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Expert Opinion: The Financing Chain: Actors, Measures and Advice

Are you a company looking for funding? This article is made for you!

Amandine
March 13, 2024
xx
min

On the occasion of this new expert speech, we discuss the theme of the financing chain in order to identify its substantial characteristics such as the predominant players, the measures recently taken in the exercise of investments in France, and the advice to be given to be given to companies in need of certain financial contributions.

The success of an entrepreneurial project is often based on this “financing chain.” This chain, made up of various actors and financial instruments, plays a decisive role in the realization of the ideas proposed to it.

Focus on the Business Angels who make up the French financing chain.

Presentation by our expert: Benjamin Bréhin

About the financing chain, we had the chance to interview Benjamin Bréhin, managing director for France Angels, the National Federation of Business Angels in France. France Angels federates 64 Business Angels networks, as well as individual Business Angels.

As for Benjamin, he has been managing director for nine years and served in the operations department from 2011 to 2015. Having been an entrepreneur himself, he knows the financing industry extremely well, from every angle and every facet of it, which allows him to take a 360° look at the businesses he is in charge of today.

As a result, Benjamin Bréhin was the perfect interlocutor to discuss all aspects of the financing chain.

Main Actors in the Financing Chain

Benjamin Bréhin told us that the spectrum of Business Angels in France has evolved considerably in recent years and that the number of players in the sector has grown. “In three years, we have the ambition to double our Business Angels in France,” he declares, corroborating this expansive trend in the sector.

In addition, the world of financing and Business Angels is increasingly organized into groups, as evidenced by the creation of Cap Créa, a grouping of 27 financing structures, including BPI France, which aims to “strengthen our impact by collectively doubling the number of creators supported within five years, in order to generate one million additional sustainable jobs.”, according to Benjamin Bréhin. The collaboration between all these companies and federations is maintained through regular meetings and business seminars to optimize the coordination of everyone's actions. Cap Créa is present in mainland France and overseas, through 3,000 diverse locations, in order to promote access to entrepreneurship for all. In total, 5,000 employees have already carried out 80,000 projects since the creation of the collective.

In addition to all associations, federations and companies such as France Angels, BPI France, BPI France, BPI France, Pépite France, Fondation Entreprise, etc., companies looking for funds, in particular B to C companies, in particular B to C companies, can use crowdfounding platforms to obtain the initial contributions necessary for their activity.

As a reminder, crowdfunding, or participatory financing in French, is a financing model that connects on the contribution of a large number of people to support a project. It is an alternative to looking for clearly established Business Angels.

New trends and financing measures

In 2024, new financing opportunities are being created. Benjamin Bréhin mentions in particular the new finance law which grants 30 to 50% tax reduction for investors, against 18% in the past years. These new government provisions are therefore an enormous financing lever for all Business Angels who wish to support new structures.

Moreover, the trend in 2023 was to refinance, and this is likely to continue in 2024. In other words, companies or structures that have already injected money into certain projects will have to make a contribution again to meet the financial challenges linked to the inflationary crisis and the repayment of PGE (Loans Guaranteed by the State) financially during the Covid-19 health crisis.

To improve financing processes and simplify the steps for entrepreneurs, Cap Créa recently introduced its “Pass Créa”, a “creator passport”, as Benjamin defines it, which allows entrepreneurs to know exactly which financing steps are still pending and what they need to prepare. It is the essential tool to build your project from A to Z and benefit from a personalized toolbox.

On the other hand, Benjamin recalls that many competitions are organized by financing structures to label entrepreneurial projects and offer significant funding, up to the proof of concept. These competitions are ideal for starting a new project and raising enough money to start a peaceful start.

Preferred investment sectors

If Business Angels themselves have evolved and are organizing differently, the same is true for the projects monitored and the sectors targeted in priority. Indeed, Benjamin Bréhin explains that he has observed increased interest in projects related to national sovereignty for some time, in particular following the Covid-19 health crisis, which has profoundly changed the entrepreneurial landscape. Investors have become aware of the importance of a strong French economy and the essential sectors that make up with current innovations. VCs (Venture Capital) and other Business Angels therefore attach great importance to the societal impact generated by new businesses and support initiatives created in the health, e-health, and AI development sectors, too, which has also been increasing rapidly for some time. Health, which was the first targeted sector after the health crisis, was downgraded to second position in 2022, but is making a comeback at the top of the podium in 2023 investments. At the same time, the environmental impact of solutions is highly regarded and it is for this reason that France Angels is increasing its efforts around eco-responsible and eco-societal investments, in particular with the creation of Mer Angels, which has already raised €1.3 million thanks to the 40 members who make up the organization.

Benjamin also highlights a change in businesses that, previously, were launched in 2-3 years, but which now require more resources because of the new challenges they covet. The companies concerned become “deeptech”, in other words, companies from laboratories that are 5 to 10 years old and whose research work creates economic value. Benjamin explains that “the marketing process is quite long and the support is more important, as well as the financial needs. Projects are risky and require a long study.”

As an example of deep tech companies, Benjamin mentions structures present in the fields of defense, aerospace or even the food industry and reports on new partnerships between France Angels and BPI France to support these companies. Thus, a territorial network has been created with groups such as Defense Angels, Agri Angels or AeroSpace. These initiatives require a significant need for federation and numerous partnerships, as evidenced by the alliance between Capital Angels and the CNES (National Center for Space Studies) which, thanks to three investments, made it possible to generate €800,000 in one year.

Small point definition:

According to Bpifrance, the term “deeptech” is used to refer to projects carried out by companies or ambitious research laboratories that innovate by pushing technological boundaries. These disruptive innovations, i.e. those that revolutionize our habits, can concern all areas, from global warming to the fight against cancer, including the reinvention of industry.

Tips for attracting investors

To finish this overview of the financing chain and the new measures introduced, Benjamin Bréhin gave us some advice for entrepreneurs who want to “attract” new investors.

“Until a year ago”, he details, “there was plenty of money in the business, everything circulated very easily. However, the market has changed and it is necessary to adapt to it. I therefore advise avoiding valuations that are too high at the start, because that would be shooting yourself in the foot. We need to go back to something that is acceptable to investors. Since the trend is towards refinancing, you must first stay at market prices to allow an optimal takeoff and rebuild your capital later.”

Finally, there is no point in running, you have to leave on time and at the right price!

To conclude...

... the project financing chain in France is complex, but constantly evolving, so it requires particular attention to follow the new measures and the changes that will upset it, in a positive and negative sense. Today, many actors are allowing the advent of a dynamic entrepreneurial landscape, such as the government and the new measures enacted, or the initiatives of groups such as Cap Créa, which make it possible to adapt the Business Angel scene.

A big thank you to our guest, Benjamin Bréhin, for this relevant insight into the financing chain!

See you soon at the Kings of La Prez 👑

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Ce qu'il faut retenir

To remember:

  • It is important to understand the different stages of development of a startup and the appropriate financing strategies according to the development cycle of your startup.
  • Self-financing, love money, incubators, start-up competitions, start-up competitions, public grants, bank loans, crowdfunding, accelerators and Business Angels are possible sources of financing for entrepreneurs.
  • Investors have become aware of the importance of a strong French economy and the essential sectors that make up with current innovations.

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