We must now turn the crisis into opportunity

The summer, the level of investment announced by the venture capital in France collapsed. With less than 16 million euros, the "Capital Finance" barometer plunged to one of its lowest levels since its inception in 2002. Simple statistical difference Or the financial crisis has joined the venture capital and the resumption of activity, which was initiated in the summer 2005, it ended three years later The trend looks negative, but thanks to the reserves of collected money to the soundness of companies who come to him the "deal flow" and the emergence of a "green bubble", the French venture capital seems to address the recession which draws with relative serenity.

In June still, prospects appeared strong. The credit crunch was little young innovative companies, turning by construction to the own funds of investment financing. In 2006 and 2007, venture capital investments have thus reached, according to the barometer "Capital Finance", the level of EUR 635 million per year, unmatched since the Internet bubble. And, in September, the index shows a rebound of pledged investment, more than 81 million euros.

But this recovery was only apparent. Three of the most important operations, which account for almost half of the total amount (37 million euros, 81.4 million), match of Refinancings. No new investor for Novagali Pharma, for example, which develops an innovative galenic for diseases of the eye. A failure to be able to turn to the stock exchange, its historical shareholders come build 15 million additional euros on the shoot, which was attended by 26 million in 2006.

Concentration on leaders

Is no new inbound to Valorem capital, a Bordeaux Office back in the production of wind power and just earn 16 million euros to 100 MW of installed capacity. Site Internet Quotatis, it is clear a new investor, CDC enterprises, participate in the round of 6 million to consolidate its European expansion. But the latter is confined, to support the market, in the role of co-investor: no other venture capitalist private just join Banexi Ventures in the start-up.

It is to draw a trend towards the concentration of venture capital around a relatively limited number of funded champions. It was established as early as year last in biotechnology and health, which retain the Palm of the round table of importance this year: Endotis Pharma (EUR 25 million) and Mauna Kea Technologies (20 million) in January; Stentys (12 million) and TxCell (10.5 million) in March... The window of the introductions on the stock exchange has closed very early in the segment, who knows as little of mergers and acquisitions. There are similar situations for the electronics, where Dibcom, Inside Contactless and more recently Sequans (19 million euros, in February), or the manufacturer of cards ASK (EUR 11 million, in September), were able to arm itself for the crossing of the desert.

The trend is not unique: the first rounds and boot are this year more than one operation on two. In particular, the venture capitalists to urge at the doors of the "cleantech", new technologies of energy and sustainable development. In addition Valorem, evidenced for example in recent weeks the first towers of NovaWatt (3 million) and Photon Power Technology (1 million euros).

However, the tightening of the terms of surrender for the capitalists suffers few exceptions. "We must now develop original exit strategies," reflects Jean Schmitt, Sofinnova partners. For its part, the investor has seen, is constituting a portfolio which is able to accompany the emergence of a new operating system in mobile phones. The crisis has not stopped the mergers & acquisitions: recent redemptions and Netia by Globecast Genesystems by American Pall shows that the French start-up know still raise the appetite for industrial groups. But the absence of an alternative stock market posed a weight on the negotiations. And therefore on the profitability of the venture capital, historically difficult.

Abundance of means

According to a recent study of the French Association of investors in capital (Afic), venture capital funds are an internal rate of return (IRR) of 0.7 over ten years, against 8.5 for capital development and 21.4 per cent for the LBO and capital-transmission. But the crisis could disrupt the fundamental, especially for companies in LBO. And despite these results, the French capitalists have never had so many ways. They have already brought together nearly 400 million euros in 2008, compared with 310 million in 2007. To add an exceptional collection of the FCPI (707 million combined) and a substantial part of the 938 million released by Act work, employment, purchasing power. We must now turn the crisis into opportunity.