%20(3).webp)
Bpifrance write up:
France’s tech ecosystem has a ubiquitous national pillar: Bpifrance.
The public investment bank, which was launched in 2012 in a bid to promote growth and innovation in the country, bills itself as a “one-stop shop for entrepreneurs.”
Between 2013 to 2021, the firm has supported nearly 80% of French startups that have raised funding. This includes either direct financing from the bank, or funding from a venture capital firm that’s been backed by Bpifrance as an LP.
Indeed, it’s been an active agent in so many of the VC firms that have gone on to back tech juggernauts from Mistral and Hugging Face to Dataiku and Doctolib.
“France is very connected to the rest of the European markets,” Adeline Lemaire, head of fund investments at Bpifrance, told European Women in VC in an interview. “If you reach out to French GPs, you can easily branch out to other markets.”
It’s a strategy that’s allowed the investment bank to spread its influence across the continent; and it has towering ambitions for the year ahead.
Investment strategy
From 2013 to 2023, Bpifrance invested a staggering $10.5 billion into the French venture ecosystem. Of this, 56% was channelled to 180 partner funds that raised €32 billion and invested €17.4 billion in 3,000 companies.
Bpifrance’s funds of funds activity aims to build on this momentum. “We are focused on VC funds and private equity funds, and we cover everything from seed to growth, as well as tech buyout,” Lemaire said. “We also cover small to mid-cap funds, and invest more marginally into private debt funds.”
GP relationships form the crux of their investment strategy, Lemaire added. “The investment strategy is to keep on reinvesting into GP relationships. We have over 230 GP relationships, and we are loyal investors and we back successor funds, but we do that on a selective basis.”
She noted that “if the performance is not good or the relationship is volatile, the investment team can decide not to reinvest into a successor fund.”
Additional criteria include excellent profiles within management teams, strong financial records, and a differentiated investment for a market — along with the depth and capacity to deliver on this performance.
While the firm invests mostly into French funds, it can also work with European or foreign GPs, with the view of attracting them into the French market.
With over $25 billion in assets under management — and over 230 GP relationships — the firm has backed everything from generalist funds such as Daphni to specialist funds such as Innobio.
A booming national tech scene
Paris’ startup scene has long been bustling, but investment frenzy for the national ecosystem has especially flourished since 2023. The country has made stringent efforts to position itself as an AI powerhouse. Startup incubator Station F has played a pivotal role, as has government support, in championing support for its open-source upstarts such as Hugging Face, Alan, and Mistral.
The country is also well-positioned to access the wider European market, Lemaire adds. “You can grow a lot of sector-leading companies in France; we have a diversified investment market, with a lot of investment firms.”
Fiscal policy has also become more favourable for these funds, Lemaire said, pointing to the fiscal treatment for carried interest. France taxes carried interest at a flat 30% tax rate if it comes under a strict statutory regime — and they are treated as capital gains.
Policy initiatives like these have made the country a bustling magnet for talent and capital. Last year, Paris overtook London as Europe’s leading tech hub, with the combined enterprise value of Paris startups increasing 5.3 times between 2017 to 2024.
Bpifrance has played a key role in this value chain, providing everything from advisory services to financing and debt guarantees to companies and funds alike.
Overcoming challenges
It’s undoubtedly been a slower few years for European VCs. A key hurdle for the market has been fundraising, which has been stymied by a lack of liquidity, making it difficult for GPs to raise successor funds, Lemaire said.
“LPs tend to focus their relationship on a small number of actors, and in this vein, GPs should remain agile and demonstrate their ability to adapt to new environments,” she added.
Still, this challenging macroeconomic environment could prove to be lucrative for some players. With heightened consolidation of funds happening on the horizon, some firms could be presented with an opportunity to extend their financial track record.
Europe’s tech scene is often stunted at the growth stage, but Lemaire is optimistic about this sector — and has “seen more growth funds come into the market.”
Demonstrating performance in the long run should be top of mind for these funds. The best projects will be able to thrive with a strong sponsor, an outstanding team, and an exceptional track record, she said.
Lemaire added that Bpifrance has differentiated approaches to the various segments they cover — and accordingly have adjusted expectations for each fund.
Cultivating its national scene
Investors have a crucial part to play in cultivating their national ecosystem. It’s important to continue to support GPs that have a promising track record, per Lemaire. One way that French VCs and founders can do this is by fostering diversity in teams, she added.
“How diverse a team often serves as an indicator of how healthy the team is,” she noted. “We encourage male teams to be more diversified, and we expect them to have signed the target commitments to include a percentage of women into partnerships by 2030.”
Grit, resilience, strategy, and diversity are therefore fundamental ingredients for France’s thriving tech ecosystem. That, and a buzzy conference such as VivaTech — which invariably brings the global tech community together in the vibrant city.
Bpifrance is the French sovereign fund. Its funds of funds activity aims to increase the capital supply to companies while generating sustainable and long-term returns on investment. It has €21.5 bn in assets under management, and 700 funds in its portfolio.
Adeline Lemaire is the executive director of funds of funds at Bpifrance. She has over 20 years of experience in investment and project financing, having started her career in Agence Française de Développement, with a stint at Proparco’s Private Equity team. In 2014, she joined the Funds of Funds department at Bpifrance.