Alven Capital raises $261 million fund to invest in French entrepreneurs

French VC firm Alven Capital has been around since 2000 and has become a major player in the VC scene in Paris. The firm recently closed a brand new $261 million fund called Alven V (€250 million), which is a big step up as Alven IV was only a $125 million fund (€120 million).

Over the years, the firm has managed to invest in many successful startups led by French entrepreneurs. Alven Capital plans to do the same thing once again, but with more money in the bank account.

“This €250 million fund — we’re not going to start making very big Series B investments, we’re going to use it on Series A rounds,” partner Jérémy Uzan told me. “We usually shared our best investments with other investors. Now, we’re able to invest as much as €30 million on a single company.”

The firm plans to invest its fund across 20 to 25 companies, which is in line with Alven Capital’s previous fund. But the firm won’t need to co-lead an investment with a big British or American VC firm if it thinks that it’s going to a be a lucrative one.

Compared to many French VC firms, Alven Capital gets its funds from traditional limited partners that usually invest in private equity firms. Alven Capital doesn’t work with big public French companies or strategic investors. If you invest in the VC firm, it means that you’re looking for a good return on investment and nothing else.

All backers in Alven IV reinvested in Alven V — they represent around two-thirds of Alven V. New LPs also invested, as well as a few entrepreneurs from Alven portfolio companies — they represent a tiny portion of the fund. The firm doesn’t want to share the names of those entrepreneurs. “We don’t consider it as a marketing argument,” Uzan said.

Alven Capital raised its newest fund three years after Alven IV. Given that they had to turn down some LPs, the VC firm plans to raise new funds at the same pace in the future.

When it comes to the investment strategy, Alven Capital has always focused on early-stage investments in tech companies led by French founders. This time, the average investment will be a seed or Series A round ranging from €200,000 to €7 million, with the ability to invest €30 million in total in a single company over multiple rounds.

When you exclude VC firms that invest in Series B and later, Alven Capital says that it is now the largest French VC firm focusing on Series A and French entrepreneurs.

Why is Alven Capital talking about French entrepreneurs instead of French companies? According to Uzan, many French entrepreneurs can start a company in one country and end up in another — it doesn’t really matter to them. “Today, we realize that many French entrepreneurs consider borders as an afterthought,” he said.

Even more interesting, while most VC firms don’t talk about returns on investment, Alven Capital shared two tidbits about the firm’s performance. First, over the past 16 years, Alven Capital has had a gross internal rate of return above 30 percent every single year.

Second, while most of the investments in Alven IV are still active, some of the portfolio companies have already been acquired just a few years after Alven Capital’s initial investment. 7 out of the 25 companies have led to significant acquisitions with an average of 5x when it comes to returns on investment. Across all funds, Alven Capital has invested in 50 companies and 30 of them have found an exit.

There are currently six persons on the investment team — Guillaume Aubin, Charles Letourneur, Jérémy Uzan, Raffi Kamber, Rodolphe Menegaux and François Meteyer. The same team will manage the investments with Alven V.

We’ve covered some of these acquisitions over the years. Zendesk acquired BIME Analytics for $45 million, Trainline bought Captain Train for $189 million, Facebook snatched, etc. Alven Capital is also an investor in Algolia, Dataiku, PeopleDoc, Stripe, Drivy, etc. Even if some of those names don’t ring a bell, I can tell you without a doubt that Alven Capital has an impressive track record.

I’ve also asked about startup valuations getting more expensive in France. “Inflation is not so bad as long as inflation is across the board.” Now, let’s see if Alven Capital can find even bigger exits for its portfolio companies.