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French venture capital at record levels

According to the the March 22 edition of French financial daily La Tribune, venture capital in France in 2010 reached its highest levels since 2000. For those of you who cannot read the article (due to subscription restrictions), I have summed it up in English below.

An interesting linguistic note that reveals a lot about cultural differences is the expression in French for “venture capital”: capital-risque, or “risk capital”. So whereas the risk-taking “Anglo-Saxon” cultures positively think of investing in businesses as “ventures”, the actual French term emphasizes the traditional risk-averse culture of France (that is gradually evolving, as the article illustrates).

Another example of this difference is that more Americans and British invest in stocks for their pensions whereas it is less of a natural option for French workers. But this too is changing.

I have some venture capital links on my business in France page.

Do you have any views of venture capital and investments in France?

“Le capital-risque en France retrouve des niveaux record”

Venture capital funds invested about €1.05 billion in 2010 (compared to €910 million in 2009). This is the highest amount since 2000, when VC reached €1.14 billion.

Investment over the past six semesters (notice the dip 2nd half of 2009)

2008: €470 mil (1st semester), €556 mil (2nd semester)
2009: €503 mil (1st semester), €407 mil (2nd semester)
2010: €515 mil (1st semester), €532 mil (2nd semester)

Most capital came from local investment funds, or FIP (Fonds d’investissement de proximité) and innovation mutual funds, or FCPI (Fonds commun de placement dans l’innovation). In fact, the second half of 2010, FIP’s and FCPI’s represented 62.5% of investments.

N.B. you can learn more about these and other French investment terminology here. See below for explanation of FCPI from that link.

Another trend is that most venture capital firms invest in the last stage, or second rounds, instead of early stage investments. Early stage made up only 7% of VC investments in the last ten months of 2010.

One last note is that the health, life sciences and pharmaceutical industries make up almost 25% of venture capital investments.

FCPI: French type of mutual funds, created in 1997, intended to support the development of innovating firms.

The capital collected by a FCPI is invested at least up to 60 % in the capital of non listed companies, or of limited liability companies, to which the Agence nationale de la valorisation de la recherche (ANVAR) gives the label “innovating”.

Subject to keep the FCPI shares during at least five years, the subscriber profits from tax advantages at the time of the subscription (tax cut) and at the time of the resale (possible exemption of the cashed products and the appreciations in certain cases)

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