Women Start. Photo: Orange
Over the past 10 years, Corporate Ventures activity has strongly increased in France. In an ever more competitive environment, the big corporate groups are using this type of investment fund to optimize their relationships with startups.
This is part of their open innovation strategy. Meeting a dual objective that is both strategic and financial, this activity has grown significantly. For this 3rd edition, Deloitte and Orange Digital Ventures produced a barometer that assesses the market and identifies the main trends in French Corporate Venture Capitalists (CVCs).
At a global level the CVC market has asserted itself as a major segment in capital risk, participating to 53 billion dollars of fundraising in 2018 or 47% more than 2017. This growth has largely been carried by Asia, where there was a 62.4% increase in the number of deals.
Europe also benefited from this momentum with growth of more than 18.6% compared with 2016. The North American market remained more or less stable and mature with a 13.1% increase in deals compared with the previous year.
Growth was significant in the French market with the average number of investments doubling compared with 2016. Additionally, 75% of the CVCs surveyed have already anticipated investment growth for the coming year.
The sustained importance of these new actors on the market can also be seen in their organizational structure. Nearly half (45%) of those who replied already have an office abroad and 75% of them have recruited new employees in 2018.
In terms of the prioritized investment area, French CVCs have adapted their strategy. It is said that 67% of those surveyed are now focusing on new investments rather than on startups that are already in their portfolio.
However only 38% are taking the lead in the investment. This trend is shared by the majority of the CVCs from around the world: only 19% made the choice to lead on more than half of their transactions. This “follower” strategy makes CVCs the ideal partner for startup growth.
While French CVCs invest mainly in Series A (the commercialization phase is launched and funds are used to accelerate the development and structuring of the company, including internationally), the study also shows a significant increase (x2.1) in Later Stage investment in more mature startups. On the other hand, investment in Pre-Seed startups saw a net reduction (68%) compared with 2017.
Additionally, French CVCs prefer more mature markets (France 41% + Europe 32% + North America 12%). While the dynamism in Asia is also attractive, CVCs invest here to a lesser degree, with an average of 12% of investments.
The CleanTech / Energy sector profited significantly from these new strategies and saw 53% growth in investments in 2018.
Photo courtesy: Orange