France’s public investment bank BPIfrance has its hands in many pots. They invest in more than 50% of seed and growth funds, and invest directly in larger rounds of companies deemed ‘national treasures’ of sorts – Withings & Sigfox, for example. Beyond being responsible for an estimated two-thirds of investment capital made available by French investors, BPIfrance’s latest goal is to teach medium-size businesses and large corporations that acquisitions are healthy.
In a report set to come out next month, BPIfrance will outline five major points that it hopes will improve the exit rate of startups in France:
- French Startups can scale up in two different ways: either by finding growth and market leadership, or through an innovation-driven acquisition enable acquirer and acquired to pivot and/or innovate.
- Acquisition’s aren’t just financial transactions, but signs of a clear strategic vision.
- Acquisitions are less about synergies created through cost-reduction, but through synergies created by growth opportunities
- Acquisitions aren’t just about technology – teams matter.
- Selling your company isn’t a sign of defeat, it’s enabling a next step.
What seems like Gospel in California hasn’t yet to seep into the big business culture in France, and BPIfrance has hit the nail on the head with these points. Here in France, businesses who stagnate look to the government to pave the road to success, for better or for worse – currently, the pig farmer’s union is protesting the descending prices offered by supermarkets in France for pig meat, due mostly to German and Eastern European pig farmers undercutting with lower prices – pig farmers expect the government to either reduce their taxes so they can compete or raise the minimum price for foreign meat to make the competitive in their prices.
BPIfrance has been hit and miss with its reports & initiatives in the past – it’s BIG event this past summer, which lasted 24 hours straight, was quickly forgotten & written off – but where BPIfrance has paved the way is their ability to create an iterative process to encourage innovation. Here, BPIfrance has put on display all the flaws of French businesses – unwillingness to acquire, only acquiring technology and not teams, acquiring to save money instead of encourage growth, acquisition as a sign of failure, etc. – all key hurdles in jump-starting France’s digital economy.
French startups currently look abroad for exit opportunities – exits into French companies are considered painful deaths (see Dailymotion), whereas acquisition by Adobe, Google or Microsoft tend to be met with praise. Clearly, France wants to promote acquisition and exits, as they are necessary gears in a fluid economy; however, France has been reluctant to accept the inverse scenario, notably refusing to let Dailymotion be acquired by the US Yahoo or the Chinese PCCW, favoring the French Vivendi, despite internal reports that an acquisition from an international company was necessary for Dailymotion to grow. Additionally, how will BPIfrance react if France’s medium-sized companies start acquiring abroad, where prices are cheaper and markets are more dynamic? Will the same open-mindedness and call for innovation be used there?
The “Acquerir pour Bondir” report will be released in September, and you can sign up for a copy by emailing acquerirpourbondir@bpifrance.fr. This article was written in conjunction with a paid partnership with BPIFrance.