IT landscape in France
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IT financing

France is traditionnally suffering from a lack of venture capitalism that could foster start-up companies and IT developments in the private sector. With the creation of two public mutual funds and the New market, the government has taken action to support IT financing.

With the start-ups bankruptcies, the fall of the stock market and the decrease in economic growth, venture capitalism in Europe is suffering. A study conducted by Burlington Consultants for Barclay Private Equity (Le Monde, 11/15/01), shows that direct investment in new companies, development and restructuring in IT industry should decrease 50 % in France in 2001, to fall at 2.65 billions Euros, and 60 % in Europe to 14 billions Euros. Investment funds always hope to sell their participation within five years, when the company they have invested in becomes public. The ROI goal for IT companies is 15 %, compared to 7 % in the stock market.
Still, funds collected have increased 15 % for the first semester of 2001, with 7.5 billions Euros in France and 48 billions Euros in Europe, raised from pension funds, insurance companies and individuals. Yet these funds are not all invested; venture capitalists prefer investing in already existing companies and promote expansion rather than diversification and risk.
The market should not suffer in the short term from a lack of financing and it seems that investors are confident in the potential of high tech industry for the mid term.

12 largest venture funds in France for innovative companies
Fund Name of fund raised Amount 
(million Euros)		 Closing date
Atlas  Atlas Venture VI 1,060 04/2001
Atlas Atlas Venture V 750 02/2000
APAX APAX france VI 700 09/2000
Viventures Viventures 2 630 06/2000
Softbank Softbank Europe Ventures 550 03/2000
Partech International Partech International Venture IV 340 12/2000
Galileo Galileo III 250 07/2000
 Sofinnova Sofinnova VI 330 04/2001
 Sofinnova Sofinnova V 225 02/2000
BNP Private equity Europe telecom and media fund 220 09/1999
Innovacom Innovacom 4 200 08/2000
Net Partners Nestor 2000 190 09/2000
 Source: Journal du Net
 


The New Market has been created in 1996, as an equivalent to the NASDAQ, to trade high technology companies. Funds raised on the new market have increased in 2000 to 1,654 million Euros, from 575 million Euros in 1999.  Internet and e-commerce have benefited from the highest investments, followed by software and biotechnologies. Several public funds have been created, such as the "Fonds Public pour le capital-risque" (FCPR), "Fonds de Promotion pour le capital-risque". Mutual funds, such as "Fonds commun de placement dans l'innovation" focuses its investments in innovating companies. Investment rules for life-insurance funds state that a minimum of 5% of these funds have to be invested in the New Market.


Sources

Journal du Net
Le Monde Interactif

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