A study
conducted by In Extenso, a consulting firm specializing in innovation management, reports on
fundraising figures for startups in 2019. The study allows, among other things, a comparison of European and French figures, showing that there was a clear increase in investments this year.
Fundraising in Europe
European startups “maintained the record for venture capital investment in 2019,” reports Patricia Braun, partner at the consulting firm In Extenso.
It is worth recalling the methodological principles outlined by the firm before presenting their figures: The study, conducted in partnership with the ELMI University Research School at the University of Azur, presents “data extracted from the Dealroom database and excludes data relating to fund subsidies and economic growth, while average investment amounts are calculated based on deals for which the amount raised is known.”
The report shows that €22.3 billion was raised, primarily in the healthcare, FoodTech, and FinTech sectors . The amounts raised increased by 51%, and investment amounts increased by 99% (€10.7 million).
Leading the pack are Deliveroo with €523 million raised, UiPath with €516 million and FlixBus with €500 million.
Fundraising in France
The analysis presented indicates that France is following the same trend as Europe, raising 3.8 billion euros during the last three quarters of 2019. For Patricia Braun, this new record is proof that “the ecosystem has been strengthening for some years and the players are becoming more professional.”
According to the barometer used, average investment amounts increased by 66% nationally, reaching €9.3 million, while the number of transactions decreased by 13%. These trends not only demonstrate a “solid vision of innovation in France,” but also suggest that the €5 billion investment target could be reached by the end of 2019, explains Patricia Braun, speaking to L’Usine digitale . This bodes well for a “promising resurgence” for the French ecosystem.
The investment sectors are the same as in Europe. However, among the top three startups raised in France are Meero, nicknamed the “Uber of photography” with €209 million, Doctolib with €150 million, and Wifirst, an internet service provider primarily for students, hospitals, and the tourism sector. This startup, backed by the Bolloré Group until last September, and whose stake has since been sold to Amundi, Bpifrance, and Socadif Capital, has raised €110 million following the acquisition of new shareholders.
Public initiatives have heavily invested in startup growth in recent years. France is indeed renowned for generating a large number of startups. The government recently launched the Next 40 program to provide financial support to growing startups and facilitate their IPOs. Among them are Meero and Doctolib. This initiative aligns with the French government’s goal of fostering the growth of unicorn companies by 2025.
Positive figures, but a slight lack of perspective
While this assessment is positive compared to previous years, some are more cautious about the future of startups. Firstly, because many of them favor the gig economy model, which doesn’t always guarantee certain social benefits for employees or freelancers . Secondly, because many, despite the aforementioned fundraising efforts, struggle to scale effectively over time due to the challenges of rapid growth. International expansion, for example, is a key milestone, and it’s far from guaranteed. Furthermore, attention should be paid to the quality of the digital sectors in which startups are operating.
Thus, following the 2019 CES in Las Vegas, Le Journal du Net, far from being lenient towards inventions dismissed as “gadgets more at home in the Lépine competition,” also emphasized the need to create “products designed for market needs.” For Nicolas Menet, CEO of the “aging well” ecosystem, when “public money is involved, public authorities must choose priorities to which they can direct resources and support.” He cited the circular economy and the ecological transition sector as examples, arguing that they address a genuine need and could create long-term employment. However, the criteria for admitting startups to the Next 40 program (supported by the French government) consider only financial aspects: “a revenue valuation of one billion euros,” “one of the largest fundraising rounds in the last three years,” or “30% annual growth over the previous three fiscal years.” To be continued…
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