A bar from 10e district of Paris, on a weekday evening. Looking thoughtfully at his glass of beer, the young man at the next table, barely thirty years old, confides in his neighbor: “It was really cool at first. I believed in it, I got involved. Every time one of the bosses asked me to stay late to finish a project, I did it. But when they started laying people off, explaining that times were tough and that they would have trouble raising the next round of funding, I realized that ultimately a start-up was a company like any other. I don’t know if I’m going to stay…”
This feeling is not an isolated case. It’s been eighteen months since many tech employees became disillusioned and the star of young startups faded. The main reason for this disenchantment is to be found in financing, the rise in rates and inflation which have made investment funds more parsimonious. Since the summer of 2022, start-ups have struggled to raise funds from investors. After a period of euphoria, “even excess” some will say, these difficulties have led them to reduce their costs and, for several of them, to lay off workers. As was the case for PayFit, Back Market, DocuSign, more recently ManoMano and many others.
The French Tech label, created in the fall of 2013, is celebrating its tenth anniversary with a bit of a hangover. Age of reason, entrepreneurial maturity or real turnaround? The world of start-ups and venture capital in France seems to have reached a turning point in its short history.
“Be careful of the optical effect, warns Franck Sebag, partner of the EY firm. While there was indeed a major drop in value, minus 49% of funds raised in the first half of 2023 compared to the first half of 2022, there were more transactions carried out. » In its barometer of venture capital in France from 1er half-year 2023, the firm counts 395 fundraising compared to 362 during the same period of the previous year. Small fundraising of up to 20 million euros, called “seed” and “series A”, held up well, proof that investors continue to finance innovations in their early stages.
Make way for profitability!
Above all, it is the fundraising above 100 million euros, those which make the unicorns, these unlisted companies valued at more than a billion euros, which have become rare. As for those worth more than 300 million euros, they have simply disappeared. However, Franck Sebag emphasizes that “the amounts raised during the first six months of this year represent one and a half times those raised during the entire year of 2019. This is something to put into perspective. We are not in a structural crisis, because growth is still there, as is the need for innovation”.
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