As a firm, Partech Ventures covers the full range of financing needs for tech and digital companies, with 40 to 50 investments ranging from €150k to €50m per annum. Its tech investment platform operates three strategies in Europe and the US: seed, venture, and growth. The company has featured regularly in Go4Venture as an active investor in the European tech scene, with Acco Semiconductor, Chronext, Lendix, ManoMano and M-Files being just some of the companies it has funded over the last six months.
In a way, Partech can be considered a pioneer, if you look at its history, and how it straddled both Europe and the US, and as a result also evolved as a ‘global view’ investor through its European fund with US presence. Having started in 1982 as Paribas Technologies in San Francisco, it only opened a French office in 1996; however, in 2009, the company took on a new lease when French GPs took back control and operated a European fund with a US presence. In the process, it grew from 7 people and €70m assets under management (AUM) then, to 40 people and AUM of €1,100m now and investing across Europe and the USA.
This international nature of the firm is one of the reasons its branding moved from the historical ‘Partech International’ to simply ‘Partech Ventures’ – the company believed that since it was obviously an international player, it didn’t necessarily need to use ‘international’ in its name.
Earlier this year, the firm closed its first growth fund for a total of €400m, which received support from some of the largest European insurance companies and institutional investors, as well as from major global industry investors and entrepreneurs.
Partech Ventures addresses the complete funding chain for startups – from the Partech Shaker campus for startups, to the Partech Entrepreneur Fund providing seed capital, the Partech International Venture Fund for early stage, and Partech Growth for growth stage. These funds are explained in the interview below.
In terms of addressing the entire value chain of seed venture and growth stages of a company, this makes Partech Ventures the second investor in France to do that after Idinvest Partners – the latter has €1.7bn assets under management in growth capital; Partech has more of a focus on tech/digital. Other firms in France are now also following the Partech formula, including ISAI, which calls itself the French tech entrepreneurs’ fund, and has over €160m under management.
The global fund and global team approach is very similar to firms like Atomico and Index Ventures (and different to Accel, which has separate funds for the US and Europe). Atomico for example operates with a single, international structure focused on creating value for portfolio companies and helping them scale to be category leaders; this is supported by a team of dedicated country managers with business development expertise and relationships to help portfolio companies. Index Ventures also operates as a multi-stage international firm, with a global network and headquarters in London and San Francisco.
Partech Ventures has always made a streak of bold investments, including companies like Sigfox and FreedomPop; these two companies were both pioneering and disruptive, both addressing cellular connectivity solutions for potentially large volumes of users or devices. FreedomPop was one of the first investments in Partech Ventures’ growth equity fund in June 2015, as part of a US$30m round lead by Partech; at that time, Partech said that they had largely bet on the company’s ‘outstanding’ management team, further commenting, “We knew we could partner with them from the first time me met.” Partech Ventures was also a founding investor in Sigfox, which in early 2015 raised €100m, the largest VC funding round for a French company, and followed up with a recent €150m funding round.
So what is the DNA of a VC firm that is able to consistently be successful in a rapidly moving global tech market? We spoke to Philippe Collombel to find out more, asking the following questions:
- Can you tell us about your multi-stage strategy with different funds?
- How do you build pan-European coverage and also have US access?
- A lot of people ask ‘why are you in France and not in London. Could you tell us how you respond?
- Can you tell us some of the market trends that you are seeing and the sectors you are focused on?
- How do you see yourself positioned in the landscape of VCs?
- What makes you the proudest and what are your key successes?
- And some of the hopeful successes?
Go4Venture: Can you tell us about your multi-stage strategy with different funds?
Our vision is to build a global platform focused on our core DNA: cross-continent tech and digital companies.
Our current investment program involves three strategies managed by three distinct teams, investing two-thirds in Europe and a third in the US:
- a seed fund (Partech Entrepreneur Fund) with €100m capacity (recently closed the Entrepreneur II fund)
- a growth fund (Partech Growth Fund) with €400m capacity
- a venture fund (Partech International Ventures Fund) targeting €360m (€400m hard cap) which just reached €320m and should close by year end; this is fund number 7, but the second fund from the current team.
Our current portfolio comprises more than 120 companies in 15 countries. We expect to add 40 to 50 new investments in the next 18 months.
Our growth fund is managed by a dedicated team led by Omri Benayoun and Bruno Crémel in Europe, and Mark Menell in the US. In less than 18 months, Partech Growth has already invested €120M in five European and US west coast tech companies:
- Brandwatch, the UK-based SaaS leader in social media intelligence;
- FreedomPop, a freemium US mobile virtual network operator with more than one million subscribers in the US and the UK, now launching Spain and Mexico;
- Made.com, an online home furnishing brand, headquartered in London and now active in the UK, France, Italy, the Netherlands and Germany;
- M-Files, the Finnish software company that revolutionises enterprise content management;
- RockYou, the San Francisco-based world’s largest in-game advertising network.
Partech has also just been chosen to manage the Paris-Saclay seed fund. This €50m fund will finance pre-seed and seed opportunities coming from the plateau de Saclay campus – home to almost 20 top French engineering and business schools and universities, with 10,000 researchers and 60,000 students (of which 10,000 are in the entrepreneurs track), 300 labs and 10 incubators and accelerators.
We believe we are also the first VC firm worldwide to design and operate a startup campus in order to provide the best working environment for startups to ‘cross the chasm’ from seed to series A. Launched in 2014, Partech Shaker is both a workplace and a B2B networking venue dedicated to business development and growth through collaboration. Based in central Paris’ ‘Silicon Sentier’, the campus is the first place in Paris to welcome startups which have already raised seed money and are business-ready.
In the mix of residents are US companies such as Dropbox, Hotel Tonight and Pinterest, which decided to develop their European operations from there, and growing startups backed by Partech Ventures, such as Kantox, Kartable or Influans, and executives from leading established companies (Alcatel-Lucent, BNP-Paribas, Dentsu Aegis Network, Econocom, France Télévisions, Haworth, Saint-Gobain).
We are in fact seeing a lot of interest from corporates. For example, we just formed a strategic relationship with Accenture to drive innovation and support the startup ecosystem. Our relationship will be extremely powerful for each party when win-win opportunities between Accenture, a startup and an enterprise client to innovate together arise.
Go4Venture: How do you build pan-European coverage and also have US access?
Our ambition at Partech Ventures is to support entrepreneurs with more than just capital. We provide a transatlantic bridge for international expansion; value-added services and portfolio support with experts, mentors and tech executives; and, since 2012, a pioneering business development capacity thanks to partnerships with twenty leading multinational corporates.
Our team has been fast expanding over the recent years, and there are now 40 of us across our three offices (San Francisco, Paris, Berlin), acting and investing as a single team. The 12 partners have diverse and complementary backgrounds; most of them have been entrepreneurs themselves or have held management positions within tech companies. We did make some investments in Israel in the 2000s due to the US roots, but over time we decided to focus on the emerging European tech scene.
One of our unique attributes is that we have a dedicated team which pushes for new deals in each strategy, and then decisions come from the partners; however, we don’t have separate US governance and European governance, and the whole team approach across offices is what helps us build both pan-European coverage, as well as provide strong access to the US.
The key is that we create a consistent offering across the tech and digital ecosystem, regardless of geographical location.
Partech Growth backs companies which, after having successfully proven their model, wish to scale up their international expansion. Our first investments boast an average annual growth of more than 50% with over 500 million euros of combined revenues, and more than 1,200 employees. As an example, we just announced a sixth deal in this fund, a $30m investment in EcoVadis, a French technology firm that ranks companies for environmental responsibility, ethical treatment of workers and other practices.
Our unique model has been pioneered and fine-tuned by Partech Ventures over the past 30 years. The current generation of partners extended investment capacity, while deepening our transatlantic and pan-European footprint. The Berlin office was opened in 2012 to complement the rest of the team based in San Francisco and Paris. The transatlantic value proposition of Partech goes both ways: helping European firms grow in the US, and helping US firms address the different European markets.
Also, the fact that we are actively working with industrial investors also helps – we are working with 20 global industrial companies, including Cisco, Carrefour and Nokia. This is very helpful for our portfolio companies.
In terms of future international initiatives, we are preparing to launch into a new continent (watch this space), and we will also shortly be announcing a partnership with a large US accelerator program to launch in France.
Go4Venture: A lot of people ask “why are you in France and not in London?” Could you tell us how you respond?
Yes, we are asked this question all the time. Well first of all, people outside France don’t realise that the country has an amazing ecosystem for startups; and then we have a lot of great general partners in France too. Also, being in Paris, we have easy access to London, Berlin, New York and elsewhere. So between our three offices we have excellent coverage across Europe and the US.
Go4Venture: Can you tell us some of the market trends that you are seeing and the sectors you are focused on?
We are focused on digital technology, and especially with applications in several business verticals, as we are witnessing a digital revolution across all sectors; in fact it’s amazing to see what can be found in both Europe and the US. There’s also resurgence of smart hardware solutions, but not in pure devices or hardware per se.
We pursue investments in game-changing companies in internet & mobile services, business software & applications, smart hardware, IoT (internet of things) & advanced technologies, with clear features:
- Stellar and complementary management teams
- Highly differentiated product or service
- Short adoption / sales cycles
- Proof of traction and retention
- Controlled customer acquisition costs and best-in-class unit economics
- Addressing large markets / industries
Go4Venture: How do you see yourself positioned in the landscape of VCs?
In Europe, we regularly compete with Index Ventures and Accel Partners in venture deals, or with Highland in growth deals. We see ourselves as a global investment firm with a team spread across offices in San Francisco, Paris and Berlin. Most of our partners have been entrepreneurs themselves or have held management positions within tech companies. The partnership is one of very few investment firms to act and invest as a single team, helping entrepreneurs build fast-growing tech and digital companies addressing large markets across multiple continents.
[The table below shows Go4Venture data on the top 20 lead investors in Europe in the period Jan 2015 – Aug 2016]
Go4Venture: What makes you the proudest and what are your key successes?
We are proud of the fact that we are constantly trying to work on and improve based on the feedback from our entrepreneurs and our investors.
In terms of highlighting some of our key successes we are particularly proud of our involvement in are:
- Business Objects – was the world’s leading business intelligence software company, acquired by SAP in 2008.
- Invensense (NYSE: INVN) – the leading provider of motion sensing solutions for mobile applications.
- Brands4Friends – the leading private sales website in Germany, acquired by eBay in 2010
- La Fourchette – the leading online restaurant booking service in France and Spain, sold to TripAdvisor in 2014.
- Pricematch – a fully automated yield management software-as-a-service (SaaS) for the hotel industry, sold to Booking.com in 2015.