Business Angels: The Jackpot Year – Challenges

Madness, overheating, runaway … While the global pandemic two years earlier had put chills over the financing of start-ups, these words reappear today to describe the rude health of French technology. Record fundraising is consecutive, and no less than 25 companies have achieved the coveted unicorn status by reaching a valuation of more than 1 billion euros. Recent example, the proponent of refurbished electronics BackMarket announced a capital increase of 450 million euros and crossed the crossbar of 5 billion euros in value. A first for a French Tech start-up.

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In this ultra-dynamic context, business angels remain an essential link. First, because they are essential to financing the first steps in a business creation before the funds come into play. So because they have increased their financial obligations. “The amounts invested by business angels have increased significantly,” notes Alexandre Korenfeld, marketing director of the Angelsquare network. Pierre-Edouard Stérin, the most active of French private investors, has thus doubled its investment, from 42 to 80 million in less than two years. Like him, other major sponsors – Xavier Niel, Bruno Rousset, Thibaud Elzière, Michaël Benabou, etc. – have stepped up their support for start-ups. The business angel community also benefits from an influx of blood and new capital. Among new entrants in their thirties, who finance start-ups even before they sign their first property purchase. A tremor is also observed on the side of women, more numerous in the rankings.

“Enter the capital as soon as possible”

How do business angels see the influx of money flowing into French Tech? “It’s very ambivalent,” replies Thierry Petit, the founder of Private Showroom. I take advantage of it, and it serves me. ” He explains: “When the funds want in, business angels are the first to come out.” But at the same time, the increase in valuation increases the entry price for shareholders. “Therefore, the interest of private investors to anticipate rounds and enter the capital as soon as possible,” emphasizes Alexandre Korenfeld. “It’s harder than ever, it requires more discipline,” continues Thierry Petit, who has ruled out “projects that can be summed up in a few slides, valued millions” and favors start-ups founded by experienced entrepreneurs, such as Memobank, launched by Jean-Daniel Guyot, former founder of Captain Train.

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Another effective parade is to structure yourself. The trend is towards grouping into clubs and pool trade flows. Two members of the Women Business Angel Network (FBA) have even just set up the Win Equity Foundation, which complements the BAs’ action. Composed of 80 shareholders, men and women, it primarily attracts young investors aged 18 to 30 years. Their Investment Dissertation: Promoting Gender Balance and Entrepreneurship Diversity. The fund currently has 2 million euros and is investing in partnership with FBA. “This allows us to increase the power of the agreements,” said Catherine Abonnenc, vice president of the FBA, as a recognized partner, while maintaining the value specific to the business angel: the accompaniment. ” Thomas Rival, partner in Evolem, Bruno Rousset’s investment holding company, goes so far as to help his foals write the “terms sheets” signed with the funds, looking very closely at the access conditions. In these crazy times, the advice of these experienced entrepreneurs can help keep a cool head.

Michaël Benabou, President of the Financière Saint-James: “The beginning of a technological tsunami”

We have experienced this period well, which has taken a leap forward in digital and thus e-commerce, which represents a third of our portfolio. The explosion of valuations is not a problem because we as professional business angels position ourselves very upstream, on the pre-seed segments and up to Series A. The insane inflation of valuations takes place primarily in the subsequent rounds. And we benefit from that in the companies where we are already shareholders. For two years, we have come closer to our ecosystem, including venture capital funds: We work more with them than against them. There is great activity and enthusiasm. BAs still take just as much risk, and foundations are taking on more and more.

I remain agnostic in terms of sectors, but I am moving more and more towards technological investments with innovative products that are capable of evolving and becoming internationalized very quickly. The most thriving at the moment: everything related to blockchain and cryptocurrencies is monstrous. We are at the beginning of a technological tsunami, which is what justifies these insane assessments.

Thomas Rival, partner in Evolem, Bruno Rousset’s investment holding company (Luko, Monisnap, Voltaire Project …): “Beware of overvalues”

Ten years ago, the balance of power was favorable for investors. It was reversed. So much the better for start-ups, but this creates side effects. If an entrepreneur travels too much money, they run a significant execution risk. By setting goals that are too high to justify a very high valuation, he risks going astray. We advise entrepreneurs to raise only the money they can spend for the next eighteen months. We also emphasize the interest in having two, three or four investors, so as not to be dependent on a single fund.

When we launched Evolem Start in 2017, we had to come up with a new proposal. We decided to take tickets from 100,000 euros to 3 million to meet a need for poorly covered funding. We implement 10 million a year without any exit horizon. Before, we were usually leaders in a Series A funding round. With sky-high valuations, this is no longer possible. So we went back to seed rounds of 1 to 4 million, rubbing shoulders with other business angels. “

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