Four years after the Great Recession, France’s newly elected socialist president François Hollande raised taxes and increased regulations on founder-led startups. The subsequent flight of entrepreneurs to places like London and Silicon Valley portrayed France as a tough place to launch a company. By 2016, France’s national statistics bureau estimated that about three million native-born citizens had moved abroad.
Those who remained fought back: The Family was an early accelerator that encouraged French entrepreneurs to adopt Silicon Valley’s startup methodology, and the 2012 creation of Bpifrance, a public investment bank, put money into the startup ecosystem system via investors. Organizers founded La French Tech to beat the drum about native startups.
When President Emmanuel Macron took office in May 2017, he scrapped the wealth tax on everything except property assets and introduced a flat 30% tax rate on capital gains. Station F, a giant startup campus funded by billionaire entrepreneur Xavier Niel on the site of a former railway station, began attracting international talent. Tony Fadell, one of the fathers of the iPod and founder of Nest Labs, moved to Paris to set up investment firm Future Shape; VivaTech was created with government backing to become one of Europe’s largest startup conference and expos.
Now, in the COVID-19 era, the government has made €4 billion available to entrepreneurs to keep the lights on. According to a recent report from VC firm Atomico, there are 11 unicorns in France, including BlaBlaCar, OVHcloud, Deezer and Veepee. More appear to be coming; last year Macron said he wanted to see “25 French unicorns by 2025.”
According to Station F, by the end of August, there had been 24 funding rounds led by international VCs and a few big transactions. Enterprise artificial intelligence and machine-learning platform Dataiku raised a $100 million Series D round, and Paris-based gaming startup Voodoo raised an undisclosed amount from Tencent Holdings.
We asked 12 Paris-based investors to comment on the state of play in their city:
- Alison Imbert, partner, Partech
- Alexandre Mordacq, partner, 360 Capital Partners
- Emmanuel Delaveau, partner, Partech
- Boris Golden, partner, Partech
- Jean de La Rochebrochard, managing partner, Kima Ventures
- Paul Bolardi, associate, AXA Venture Partners
- Shiraz Mahfoudhi, Speedinvest
- Guillaume Dupont, founding partner, CapHorn
- Martin Mignot, partner, Index Ventures
- Bartosz Jakubowski, principal, Alven
- Pierre Entremont, founding partner, Frst Capital
- Pierre-Eric Leibovici, founding partner, Daphni
Alison Imbert, Partech
What trends are you most excited about investing in, generally?
All the fintechs addressing SMBs to help them to focus more on their core business (including banks disintermediation by fintech, new infrastructures tech that are lowering the barrier to entry to nonfintech companies).
What’s your latest, most exciting investment?
77foods (plant-based bacon) — love that alternative proteins trend as well. Obviously, we need to transform our diet toward more sustainable food. It’s the next challenge for humanity.
What are you looking for in your next investment, in general?
Impact investment: Logistic companies tackling the life cycle of products to reduce their carbon footprint and green fintech that reinvent our spending and investment strategy around more sustainable products.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
D2C products.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% investing in France as I’m managing Paris Saclay Seed Fund, a €53 million fund, investing in pre-seed and seed startups launched by graduates and researchers from the best engineering and business schools from this ecosystem.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Deep tech, biotech and medical devices. Paris, and France in general, has thousands of outstanding engineers that graduate each year. Researchers are more and more willing to found companies to have a true impact on our society. I do believe that the ecosystem is more and more structured to help them to build such companies.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris is booming for sure. It’s still behind London and Berlin probably. But we are seeing more and more European VC offices opening in the city to get direct access to our ecosystem. Even in seed rounds, we start to have European VCs competing against us. It’s good — that means that our startups are moving to the next level.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
For sure startups will more and more push for remote organizations. It’s an amazing way to combine quality of life for employees and attracting talent. Yet I don’t think it will be the majority. Not all founders are willing/able to build a fully remote company. It’s an important cultural choice and it’s adapted to a certain type of business. I believe in more flexible organization (e.g., tech team working remotely or 1-2 days a week for any employee).
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality sectors are of course hugely impacted. Yet there are opportunities for helping those incumbents to face current challenges (e.g., better customer care and services, stronger flexibility, cost reduction and process automation).
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Cash is king more than ever before. My only piece of advice will be to keep a good level of cash as we have a limited view on events coming ahead. It’s easy to say but much more difficult to put in practice (e.g., to what extend should I reduce my cash burn? Should I keep on investing in the product? What is the impact on the sales team?). Startups should focus only on what is mission-critical for their clients. Yet it doesn’t impact our seed investments as we invest pre-revenue and often pre-product.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
There is no reason to be hopeless. Crises have happened in the past. Humanity has faced other pandemics. Humans are resilient and resourceful enough to adapt to a new environment and new constraints.
Alexandre Mordacq, 360 Capital Partners
What trends are you most excited about investing in, generally?
Logistics/Enabling technologies in AI/Impact consumer businesses.
What’s your latest, most exciting investment?
900.care — rechargeable bathroom products.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Defense tech startups — [these often] scare VCs, but are very sticky clients with large pockets.
What are you looking for in your next investment, in general?
Strong founders with industry knowledge, addressing unsolved problems on growing markets.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Micromobility — both from a service and a product perspective.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50% in France and 25% in Italy (our two offices) — then 25% outside (as early-stage investors, you have to be very close to your local ecosystem).
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Exotec (warehouse robotics).
How should investors in other cities think about the overall investment climate and opportunities in your city?
France is a very welcoming ecosystem for foreign investors and employees — lots of public funding, large tax exemptions on R&D, lots of VC money at early stage, and more recently at later stage.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Investment strategy taking even more into account how to get to profitability.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Some companies benefitting big time from the pandemic (delivery, electronic signature, logistics … ).
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Birth of a second kid — life continues :-)
Emmanuel Delaveau, Partech
What trends are you most excited about investing in, generally?
A few trends we are excited about include:
- Future of health: personalized, online.
- AI-assisted future of work: remote, collaborative, continuous education.
- Future of commerce: Software-enabled, social.
- Instant future of finance: API-based, data-driven.
- Decentralized future of mobility: autonomous, multimodal.
- On-demand future of computing: edge, AI.
- Wireless future of industry: “Softwarization” of large enterprise processes.
- Industrial internet digitization of informal economies, especially in emerging markets.
- Sustainability revolution across B2C and B2B operations and consumption.
- Return of sovereignty: privacy, identity, security, supply chains, geopolitics, etc.
What’s your latest, most exciting investment?
QUIBIM in Spain: A groundbreaking tech startup specializing in radionics, the extraction of standardised, quantitative information from medical imaging data sets using artificial intelligence (AI), enabling hospitals and pharmaceutical companies to detect diseases early and systematically.
What are you looking for in your next investment, in general?
We invest from pre-seed to growth stages, with checks ranging from €200,000 to €50 million and every support we can bring to empower extraordinary people to build great companies. The teams we are looking for are the best teams at that moment in time for the business they have founded. This means a mixture of tech-savviness, business acumen, structure, drive, ambition, honesty and excellence. We seek out people with the right mindset — those that are always learning and are ready to explore new frontiers.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are strong believers in the multilocal approach, as a result of our history. We were born in the U.S., our HQ is in Europe, we invest in approximately 30 countries in Europe, North America, Africa and Asia out of five offices. The two questions we ask ourselves everyday are: How can we create the most value for entrepreneurs, and how can we create the most value for the VCs and local ecosystems who we work hand-to-hand with?
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The range is so wide! All major industries and technologies are undergoing changes, at different speed and scale.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Europe has emerged as a true tech ecosystem, i.e., entrepreneurs, clients, investors, cities, influencers and policymakers are more interconnected than ever, and investors should be increasingly aware of this new reality despite travel restrictions.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
It is already the case. In recent years we invested in companies built outside of the main tech capitals, for instance in Brighton, Lille, Lyon, Hamburg, Cologne, Gothenburg, Tampere, Valencia, Louvain-la-Neuve, Attala, Varsaw, etc. We are also seeing more companies being built on a fully remote basis.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We should probably be careful not to mix up the short- and long-term effects of the COVID crisis — companies thriving today are not necessarily the best positioned to benefit from secular trends that have been accelerated due to the crisis, and the reverse is true.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
No particular impact on our investment strategy, we did almost 20 new deals since March. We’re here to provide capital and resources for companies that have the potential to become tomorrow’s leaders. Building a company is an amazingly tough mission, the current environment makes it certainly tougher but at the same time opens even more opportunities. Advice: Think bold, move fast, be fair ;)
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
More than green shoots!
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The agility of founders in how they adapt to uncertainty and pivot their offering, amazing!
Boris Golden, Partech
What trends are you most excited about investing in, generally?
Seed investing is about spotting the youngest startups exploring cutting-edge trends. There are a lot of them and I wouldn’t be able to select a few right now!
What’s your latest, most exciting investment?
Sorare, a fantasy soccer gaming platform, powered by cryptocards.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
B2C voice social experiences, environment-oriented B2C and B2B platforms.
What are you looking for in your next investment, in general?
4Ms: Management team, market opportunity, model, momentum.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Lots of DNVB, for instance pet food. Super operational businesses. Capital-intensive, low-tech, low-margin businesses.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Myself, more than 50% in my local ecosystem (France). But as a fund, 80% outside of France, and even close to 50% outside of Europe.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Deep tech and data-intensive businesses, because of the French DNA and talent pool in those scientific fields. Dataiku, Jellysmack, Sqreen, Alan.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, makes sense, we already see more and more remote teams right now at pre-seed stage!
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
No real impact on our strategy. Worries: B2B sales cycles, fundraising, operations. Advice: Be in control of your burn, focus on what’s not depending from the market (e.g., product, tech, etc), retain your existing customers/business, rethink the growth/hiring plan, but also seize opportunities.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Absolutely, first not so many really impacted, and for instance in fitness starting to see strong recovery!
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Strong numbers and morale from portfolio companies :)
Any other thoughts you want to share with TechCrunch readers?
Because of public subsidies, loans and stuffs, many startups have actually extended their runway. And keep up the great work!
Jean de La Rochebrochard, Kima Ventures
What trends are you most excited about investing in, generally?
Consumer mobile, SaaS for SMBs, marketplace with solid supply control and developer tools.
What’s your latest, most exciting investment?
Impala, Nabla.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We’re always surprised to discover things we had not imagined or thought thoroughly about before and we’re always surprised how fast similar companies in a certain space seem to pop up at the exact same time.
What are you looking for in your next investment, in general?
Impact and velocity :)
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Scooter, second-hand commerce.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We back French entrepreneurs mostly, but [invest] all over the world.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Mobile consumer, developer tools, we’re doing pretty well. Sales-intensive products are not really French things unfortunately but we’re progressing.
How should investors in other cities think about the overall investment climate and opportunities in your city?
French people can’t take two-hour lunch breaks anymore. It’s a good thing, no? ;)
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Work from anywhere is such an interesting narrative.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Cash is king. Many narratives are shifting from growth to profitability.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
I like to believe that a crisis is an opportunity to get rid of those who were abusing their positions. It’s especially true in the live entertainment space (Live Nation, Ticketmaster, Viagogo) and I can’t wait for the next $10 billion company of that industry to emerge (Hint: dice.fm).
Any other thoughts you want to share with TechCrunch readers?
The world has been noisier and noisier with the rise of social media and how fast anything spreads. Twitter seems like a great reflection of the current amplification of this phenomenon. It’s a time to focus, to stay positive, to do the right things by the people you care about. We never regret what we achieve with heart and rightful intentions.
Paul Bolardi, AXA Venture Partners
What trends are you most excited about investing in, generally?
SaaS/enterprise software, and primarily cybersecurity. Underdigitized and complex markets.
What’s your latest, most exciting investment?
NS8 — fraud prevention platform for e-commerce.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Deep tech and “core-business” solutions, mostly in the fields of digital health and finance/insurance.
What are you looking for in your next investment, in general?
Unit economics, product/tech differentiation.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
B2C fintech/insurtech, quite crowded already “low-tech” products mainly sold to fast-growing companies.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50% Europe 50% U.S.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Health startups and other applied AI startups (strong talent pool in France). Incepto — Antoine Jomier (former GE health care manager now building AI tools for radiologists).
How should investors in other cities think about the overall investment climate and opportunities in your city?
Equal to pre-COVID — French public authorities helped particularly well the startup scene.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Indeed more and more remote work and team in general, yet startup ecosystems will be slow to move (a mixture of corporates, investors, startups, talents and universities).
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
SME tools, with budget cuts expected as a response to the economics turmoil. These unprecedented times prompted digitization of many sectors (health, large corporates, banking).
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Little impact on our investment strategy apart from closer looking at unit economics/profitability horizon and certain sectors that we currently don’t consider (e.g., hospitality). Our founders worry about future financing and potential loss of revenues because of the impact on sales and marketing. One [piece of] advice: Minimize burn rate and leverage all other alternative sources of financing (with a limit for debt).
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, e.g., in digital health where many hospitals needed to adapt.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
People getting more and more accustomed to social distancing and sanitary barriers.
Any other thoughts you want to share with TechCrunch readers?
The VC market shall be protected by the surplus of liquidity in this asset class, and we must feel pretty fortunate compared to other sectors.
Shiraz Mahfoudhi, Speedinvest
What trends are you most excited about investing in, generally?
I primarily focus on two industries: Prosumer tech and digital health. We define prosumer tech as a blend of B2B SaaS and B2C/D2C models. The trends I’m most excited about in this space are edtech and the passion economy, which have both surged in recent years and saw further acceleration due to the pandemic. As for digital health, I’m interested in vertical and horizontal solutions targeted at specific populations, and I’ve been focusing much more on women’s health, as it is still an underserved market in France.
What’s your latest, most exciting investment?
Our latest investment in France is Lizee, a SaaS solution that helps retail brands integrate themselves into the sharing economy by renting their products. Lizee has already started working with major brands, including Decathlon and Delsey.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We don’t currently see many startups in the e-learning space or audio tech industry. Another hugely overlooked opportunity in France is women’s health, especially when compared to the maturity of the market in the U.K.
What are you looking for in your next investment, in general?
Considering we invest in very early-stage (pre-seed and seed), the most important factor is the team — background, prior founding experience, ability to execute, vision, etc. We also look at standard criteria, such as the product and potential market opportunities.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We’ve seen quite a lot of productivity tools, so it’s become very hard to differentiate oneself in this industry. As working habits have evolved in recent years, freelancing or “slashing” has become increasingly widespread among the working population, which led to the launch of multiple freelancing and gig platforms. As a result, I feel this space is now too competitive for a new player in France. Obviously, due to current and future impacts of the pandemic, the travel industry has suffered drastically and this will likely continue if companies refuse to reinvent themselves.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
I’m 100% focused on investing in France. While I’m based in Paris, other French startup hubs are also of great interest: Lyon, Nantes, Bordeaux, Nice and Lille, to name a few.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
As the main hub for most French corporations, Paris is now well-known for enterprise software and fintech startups, both of which began increasing a few years ago. There has been a surge in health tech, accelerated by the pandemic, as France is renowned for its large research centers and scientific community. The food tech scene has also been hot over the last few years, but I believe this industry has become saturated and will be consolidating going forward. In general, I believe the startup ecosystem in Paris will continue to grow and become even more diverse and mature, specifically due to Station F and the government-led French Tech initiative.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris has seen a tremendous surge in entrepreneurial and investment activity in recent years. Additionally, many VCs have either been created here or opened an office here. While the increasing number of VCs in Paris leads to fiercer competition, I believe it ultimately creates a healthy balance between entrepreneurs and investors. The tech startup ecosystem is at the heart of the Paris economy, and the awareness raised around technology as a growth enabler during the pandemic will likely accelerate the creation of opportunities for investors.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Definitely! Before lockdown, many people in Paris — a recent survey showed 57%, predominantly young — wanted to move to the countryside or at least to smaller cities than Paris. Since the lockdown was lifted, we have already started seeing this in action. Several startups have moved to other cities (e.g., LiveMentor relocated their HQ to Aix-en-Provence) to offer their employees a better lifestyle, and many employees have taken advantage of widespread working-from-home policies to move out of Paris — even if they need to commute to the city one to two days/week. I believe this “urban exodus” will benefit France, as it will most likely decentralize the tech ecosystem, which is polarized in Paris and democratize technology across the country.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The industries most heavily impacted by the crisis are travel and hospitality. I believe both will need to reinvent themselves and adapt to new consumer behaviours: More eco-conscious travel and safe environments conducive to rediscovering social interactions. The most obvious opportunities lie in businesses related to remote working — collaboration tools, flexible workspace, employee engagement tools, e-learning, to name a few. Climate tech is definitely a promising industry, due to a growing awareness around environmental topics and global warming. I also believe more businesses will strive to have a positive impact on the world, meaning that “tech for good” or “impact investing” will no longer be specific investment pockets but will become widespread throughout the ecosystem.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
As our founders are usually focussed on building their product for the first 12 to 18 months after investment, we haven’t needed to adapt our strategy significantly. The main concerns are what the current runway looks like and how disrupted the fundraising environment will be at the end of that runway. Our biggest priority has been supporting founders to make sure they’ve got at least 12 months of runway. Our advice to startups is always to keep a disciplined focus on the core of the business; now is not the time for side projects or distractions. Fiscal prudence now will be key to helping founders withstand any unforeseen circumstances the future might hold.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, we’ve seen a number of companies that have managed to benefit from the crisis because their service offering fulfilled a particular need during the lockdown. For example, our edtech portfolio company GoStudent grew significantly while schools were closed.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Personally, I’m very happy that public awareness was raised around global warming and that entrepreneurs now tend toward a more conscious way of doing business. I’m also excited that a sense of purpose within the startup community is really picking up again!
Guillaume Dupont, CapHorn
What trends are you most excited about investing in, generally?
Enterprise digital transformation (data, AI, cyber).
What’s your latest, most exciting investment?
Most exciting recent CapHorn investment (together with Localglobe): Storelift. The company is providing autonomous stores leveraging computer vision, sensors and AI. The demand was there but the trend is accelerated by the context, the team is doing a great job at a very fast pace, the space is not saturated and the market potential very large.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Space tech! I would also like to see more companies providing tools for the gaming industry! I would like to see more aggressiveness and crazy ideas (hyperloop-like) from European startups. Not clear to me how startups could address the demand for more European sovereignty but with smart go-to-market I believe there is an opportunity.
What are you looking for in your next investment, in general?
We are still looking for the same basics: A great team that changes an industry with a new approach or product that can be scaled internationally. Because of the context, we are also looking for a smart go-to-market approach, ability to adapt and adjust the business to uncertain times and cash efficiency. I like topics that are hot business-wise, which is, right now the case for remote productivity tools, cybersecurity.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
The HR space seems crowded with a lot of niche offers so difficult to address for a new player. Obviously, we are careful when looking at new investment opportunities in areas strongly impacted by the COVID situation: travel and hospitality, retail tech, marketing tech … but sometimes the best opportunities are contrarian! Entrepreneurs managing to get growth in these markets must have something very special!
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Paris 40%, France 70%, Europe 90%. In France, we invest or co-invest with fellow foreign VCs very frequently and with them we are more and more looking at cross-border deals in Europe.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
INDUSTRIES: Vertically focused AI companies especially on market with strong French players, such as insurance or luxury brands. COMPANIES: Alan! Strapi! (I am not investor.) In our portfolio: I would love to mention many of them so if I focus on the early-stage part: Miuros (AI-powered solution for customer service teams) and as mentioned before Storelift.
How should investors in other cities think about the overall investment climate and opportunities in your city?
The Paris hub and France in general is full of great opportunities. The money is coming in but the most interesting signal is there is a growing number of experienced and successful executives joining French startups. Follow them!
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The trend was there before the pandemic. What we see is more founders and companies emerging from just anywhere but as they want to hire top executives they are joining the major hubs.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel tech, hospitality, retail tech, marketing tech, transportation are among the most exposed areas to shifts of behaviors. It may be counterintuitive but it also means that there are opportunities there. Education and health are also quite challenged and ready for disruption. Is it the time for crypto? The conditions are there. We are seeing already big change in where several people want to live and thus transportation and retail localization are strongly impacted. Many businesses will have to adapt. If you provide them with the tools to make the right decisions, you have a great opportunity.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID impact on investment strategy: Increase round size for a given company, favor entrepreneurs and markets we know well.
Biggest worries of founders: People are living this period in very different ways depending on their personal situation (kids, location, apartment/house, age, health … ), they have to manage this disparity and provide their team a way to read this very uncertain period!
Advice to startup: Find the right balance between securing a long runway because we do not know what the economy will look like in the coming quarters AND being opportunistic business-wise and on key hiring because what you do now can make a big difference. For large business opportunities, it is a time for CEO-driven sales. You should sell critical advantage for your customers at the highest possible level.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes :) The coming quarters will be interesting to follow!
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The human capacity to adapt and keep building a great future whatever happens. Founders’ reaction was and is great! The way my kids adapted to e-education in just days.
Any other thoughts you want to share with TechCrunch readers?
Many conditions are there for Europe to be a stronger player in the global tech scene. Wherever you are you should get involved now!
Martin Mignot, Index Ventures
What trends are you most excited about investing in, generally?
When I invest, I focus first and foremost on the person, the entrepreneur — before we even get to the sector or any trends. I want to get to know the founder, learn about what drives her, how and why she chose to solve a particular problem, and find out whether she is so obsessive about it and so relentless that nothing will stand in her way. I mainly work with founders who are building businesses that meet the “toothbrush test,” meaning it is so essential to the way we live and work that we use it every day, and in most cases multiple times a day.
What’s your latest, most exciting investment?
Matera, the property management platform founded by Raphaël Di Meglio.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Many investors and entrepreneurs alike have pulled back from hardware investments, but not all hardware startups are alike. I still believe there is a big opportunity for startups that combine hardware with software to create really innovative solutions, but the magic must be in the software.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
A third in Paris, two-thirds across Europe.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Those that benefit most from the great technical talent and startup experience that Paris has built up over the past few years. From Matera to Alan, Swile to Dataiku, they all have managed to attract world-class technical talent.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris has really been on a roll. Since the Criteo IPO, which has been a great catalyst for the ecosystem, Paris has gone from strength to strength. There is a real feeling of optimism and ambition in the air. Of course, this has also meant it is very competitive for VCs and for companies recruiting talent.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Cities will continue to be attractive for young people who are drawn to them at the start of their careers as they seek professional and personal relationships. However, startups may get more distributed across several large cities, rather than being all in the capital. I wouldn’t be surprised if we see more countries starting to feel like Germany, with multiple strong regions and cities attracting talent and becoming tech hubs in their own right.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment pace doesn’t change much through the ups and downs. We’ve found that we have the best outcomes when we continue to invest consistently over a long period of time. We have raised $2 billion in new capital in April, and we continue to invest in the next generation of entrepreneurs.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Interestingly, B2B companies that had seen a slow down at the beginning of the pandemic are more than making up for it now. I didn’t expect [such a] quick comeback.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Seeing people reclaim space in cities from cars. Paris removed thousands of parking spaces, introduced more cycling, more pedestrian areas and expanded outdoor retail. It’s been incredible and by all accounts this change will be permanent.
Bartosz Jakubowski, Alven
What trends are you most excited about investing in, generally?
SaaS, consumer apps, fintech.
What’s your latest, most exciting investment?
Georges.tech.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Overlooked opportunities: D2C for the 99%, group chat, account-to-account payments.
What are you looking for in your next investment, in general?
Very high differentiation, driven founders.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Productivity for SMBs, challenger banks, D2C.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
60%.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
ML-based vertical software. Excited about Doctolib, which still has a ton of upside in front of them.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Distinguish between the really driven entrepreneurs and the ones considering entrepreneurship as a cool endeavor. Also, they should dig into how ready the founders are to really scale a business globally or at least in Europe.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really in France, I think the most ambitious people will still want to be in the most stimulating environments.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
A lot of companies where built on leveraging the office space as retail sqm. I think this trend will be tougher. To the contrary, companies able to leverage higher e-commerce penetration and higher digitization of both consumers and businesses will thrive. I think it’s the revenge of purely digital companies over ops-heavy companies.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Biggest worries in the portfolio: Should they keep on pushing a very aggressive top-line driven strategy at all costs (putting their company at risk, in the unknown of whether later-stage investors will still favor growth over profitability) or switch to a “healthier” growth mode. Our advice is that the selection on “land-grab” markets versus other markets will be even stricter, and only the former should keep pushing as (or more) aggressively than before.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, mainly in social and gaming, and insurtech.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Seeing that the European model of a better safety net prevented the unemployment rates and foreclosures from being as bad as in the U.S.
Pierre Entremont, Frst Capital
What trends are you most excited about investing in, generally?
Seed in France!
What’s your latest, most exciting investment?
Pigment.
What are you looking for in your next investment, in general?
We are founder-centric.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% France/Paris.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Super strong.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
No change, we invest for the long run.
Pierre-Eric Leibovici, Daphni
What trends are you most excited about investing in, generally?
Europe has unfair advantage to address (i) social, (ii) economic and (iii) environmental structural and transition challenges. Daphni team main focus is to fuel ambitious projects with direct or indirect positive impact for a sustainable world by leveraging this European pattern. We have the potential to preempt market and to have global market leaders.
What’s your latest, most exciting investment?
Backmarket.
Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
There are probably opportunities in the construction, future of work and fashion fields that are not covered or tackled by startups.
What are you looking for in your next investment, in general?
Given the context we pay a very strong attention to the complementary of the founders team, the frugal mindset, the sector targeted, the value proposition fit with our strategy, which is to support deals that aim to build a better world.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
We are sector agnostic. We think that disruptions are cyclical. Our job is to try to anticipate the disruption at the right time (not too early and not too late). Our strategy is to leverage European DNA around pillars like well-being, creativity and collectiveness.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
In the very short term higher focus locally but a split around 60/40 remains our final target.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
France has European leaders in the marketplace field. Food tech remains a hot topic. The fintech space is also dynamic. Deep tech and AI startups should emerge in the midterm thanks to our first-tier engineers. Startups like Backmarket, Memo Bank, Swile, Typology, Pazzi and AnotherBrain are very promising.
How should investors in other cities think about the overall investment climate and opportunities in your city?
We have a generation of very sophisticated and mature entrepreneurs, founders and managers. We start having “mafia” coming from successful startups with high ambition. We have more and more serial entrepreneurs with the experience of scaling. International late investors have never been so active in France. All the ingredients are gathered to have numbers of big successes. That is the reason why the ecosystem is very dynamic and attracts more and more talent coming from outside of France. There are numbers of private and public initiatives to support this dynamic.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
No.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
At every level the pandemic will create opportunities for our ecosystem. Being much more agile and inventive than traditional companies, our startups are going to create new usages that will fit with new needs and expectation. There will be opportunities around future of work, food, well-being, health, transportation, construction and proptech.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
More than ever we want the investments we support to be useful to build a better world. Our founders remain very optimistic because they are aware of their agility, their inventiveness, their capacity to attract the best talent, and [ability] to adapt quickly (including pivoting). Be opportunist (COVID is going to generate plenty of opportunities), be frugal in order to have more time than usual to prove before going back on the market to raise funds, take the time to do what has to be done and that you have always postponed until now. It is good timing to test new ideas.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially in the B2C arena.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
We have managed to organize the first closing of our new fund in July. After an awful week after the announcement of the lockdown in France when a lot of investors decided to postpone or cancel their commitment, we have seen investors after the end of the lockdown being very supportive with the ambition to send good signals to the market with a very positive spirit. They are amazing limited partners we know we can rely on and we will never be thankful enough
Any other thoughts you want to share with TechCrunch readers?
It is our responsibility to make sure the investments we support have a positive impact for a sustainable world. Europe is very well-positioned to lead the transition in order to find solutions to the (i) social, (ii) economic and (iii) environmental challenges we face. Our European societies are advanced in terms of culture, mindset and awareness regarding these issues. Startups could leverage this positive context to preempt at very large-scale opportunities.