French VC investment increases in 2000

Despite the overall increase, venture capital companies surveyed invested less in dot.coms than in the previous half year for the first time since 1998.

French venture capitalists invested more than E914m (FF6bn) last year in 489 companies, an increase of 250 per cent on the previous year’s FF2.27bn, according to a report produced by Chausson Finance.

Investment in European dot.coms however dropped by nearly 25 per cent in the second half of 2000 from the first six months, according to L’indicateur Chausson Finance, a report from Paris-based Chausson Finance. The report surveyed 36 venture capital companies including ABN Amro Venture, Apax Partners, Cie Financiere Edmond de Rothchild and 3i France.

“There was a drop in investments, but it’s not as bad as people thought”, said Christophe Chausson, founder of Paris-based Chausson Finance SA, a firm that helps start-ups find financing.

About 225 start-ups received funding in the second half, with the average investment at FF11.6m, the report said. More than 60 per cent of the money invested from July to December went into second-round financing. First round financings dropped to FF950m in 115 companies, from 170 first round fundings totalling FF1.75bn in the first half. Of the capital invested in high-tech, 90 per cent went into French companies.

“If you’re in the domain of pure internet start-ups – such as content businesses and portals – you can’t find money today,” Chausson told The Wall Street Journal. “[Instead] money is going to companies developing innovative software, hardware or infrastructure schemes rather than the latest online community sites.” According to the report, investment in telecom start-ups grew to FF489m in the second half of 2000, up 54 per cent from the first half.

Investment in e-commerce and content sites dropped 54 per cent to FF490m from FF1.05bn. Investment in internet services dropped even further, falling 56 per cent to FF351m from FF801m in the first half.