France’s Top CFOs Get Trained to Do More Startup TakeoversBy
CFOs get trained on valuations, timing and number of takeovers
Fund behind the initiative eyes more M&A, Brexit opportunities
France’s top corporate finance chiefs are getting lessons on the specifics of acquiring startups in a push by a state-backed investment fund to triple tech deals in the country within three years.
Chief financial officers from France’s biggest companies, from banks to industrial conglomerates, are learning to pin a price tag to a startup, spot when a company is ripe to be snatched up, and calibrate how many acquisitions it takes to land a technology gold nugget. Their teachers are venture capitalists or other entrepreneurs, called in by Bpifrance, an investment fund supported by the government that has spent years pumping money into the country’s startup ecosystem and investing alongside other funds to provide reassurance.
“What France’s tech scene needs now is more exits,” Paul-Francois Fournier, Bpifrance’s head of innovation, said in an interview in Paris ahead of a conference Wednesday detailing its investment strategy. “Bigger companies are learning to manage their startup investments, and VCs can teach them a lot.”
Bpifrance invests in companies to help boost financing for startups in France as well as in other funds. The next step is to spur acquisitions so investors can cash in and back new projects. Fournier is looking to go from about 50 corporate takeovers of startups a year to double or triple that, in three years at the most.
“French companies are still dominated by CFOs who are terrified of valuation multiples,” Nicolas Dufourcq, Bpifrance’s CEO, said Wednesday in a conference in Paris about the fund’s investments in innovative companies. “We do our part to educate them.”
With offices in central Paris, not far from Google’s French headquarters, Bpifrance brings CFOs and venture capitalists together in a space called Le Hub for informal chats about how to help companies identify a target and close the deal. French companies that have participated include Accor SA, Valeo SA, Faurecia SA and TF1.
“Owning an incubator or a corporate venture fund with a bunch of minority stakes doesn’t fix the problem for companies -- they need to buy startups, do full acquisitions,” Fournier said. “It’s an opportunity to get new technologies and talents in as bigger companies seek to regenerate and reinvent themselves.”
Investment in technology companies in France was $1.5 billion during the first nine months of 2016 spread over 368 operations, up from $1.25 billion in 2015 over 215 operations, according to a report by CB Insights. France overtook Germany in the third quarter with $857 million to $462 million, but it still lags the U.K. which had $919 million during that period.
France can leapfrog the U.K. in the final quarter of the year if financing keeps up, helped by several fundraising rounds in November including Sigfox’s 150 million euros ($159 million) and Devialet’s 100 million euros, Fournier said. Brexit could also create instability for the U.K. and persuade investors to look toward France, including in the financial technology sector.
“The French ecosystem is benefiting from deeper factors than just Brexit, but Brexit could lead to an acceleration of the trend from the first nine months of the year,” Fournier said. “Brexit is an amplifier.”