Start-ups: fundraising in France and Europe drops by half

Money became scarcer for start-ups in the first half of 2023, in France and in Europe, with fundraising halved compared to 2022 records, indicates an In Extenso-Essec-France Angels barometer released on Friday. In total, fundraising totaled 4.5 billion euros in France, against 8.9 billion a year earlier, and 23.2 billion in Europe, against 44.7 billion a year earlier, with 540 operations in France and 3582 in Europe. The average ticket in France was 8.6 million euros, against 19 million a year earlier. While the number of transactions increased slightly (14% in France and 23% in Europe), the amounts plummeted, reflecting a general decline in valuations. The first half of 2022 had seen spectacular fundraising, such as Doctolib (500 million euros), Qonto (486 million) and Back Market (450 million).

France remained number 2 in fundraising in Europe during the semester, behind the United Kingdom (6.5 billion) but ahead of Germany (3.9 billion). Mega-raisings fell sharply, in particular due to the disengagement of major US funds. The remaining investors rather target companies in the seed phase, innovative projects, such as quantum, and "impact", primarily energy, the most attractive sector for funds with one billion euros raised, and health, which comes in second place, followed by the software and fintech sectors.

In France, the second quarter saw only four operations worth more than 100 million euros: DrivEco, a solution for charging electric vehicles (250 million), Ynsect, a specialist in breeding and processing insects ( 160 million), TSE, solar energy producer (130 million) and Mistral AI, generative artificial intelligence start-up (105 million). The cleantech and “impact” sectors (health, environment, etc.) remain solid, supported by public or European aid. The French ecosystem will be able to benefit from the mobilization of 7 billion euros of private funds within the framework of the Tibi system.

Operations are slowing down, with delays of 6 to 9 months instead of 4 to 6 months previously. Valuations are falling, especially in the software as a service (Saas) sector. Another brake for investors, weak resale prospects with the absence of industrial buyers, as well as a closed IPO market. This context has led to plans for voluntary departures and layoffs in start-ups, against a backdrop of mergers and acquisitions, a trend which should continue in the second half, after “two years of exuberance”.