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Take a step forward with the IPO

December 16, 2022 | News, Other, grandstands, Sector views

The theme of financing is at the heart of the management and development of start-ups. It is sometimes so pervasive that it can become almost obsessive for the founders, forcing them to devote a considerable part of their time and energy to fundraising. Of course, this exercise is made even more complicated in this period of exceptional uncertainty which leads investors to be much more demanding and less reactive.

The usual method of financing start-ups goes through cycles that are imposed on almost all entrepreneurs, unless they have captive resources from the outset (subsidiary of a large group, support from a family office by example).

The usual sequence is:self-financing which should allow the development of a proof of concept and an MVP (“Minimum Viable Project”). Otherwise known as “Bootstrapping”, these “first rounds of the wheel” consist of mobilizing the personal savings of the founders and asking for support from the close network (“friends & family”). Then comes the turn of Business Angels, which bring the start up until the relay can be taken by venture capital (VC) funds. The latter sometimes intervene from the start but most often from Series A (acceleration of commercial deployment).

It should be noted that the financing can be supplemented at the margin by the loan (banks) and the support from public institutions or regional (BPI in particular).

The more the development is confirmed, the more the financing depends on large funds, which requires a lot of effort of preparation and conviction. The combination of several funds quickly becomes necessary (which is not always easy) as well asa good alignment of the objectives of these and those of the founders in terms of strategy, valuation, timetable and “exit” objective.  

At a certain stage of success, the question arises ofaccess to “wholesale” financing, recurrent, without the entrepreneur having to spend all his time “on the road”, prospecting deep seas.

Listing (IPO) is undoubtedly an interesting solution.

It certainly requires a careful preparation of the company to bring itself up to the standards of a marketing, but brings a number of essential advantages: financing of large amounts, over time, without being forced to organize incessant "Road Shows”, liquidity offered to investors, founders and employees, increased visibility, diversified and local shareholding.

The French fintech ecosystem is particularly qualified for this exercise.

With 10 unicorns (and many candidates for this status) out of the 29 that France now has, the question of marketing arises for many of its players.

Let's remember that the President of the Republic, Emmanuel Macron had set the target of 25 unicorns in 2025. Objective reached 3 years in advance!

On November 23, Jean-Noël Barrot, Minister Delegate to the Ministry of the Economy, Finance and Industrial and Digital Sovereignty, in charge of the Digital Transition and Telecommunications, announced a new ambition: 10 French unicorns listed on the Paris Stock Exchange by 2025.

This new objective is accompanied by a government support plan:  

  • nearly 800 million euros will be mobilized (500 million from Bpifrance and 300 million from Caisse des Dépôts) to invest directly in start-ups as part of their IPO. An amount that may increase later. 
  • The French Tech Mission will also continue to support newly listed start-ups whereas, until now, they have de facto left the program. 

The purpose of this infographic, established in cooperation with Euronext, a market player very involved in the financing of innovation*, is to provide entrepreneurs with an identification of the issues, advantages, conditions and constraints of the IPO.

May it modestly contribute to providing our entrepreneurs with the means for their legitimate ambition.

*particularly through its two initiatives: 

TechShare, its pre-IPO program for European tech companies 

Tech Leaders, its specialized index launched in June 2022, which brings together on the same platform leading and growing technology companies listed on Euronext.

 

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