SEP Matching Event in Paris: a new Monitor mapping the French scaleups ecosystem

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Startup, Scaleup, Exit

A new SEP Monitor was presented today at the SEP Matching Event hosted by Le Web reports that France has one of the most advanced ecosystems of ICT Scaleups.

Over 200 ICT startups broke the early-stage level in the last three years and raised over $2.1B. 4% raised more than $50M. An additional $500M was collected on the stock market. Over 50 exits were identified with a sharp increase in 2014.

Notable French scaleups include Vente Privee, Spartoo, Teads, Qosmos, Sarenza,Bla Bla Car, and Deezer.

Software, E-Commerce, Mobile and Advertising account for the majority of scaleups.

Paris, December 11^th – Startup Europe Partnership (SEP) today presented a new Monitor at the SEP Matching Event, hosted by Le Web, that includes preliminary results on the French ICT startup and scaleup ecosystem. SEP identified and analyzed over 50 exits and approximately 250 ICT startups that raised more than $0.5M, with $2.1B raised from the venture capital community. An additional $500M was collected on the stock market (IPO).

“Comparing preliminary results from the ICT ecosystems of UK, France, Italy and Spain, the UK and France have the most advanced ecosystems of ICT scaleups,” said Alberto Onetti, Coordinator of SEP. “If we look at the numbers of ICT Scaleups, the UK and France have respectively four times and two and a half times more scaleups than Spain and Italy. But if we look at the capital available for ICT companies seeking to scaling up, the UK has no competition. Compared to France, in the last three years UK scaleups raised twice as much venture capital and eight times as much financing on the stock market (IPO). The SEP Monitor we are going to publish next February in Berlin will add a more comprehensive picture of European scaleups.”

The French ICT Startup Ecosystem: Capital Raised

The SEP Monitor identified approximately 250 ICT scaleups based in France that generated significant revenue or received relevant funding (>$0.5M in capital raised, post seed) in the past three years. Approximately 66% of the identified companies raised between $0.5M and $5M, while 24% received between $5M and $20M. 6% of the scaleups received $20M to $50M, and 4% raised more than $50M, totaling more than $2.1B in the past three years. An additional $500 million was raised on the stock market through initial public offerings (see below).

Notable Scalers and Scaleups

Among the most notable French scaleups is Spartoo, an online retailer of shoes and footwear headquartered in Grenoble and founded in 2005. The company raised $55M in three rounds (Series A, B and C) from five investors, including Sofina, A Plus Finance, CM-CIC Capital Prive, Highland Capital Partners and Endeavour Vision. In second position we find Teads, a technology group specialised in the creation of innovative video advertising that raised $52M and acquired five companies (Beezik, Trigami, BeeAd, Nomao.com and PromoDigital). Its merging with Ebuzzing, a global video advertising distribution platform, is expected to generate revenues of $100 million in 2014. Lastly, Paris-based Qosmos, providing network intelligence technology, raised $43M in three rounds from five investors. Recently, the path has been followed by three other French “scalers”: Sarenza,Bla Bla Car, and Deezer, which respectively raised $101M, $110M and $149M. They joined Vente Privee ($2.2B in revenue 2013), the company that pioneered online flash-sales.

The “Dual-model” also works in France!

As reported for Italy, SEP Monitor found an increase of “French-American Scaleups” – companies following the so-called “Dual Model” (French-born & U.S.-grown). These include Sketchfab, Infinit, Doctrackr, and Dashlane, maintaining their development centers in France and at least half of their management team in the United States. Similarly, Novapost, Synthesio, Criteo and Sequans moved to the U.S. for growth expansion after having reached some scale domestically.

Exits and Trends

The SEP Monitor identified 55 exits in the ICT field that occurred since 2011. This number has recently grown significantly from four in 2011 to 25 in 2014. In 2012 and 2013 the average was 10 exits per year. SEP Monitor reports 35% (19) of French startups have been acquired by French companies. A similar number (20 deals, 36% of total) have been acquired by U.S. companies. Ten acquisitions stayed in Europe and six moved to other parts of the world.

Acquisitions and IPOs – Some Examples

The most significant ICT acquisitions with disclosed amounts are PriceMinister (acquired by Rakuten for $250M in 2010), ExaLead (acquired by Dassault Systemes for $160M in 2010), Aldebaran (acquired by SoftBank for $100M in 2012), Neolane (acquired by Adobe for $600M in 2013), CrossKnowledge (acquired by John Wiley & Sons for $175M in 2014), La Fourchette (acquired by TripAdvisor for $140Min 2014), and A Little Market (acquired by Etsy for $100M in 2014).

The most notable companies that went public in the last three-year period were Criteo ($251M/2013) and Sequans ($77M/2011): they both had IPOs in the U.S.

The domestic ICT IPOs are still rather scarce. The 2006 property website Seloger IPO ($230M) has not been followed by any significant IPOs until 2014, when home network solution company AwoX (April 2014) and professional social network Viadeo (July 2014) went public. Other domestic IPOs are Visiativ and Anevia.

Areas and Markets

Software Solutions and E-commerce, accounting respectively for 24% and 14% of all mapped scaleups, are the most relevant sectors in France. In third position we find the Enterprise Services sector with about 11%, followed by the Mobile and Advertising sectors at 8%. Finally, Hardware and Digital media are respectively represented by the 7% and 4% of identified companies.