Frst, the Paris-based VC agency that counts firms like Pigment, Payfit and Owkin in its portfolio, has closed €72m of its third fund to again French founders. Frst hopes to shut the fund at €100m.
Traders within the fund embrace the European Funding Fund, Bpifrance, Axa Enterprise Companions, Isomer and Mubadala, together with quite a few founders. Round 90% of Frst’s institutional buyers have reinvested.
The plan is to speculate the capital over 4 years, into 30 seed-stage firms in any sector, writing cheques ranging between €1m-3m. 50% of the fund is reserved for follow-ons.
Fundraising in 2023
It took Frst round 9 months to achieve a primary shut.
“There’s a number of wait and see” amongst LPs who may be deploying for the primary time in a sure fund — as many are stretched by needing to “re-up” in different companies that deployed their capital faster than anticipated over the previous few years, says Bruno Raillard, cofounder and managing companion at Frst.
“However we’re buoyed by the truth that skilled LPs know that in a market downturn you get a few of the finest VC vintages.”
Between now and the ultimate shut of the fund, Frst hopes to carry onboard extra sovereign wealth funds, fund-of-funds and asset managers. All these buyers are an increasing number of all for backing early-stage VC funds, says Raillard, after having been burned by investing in growth-stage firms within the growth days of 2020 and 2021 and being left excessive and dry by meagre returns since.
The place LPs select to not make investments, it tends to be all the way down to their “degree of conviction on France” (this varies amongst buyers, says Raillard) or their degree of conviction within the model Frst is constructing and why founders would select the agency. “However annually [that] turns into clearer — and so they get extra founders to speak to,” he says.
Avoiding FOMO
Frst has had AI firms — like drug discovery platform Owkin and authorized intelligence platform Doctrine — in its portfolio because the final time AI was in vogue, and Raillard says the workforce is leaning on this community to determine what’s hype and what’s not in Frst’s present dealflow.
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The workforce does, nevertheless, satisfaction itself on shifting quick, he says; getting offers achieved in only a few days if wants be. “One in all our core values is velocity; assembly founders shortly, and making a call quick. That’s essential to win offers, and provides respect to founders.”
Take Pigment, the buzzy Paris-based SaaS firm. Frst had recognized co-CEOs Eléonore Crespo (previously an investor at Index) and Romain Niccoli (additionally cofounder and CTO of French tech success story Criteo) for some time, so when Crespo stated she was engaged on the corporate, the workforce invited her in to pitch. “After 30-45 minutes, we stated ‘wait right here’, went out — and got here again with a time period sheet,” Raillard says. “Our information of them and their dynamic and the issue they had been tackling satisfied us.”
Frst invested in Pigment’s seed spherical in 2019 and Sequence A in 2020. Earlier this month, the corporate raised an $88m Sequence C led by US VC Iconiq — reportedly at a really excessive income a number of.
It’s true it’s excessive, Raillard says — income is at present within the low double digits — however he thinks the corporate deserves it. “With this kind of firm and the standard of the workforce, we predict it is going to be a class chief, with a €10bn-30bn market cap — so we’re not involved in regards to the income a number of at present. It has insane traction — so we predict it is going to develop into [its valuation].
“Prime-tier VCs have are available, appreciated what they noticed, regarded below the hood, appreciated it much more, and stated we wish in, at no matter value.”
The arduous stuff
Frst’s backer Bpifrance has an formidable plan to spice up France’s deeptech ecosystem.
That’s all nice, says Raillard — however there nonetheless aren’t sufficient founders tackling the most important issues.
Take local weather tech: “A number of founders need to ‘do’ local weather — however most don’t do the arduous stuff. They do software program as an alternative.”
“There’s a much smaller proportion of founders with the ambition to construct one thing in deeptech — and you’ll’t hack ambition.”
Raillard want to see extra firms like Bordeaux-based Dioxycle, which has developed know-how which may flip CO2 into on a regular basis merchandise like gasoline, plastics and artificial materials. Frst was eager to speculate, however misplaced out to US local weather fund Lowercarbon, he says.
Raillard is bullish on French expertise extra typically, nevertheless. A number of French startups — like Qonto (not a portfolio firm), Owkin and Pigment — are turning into magnets for expertise, he says. “And high-quality expertise attracts extra expertise.”
