare to an analysis I have made on 165 public companies.

Click on picture to enlarge. Source: personal data

This is a popular topic, and you might read again Wadhwa’s study, his Washington Post article or Is There A Peak Age for Entrepreneurship? I am not sure how to read all this, but I have the feeling there is a tendency to higher age recently… The average age of French founders is 41 whereas the public companies I have have founders with an average of 36.5 (and 34 for the companies founded before 1995).

Finally there is an analysis of “models of development of start-ups”.

The authors compare 2 main classes of start-ups (out of 5), the ones being the most common (classes 3 and 5 in the figure). [Class 4 is more an intermediate status en route to either 3 or 5; class 1 is M&A and class 5 have not developed at all.]

“In class 3, 41% of the total population, companies have a lower level of development because the company is “self-centered”. 50% have no partner, no subsidiary. The project leader is still a dominant position in the capital: 68% have a stake greater than 75% in this class; 1 out of 2 still 50% to 75% of capital.”

“In contrast, firms in class 5, have a proven open behavior. They have opened their capital to have the resources to advance an innovation project. 60% of project owners have less than 25% of the start-up in this class, as well as half of them with between 25% and 50% of the capital. Moreover, almost all listed companies are in this class. 80% of these companies are internationalized (export or implantation).”

“These are companies that have had time to grow: almost half who them are more than 8 years old and almost 40% are between 5 and 8 years old today. The maturity only does not explain, however, their momentum. Indeed, they were faced, too, with problems of redefining their business plans as well as those of class 3, even a little more frequently. However, they saw this less as a constraint.”

“In addition, Class 3 focuses more on public funding which is considered a main lever for growth. The youth of this population and the lower opening of their capital can hypothesize that the public support at the pre-seed and seed stages is an essential substitute to private capital.”

“The statistical comparison classes 3-5 on these variables reveals that:
• The median Class 5 has a higher workforce than class 4, which employs, more people than class 3 (respectively 10, 6 and 4 employees);
• Classes 4 and 5 achieve an identical median turnover (about 580k€) higher than the median Iclass 3 (390k€);
• On the median level of equity, it is still significantly higher for class 5 (409k€) than for class 4 (284k€) and Class 3 (149k€), and more than €1million for the upper quartile of the class 5 only 389k€ for the class 3)”

Of course the conclusion of the report is to encourage the filtering and then development towards class 5. but myless optimistic conclusion is that even class 5 companies are not big success stories…

Deezer, a new French success story?

I do not often talk about french start-ups, but after my recent blog on Parrot, it would be a mistake not to mention Deezer’s latest financing round. If you do not know Deezer’s music service, just try it!

Deezer has been founded by two young French entrepreneurs (28 and 32 at the time of foundation), its seed investor was Xavier Niel, the famous founder of Free, and was backed by AGF Private Equity, DotCorp (the holding of the Pixmania founders) as well as Orange. It made a lot of buzz yesterday when it announced its new huge round with Access Industries, the owner of Warner Music. The beauty of private companies in France is that, though they are not public, you can find information of their shareholders thanks to Infogreffe, the French register of commerce. It will only cost you a few Euros. So… here is the cap. table I could build from the info I grabbed. Not fully accurate probably. I do not have the CEO or COO shares. And Access may buy more shares from existing shareholders (which may explain why the news mentions a $130M round and not €70M I have in the table).

Not a success story yet, but promising for sure!

Click on table to enlarge

Going public when you are not a US start-up – part 2/4: Envivio

Envivio follows my recent post on another start-up with European roots, Transmode. Envivio has similarities and differences. Both have roots in the Telecom industry, Transmode with Ericsson and Envivio with France Telecom. Both were founded in 2000, 11 years before the IPO or filing.

Both had complex financing rounds, including “down rounds”. You can see that in the Transmode case, the price per share went from $5.5 in the B round to $1 in the C round. These down rounds are usually terrible for founding teams. And indeed, there is not much info about Transmode founders.

Envivio had raised $41M until 2008 and the price per share increased steadily to $2 per share. Difficult to give precise dates for the rounds, but the investors were a combination of corporate investors (France Telecom, Intel, Bertelsman, Philips), and financial (Global Accelerator, Crédit Lyonnais – now Crédit Agricole). Then the G round in 2008 was a down round at $1.25 and the H round, less than 2 years later, even lower at $0.34. With such events, it is not surprising to discover that the investors own 87% of the company before the IPO. Obviously, this would have been very dilutive to the founder, Julien Signes, without the possibility of granting new (stock option) shares that you discover in the right column.

There is another interesting difference with Transmode: Envivio is filing to go public in the USA, it is indeed an American start-up, and not much shows its French roots (the R&D is based in Rennes, Britanny though). Even if Julien Signes studied and worked in France initially, he worked also for France Telecom in San Francisco and I would be curious to know if this had an impact in his entrepreneurial path. I asked him and am waiting for an answer, but it is possible that Envivio is not allowed to communicate in the pre-IPO period.

It is one my thesis that Europeans who had a US experience have digested better the start-up dynamics (whether they moved to the USA and became entrepreneurs there – De Geus, Bechtolsheim, Brin – or they became entrepreneurs in Europe but had lived in the USA – Liautaud, Borel, Haren). This does not prevent European high-tech start-ups to exist and succeed, but I have to admit, the numbers are not exactly the same.

Again, because the company is not public yet, I had to guess what the price per share might be at IPO. I have put a small price, using multiples of market cap. to revenues of 7x. I will make an update when I know more…

Next: Alibaba

NB: an explanation from the filing on the issuance of incentive shares: “In September 2008, we sold 1,532,372 shares of Series G1 convertible preferred stock and 13,359,323 shares of Series G2 convertible preferred stock for $1.25 per share and received total consideration of an aggregate of $15.9 million. Also in September 2008, we converted the outstanding principal balance of our outstanding convertible promissory notes in the amount of approximately $8.9 million plus accrued interest in the amount of approximately $0.2 million into 467,628 shares of Series G1 convertible preferred stock and 6,829,154 shares of Series G2 convertible preferred stock simultaneously with our Series G financing. In June 2010, we sold 895,502 shares of Series H1 convertible preferred stock, 18,487,298 shares of Series H2 convertible preferred stock, 7,775,801 shares of incentive Series 1 common stock and 87,170,915 shares of incentive Series 2 common stock for $0.3351 per unit and received total consideration of approximately $6.5 million. In connection with this Series H financing, all outstanding shares of Series B, C, D, E and F convertible preferred stock converted into shares of common stock. Also in June 2010, we converted the outstanding principal balance of our outstanding convertible promissory notes in the amount of $1.0 million plus accrued interest in the amount of approximately $4,800 into 2,998,571 shares of Series H2 convertible preferred stock simultaneously with our Series H financing. The number of Incentive Shares to be issued was based on the series of the outstanding convertible preferred stock held by each Series H participant as follows: at a rate of 107.430618 shares of common for each share of the Series B, 77.588779 shares of common for each share of Series C, 1.492092 shares of common for each share of Series D, 1.865115 shares of common for each share of Series E, and 3.073709 shares of common for each share of Series F. As a result, the Company issued 94,946,716 Incentive Shares with the shares of Series H convertible preferred stock issued during the Series H financing.”

A French start-up goes public on NYSE

Sequans is a wireless chip company which went public last month. This is a rare enough event to be worth a post. All the more as the start-up is French and it went public on the New York stock exchange. It may not look like a great IPO but for a non-US company, it is a real achievement (there had been Ilog, Business Objects and a few other French start-ups). What is also interesting is that it did not have US VCs and the company was founded in 2003, less than 8 years to go public.

What else worth commenting?
– the company had raised more than €50M prior to IPO and $66M at IPO.
– the founding team had experience with another US company (Juniper)
– VCs come from France (i-source, SGAM) and the UK (Add Partners, Kennet). Later on, it added strategic investors (Swisscom, Alcatel, Motorola).
– All shareholders sold a little piece of their stake (about 3-5%)