According to our assessment, Bpifrance’s direct investments and fund of funds activity have made a significant contribution to structuring and driving the supply of private financing to French start-ups, thereby helping to develop the ecosystem.

Venture capital (VC) is a financing mechanism whereby one or more investors acquire a share, usually a minority share, in the capital of young, innovative, unlisted companies. It is therefore a source of capital for start-ups that are generating revenue but are still seeking profitability. The investor’s objective is to participate financially in the development of innovative companies with high growth potential and to realize substantial capital gains when selling their shares.

Since its creation, Bpifrance has pursued and intensified its policy of public support for the French venture capital market, which was relatively underdeveloped in 2013. Bpifrance’s VC activity takes the form of various support instruments for start-ups: innovation aid, direct and indirect investment (through “partner” funds subscribed as part of its fund of funds activity).

In this context, Bpifrance has conducted an unprecedented analysis of 10 years of public action, aimed at assessing the contribution of Bpifrance’s investments to the financing of French start-ups and, more broadly, the economic impact of Bpifrance on the French venture capital market. This study is based on an extremely rich set of data — INSEE, DGFIP, INPI, Dealroom, Pitchbook — supplemented by qualitative surveys of a sample of subscribers and fund managers, as well as an international benchmark of public support for venture capital carried out by the OECD.

Find out more about the methodology and data used in the full report (in French).

The amounts raised by French startups have grown significantly over the last decade

The amounts raised by French startups increased nearly ninefold between 2013 and 2023 to reach €8.3 billion, passing €13.5 billion in 2022 during the post-Covid recovery.

Furthermore, these amounts raised grew faster than the total amounts injected directly or indirectly by Bpifrance into the ecosystem, highlighting the performance of this funding. They “only” increased sevenfold between 2013 and 2023.

Fund performance has improved significantly

The economic performance of partner funds has also improved significantly in recent years.

This progress is visible in exit multiples, which measure the capital gain realized by a fund from the moment it acquires a stake in a start-up until the sale of its shares.

They improved from 1.3 for funds subscribed by Bpifrance between 2005 and 2008 to 2.5 for those subscribed in 2013 and 2016, illustrating the increase in the quality of start-up projects and the professionalization of players in the ecosystem.

Bpifrance plays a structuring role in the French venture capital ecosystem

In venture capital, Bpifrance has invested $10.5 billion over the period 2013-2023, representing nearly 30% of the total amount financed directly or indirectly by Bpifrance. Of this €10.5 billion, 44% was invested directly in 500 start-ups, with the remaining 56% subscribed to 180 partner funds that raised €32 billion and invested €17.4 billion in 3,000 companies. Bpifrance’s support has also resulted in a steady increase in the average size of funds subscribed across all market segments, from seed capital to growth capital and venture capital.

This action by Bpifrance has had a structuring effect on the venture capital industry. Firstly, two-thirds of French venture capital funds that raised capital from professional players between 2013 and 2021 raised funds from Bpifrance. Second, 80% of startups that raised funds were supported by Bpifrance in the year of the fundraising or beforehand, either directly or indirectly; all of which illustrates the momentum generated by Bpifrance’s action.

Bpifrance’s action thus has a powerful leverage effect on private financing. Indeed, more than 80% of the partner funds surveyed indicate that Bpifrance’s investments enabled them to reach their target fund size, and nearly 80% of them indicate that these same investments triggered other subscriptions and increased the size of the fund.

This is thanks to the co-investment principle, which limits the risk of substitution effects with the private sector: the average weight of Bpifrance’s direct funds in the financing rounds in which they participate and in the capital of private funds subscribed through the fund of funds activity is only 16% and 17% respectively.

As a result, Bpifrance has a significant impact on the development of the startups in which it invests.

The 2,000 startups invested in by Bpifrance’s direct funds and partners have very strong growth trajectories: their revenue has tripled on average and their workforce has doubled in the five years following the fundraising (2010-2015).

Bpifrance also contributes significantly to the R&D and innovation efforts of young companies. These startups account for 28% of all patent applications by SMEs and 19% of research tax credits (CIR) awarded to them.

Nevertheless, the French ecosystem still has significant room for improvement

Despite strengthening over the past ten years, the French ecosystem remains less developed than the Anglo-Saxon markets. For example, the amounts raised by American and British start-ups represented 0.6% of GDP in 2023, compared with 0.3% in France. Furthermore, the subscriber base is still insufficiently diversified and internationalized, with foreign investors accounting for three times more of venture capital fund subscriptions in the United Kingdom than in France.

Secondly, the French market lacks private institutional investors capable of investing large amounts in venture capital funds, as evidenced by the average amount invested by Bpifrance in venture capital funds, which is three times higher than that contributed by private co-subscribers.

Finally, there are still not enough “top performer” funds compared to the United States. French funds are also less able to quickly return liquidity to their investors. And there is finally a need to develop exit options for funds (industrial disposals, IPOs).