L’Atelier talks to Romain Serman, Head of Bpifrance USA. He outlines his aims for the US arm of the French investment bank and the areas where French entrepreneurs have growth potential. So, will BpiFrance USA succeed in boosting the mood among French entrepreneurs?
Romain Serman is Head of Bpifrance USA, the US arm of Bpifrance, an investment bank created by the government of French Prime Minister Jean-Marc Ayrault in 2012. The bank finances startups, small and medium-sized companies and mid-cap firms, supporting French central and regional government policy. Every year, in partnership with state-run organisation Business France, Bpifrance selects several French startups for a three-month acceleration programme in San Francisco, called Impact USA (formerly ubi i/o). However, Bpifrance’s commitment to entrepreneurs in the United States goes much further than that. L’Atelier met up with Romain Serman, Head of Bpifrance USA, to hear his views on the US ambitions of this bank with a difference.
L’Atelier: So how do things look from the Bpifrance USA viewpoint?
Romain Serman: Well, there’s been a real entrepreneurial boom in France over the last four years. The most promising startups emerging from the ecosystem ought not to be just champions of France but champions of the world! Looking to launch on the US market is a natural step for a French firm, because the home market is limited. In the field of biotechnology for example, France represents 0.6% of the global market, compared with 40% for the United States. Moreover, when it comes to new technologies, as in many other fields, success comes through know-how. California is a real ‘techland’ that has been building up its know-how for decades. In comparison, France has accumulated only a few years of experience in this area. Just imagine, sons are already taking over from their fathers in the management of some Silicon Valley venture capital funds! Sometimes these venture capital (VC) firms have been up and running for close to thirty years, and have probably dealt with tens of thousands of startup ventures. Consequently, today their business is founded on very solid skills.
The French wine industry is a telling illustration here. If you want to learn how to make good wine, you’d do well to go to a vineyard around Bordeaux or in Burgundy where the top vintage ‘Grands Crus’ wines have been produced for dozens of generations. The analogy suggests that it will be difficult to build a technology company without observing what’s happening in Silicon Valley and really experiencing it. Bpifrance USA therfore sees itself as an import-export firm for French company founders on American soil.
In the same way that the Bordeaux region specialises in wine, Silicon Valley has its tech know-how. How are you putting this vision into practice?
First of all, my role is to manage the deal flow, i.e. to identify ideal candidates who would benefit from either debt financing or direct investment. Since 8 January, 260 dossiers have passed through my hands – that’s around two per day, which is quite a lot. In fact, the number has almost doubled since last year.
My second task is to support entrepreneurs when they’re setting up or prospecting for business in the United States. Bpifrance USA sees itself as a service platform attached to our banking activity. So, in addition to the sums we invest in the company, we’re ready to provide entrepreneurs with an added layer of services. This support initially consists of familiarising them with the codes of US business culture, especially in Silicon Valley. Although on the surface there seems to be very little difference between our two cultures, there are in fact some significant nuances! Punctuality, which is taken very seriously by US Americans, is one example. I’ve been lucky enough to live for the last seven years in San Francisco, and this allows me to give some valuable advice to French entrepreneurs. In addition, I try to put them in touch with the right people – VCs or corporates – striving to create a win-win situation for the two parties. Eighteen months ago, I was able to introduce [Paris-based high-end audio equipment manufacturer] Devialet, which makes Phantom, the ultra-powerful wireless speaker, to Salesforce founder, chairman and CEO Marc Benioff, who in turn presented the product to Tim Cook. Angela Ahrendts, SVP of Retail at Apple, was really won over by the Phantom speaker and got it into the Apple Stores in San Francisco in double-quick time.
We also try to help startups recruit local staff, as this is always a tricky issue for them.
My third job is to expand our relationships with Silicon Valley VCs. So sometimes I talk to them about fledgling French companies that I think fit their investment criteria. These days it is perfectly possible to raise seed funding and series A and B funding in France. However, for large amounts – I’m talking here about investing several hundred million dollars – there’s still a shortage of providers in the market. It has now become essential to develop relationships with American VCs. And this is all part and parcel of French brand development abroad.
Do you draw inspiration from a particular model in the US?
Yes, we do get a lot of inspiration from Silicon Valley Bank (SVB). Its culture is very much the Silicon Valley culture. SVB was founded at the beginning of the 1980s by the largest venture capital firms in the San Francisco Bay Area, on the basis that at the time there were no services suited to the specialist financing needed by entrepreneurs. Before settling into the private banking business in the 2000s, it was basically set up for the purpose of handling the funds raised by Silicon Valley companies from VCs, and from there it came to specialise in financing high tech startups. SVB is a useful model for Bpifrance USA and today we’re in discussion with them about helping young French firms to grow their business.
What tips can we glean from the US model for financing young companies?
Well we don’t need to take inspiration from their technology – that’s the same everywhere – it’s more their culture. However, we’re not comparing the United States or Silicon Valley with France, we’re comparing Silicon Valley with the rest of the world! The San Francisco Bay Area encourages an unrivalled spirit of ‘get up and go’. And that’s what we need to acquire!
However, banging on about ‘in Silicon Valley, everything is better’ is based on a mistaken belief. If you’re a French early-stage startup, it’s probably easier to raise funds in France than in San Francisco. There’s perhaps fifteen times as much money in Silicon Valley to fund ventures at the seed stage, but there’s probably a hundred times as much competition, given that the entrepreneurial scene over there is very international.
On the other hand, developing an optimistic attitude, plus a sense of ambition and a culture of sharing information – as opposed to working in silos – are all areas where French entrepreneurs need to improve.
Moreover, French startups have a reputation among venture capital firms for concentrating their efforts on developing a perfect product and neglecting to conduct an analysis of their market – which is something that US startups are very good at. This attitude may have something to do with the fact that in France we have lots of highly-qualified engineers, but French entrepreneurs do need to learn to understand their market in the widest sense, to strengthen their go-to-market strategies, and to choose the right distribution channels and business model.
You say: “Developing an optimistic attitude, plus a sense of ambition and a culture of sharing information – as opposed to working in silos – are all areas where French entrepreneurs need to improve.” Aren’t we talking here about mature know-how, as mentioned earlier?
Well, we’re starting to see a generation of successful, experienced entrepreneurs emerging, such as [founder and CEO of ridesharing platform BlaBlaCar] Frédéric Mazzella. All the same, we’re only at the very beginning as regards building up entrepreneurial experience. An entrepreneur will experience failure, and sometimes enjoy success. It goes in cycles. But over time entrepreneurs start interacting with each other – young people among themselves, and then the young ones with older hands. This engenders a process of sharing knowledge and transmitting successful best practice.
However, this process takes time. You can’t build an ecosystem overnight! The Silicon Valley entrepreneurs back in 1990 were probably not as good as the current generation.
In France, we’re suffering from the effects of some toxic elements which have slowed our progress. We’re much less open to global currents than Silicon Valley, where there’s a high degree of cultural mixing. On top of that, all those European countries tend to create fragmented markets that are difficult terrain for startups to explore. And last but not least, although the innovation financing market in France is gaining strength, VC teams need to regenerate themselves with new blood and become more international in outlook. That’ll come!
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