There are more than 4,500 enthusiasts in France ready to invest their funds in innovative start-ups. But only the most promising projects find favor in their eyes.
Their objective ? Make money, of course! But not only: “The majority of business angels themselves have experience in starting a business. Reliving this adventure with the newcomer they plan to support is in their DNA “, explains Philippe Gluntz, President of Business Angels Europe. But this element of affect should not suggest that they can be convinced by relying on enthusiasm alone. The “angels” remain pragmatic: barely more than 5% of the files presented find takers.
INVESTORS in high demand
The average amounts invested by these “angels” reach 120,000 euros, but some projects can exceed 700,000 euros. This is what happened for Louis Kerveillant and his associates, who in 2015 founded Les Piaules (a new generation youth hostel in Paris). They succeeded in convincing two business angels, resulting from their professional relations, to invest 1 million euros in their company, very greedy in capital.
“Business angels are increasingly called upon for second and third rounds of funding, which are generally two years apart,” notes Philippe Gluntz. That’s why they’re struggling to absorb the demand. As a result, they have become ultra-selective. To attract them, you need to have an innovative idea, but also to display strong development potential. “Business angels only fund projects that are in the early stages, which is the riskiest stage in a business’s life. It is therefore better to present them with double-digit growth prospects, ”continues Philippe Gluntz.
A SHARP SELECTION that can take up to four months
Some 10,000 files pass through the France Angels site each year, which acts as a one-stop shop. They are then referred to the appropriate network (there are already 82) according to various criteria. Geographical proximity, in particular, is important: in the early days, the business angel travels twice a month to the start-up that he has taken under his wing.
Company activity is also taken into account. Some networks are specialized in particular sectors, such as IT Angels (software publishing) or Health Angels (health, biotechnologies, etc.). Others bring together former students: Ensae Business Angels & Entrepreneurs, Essec Business Angels or Edhec Business Angels, for example. If their file is successful, the entrepreneurs go before a selection committee. “At this stage, it is in 60% of cases the personality of the leaders that makes the difference”, assures Philippe Gluntz. The response time? Allow between three and four months.
Valerie Froger
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