France-focused venture capital fundraising has been a hot topic in the industry lately, with 2014 witnessing the highest level of France-focused venture capital fundraising since 2001. €726mn was raised by 11 funds in 2014, the closest France-focused venture capital fundraising has come to matching the 2001 high, when 14 funds amassed just over €1bn. Preqin’s Funds in Market online service reveals that 45 venture capital funds focusing on France have held a final close between 2008 and June 2015. Collectively, these vehicles raised an aggregate €2.6bn in capital commitments. This blog uses Preqin’s Funds in Market data to analyze the current trend of venture capital funds targeting opportunities in France.
This fundraising success seems to stem from an increase in later stage capital, which has been in relatively short supply in France since the financial crisis. In 2014, venture capital funds that pursue expansion/late stage opportunities raised slightly more capital (€283mn) than those funds focusing on early stage opportunities (€259mn) , the first time this had occurred since 2008. This contrasts with 2013, when early stage fundraising significantly outstripped expansion/late stage funds by 88%, as shown in the chart below.
There are currently 10 venture capital funds in market primarily targeting investment opportunities in France. Combined, these funds are aiming to raise €673mn and have already accumulated €506mn via interim closes. This is a promising sign that fundraising in 2015 may remain at a similar level to the peak seen in 2014, as is the fact that €175mn has already been raised via final closes so far this year.
The largest fund in market is Serena Capital II, managed by Paris-based firm Serena Capital, which has already surpassed its target of €125mn to invest in early stage technology companies. The fund held a second close in June 2014 on €130mn, and is expected to hold a final close at the end of June 2015.
The 2014 spike could potentially have been aided by the French Government’s actions to encourage more start-ups: increasing the necessary threshold for regulatory oversight for crowdfunding in 2013, and creating ‘La French Tech’ brand, part of an innovative public policy to award cities for their ecosystems of start-ups. Both of these are a boost to the venture capital market in France and should help present venture capital fund managers with a wider array of investment opportunities in the country.