Between 1996 and April 2001, 32 start-ups have made 43 fund-raisings: the first survey on that subject, conducted by the Dynamis Observatory from the Ceram, make sthe phenomenon clear.
Start-ups from the Riviera and capital venture ? Until now, except the fund-raising announcements, there were few elements to assess the phenomenon in overall and especially to understand its evolution. The survey on financing by venture capital from start-ups of the Riviera, which has been presented during the latest evening of the Sophia Start-up Club, is a premiere. Realized by the Dynamis Observatory, a cell launched by the Ceram in order to analyse deeply and regularly the strategic behaviour of high tech companies from the Alpes-Maritimes, the survey offers a vision of the phenomenon over five years (1996 to 2001).
1.244 billion francs over five years
What are the elements put forwards by the observatory headed by Michel Bernasconi and Franck Moreau ? First some figures. Between 1996 and April 30th 2001, 32 companies have already risen funds for an amount of 1.244 billion francs (half of which in 2000). Funds come from 64 venture capital funds, and half of them are foreign ones. The average amount invested on the first fund-raising (a total of 32) is up to 21 million francs; for the second fund-raising (9 fund-raisings) for 62 million francs and the average amount risen by company (first and second fund-raising campaigns included) is up to 39 million francs.
The analysis deals with fund-raisings realized by companies which were born in the region with capital-ventures. Thus, fund-raisings realized by companies which set up on the French Riviera but which do not have their offices there (Wwwoosh, Vivance, IXEurope, etc) as well as fund-raisings done by business angels or by listing on the stock exchange are not taken into account. Such a methodology explains why there are so many differences with another survey conducted by the Sophia Antipolis Foundation.
Michel Bernasconi, who presented the survey to the CIV of Valbonne, has also given some analysis elements. ”Over a period, we notice an acceleration of the number of operations. From one single operation in 1996 to nineteen during year 2000. The repartition between financing rounds shows the first rounds have increased in 2000 (16 against 7 in 1999 and 0 in 1998). There a few second rounds, since there were not any single one in 1999 and only three in 2000 (but already 3 in 2001 stopped late April)”.
The rise in power of the start-up phenomenon
”As far as the amounts risen by companies is concerned, we notice a strong increase in 2000 with 585 million francs, as against 233 million in 1999. If we cancel year 1996, since only one single company (Nicox) was involved, the average amount by raising is increasing regularly during the observed period, from 14 million francs in 1997 to 31 million in 2000”, Michel Bernasconi has said.
The champion of the fund-raisings have been Nicox in 1996 and 1997 (97 million francs), Aucland (115 million francs) in 1999, Kast Telecom (240 million francs) and Opt(e)way (112 million francs) in 2000. In a general context which encouraged the creation of technologic companies, new companies from the Alpes-Maritimes have been particularly successful.
In the survey, they also insist on the international characteristic of the research park: half of the 64 funds, which have made operations, are foreign ones. Europeans and Americans are equally represented with 22% of operations. The most active Europeans are English and Swiss. Asia with 5% is represented by Singapore and Japan. The creation of the International Summit of venture capital (which takes place every year in December) five years ago has played an important role by allowing companies to meet international investors. Over the period, the most active two accompanies in terms of operations are Sofinnova Partners and 3I which have respectively financed four and three companies.
Reasons to remain optimistic for 2001
And 2001 ? Michel Bernasconi is still optipistic. "According to characteristics of financed companies and to the tendency over the first 4 months 2001, we can think that this year will not experience a collapse of the financing amount despite a change in the behaviour of the venture capital industry since the e-krach. On the one hand, dotcoms did not account for an important part of the financings. Among the 32 companies involved in fund-raisings, only three of them are in the Internet industry, one in the B to C (Aucland) and two, in the B to B (Etexx and buying Partner).
On the other hand, most of companies in Sophia Antipolis are providers of Internet or Telecom technologies, and, even if their market slows down, their prospects are encouraging on the middle run. Then, as there were many first rounds in 2000, the second rounds should take place in 2001. We also notice that late April 2001, funds that have been risen are already equal to the whole year 1999 (233 million francs in 1999 and 585 million francs in 2000, a record year). Thus, unless an aggravation of the crisis or collective difficulties for companies, fund-raisings should go on.”