What CroissancePlus expects from investment funds

The financing of growth and more. The Vice-President of CroissancePlus, Nicolas d’Hueppe, explains the new expectations of its members with regards to investment funds.

Partners have become essential for growth

CroissancePlus brings together the leaders of French companies experiencing strong growth. Many of its members have at least one investment fund as shareholder. “Our members are well aware that, in order to finance growth, you have to open up your capital and accept a fund”. This is true regardless of the stage of development: funds raised range from a few hundred thousand euros to the 200 million dollars raised by BlaBlaCar.

One of the CroissancePlus recruitment criteria involves having “a real growth plan”. Investment funds are essential partners in implementing these plans. “Growing companies are facing a changing environment, which limits their visibility. They are confronted by vast challenges in terms of territories and product adaptation”. Nicolas d’Hueppe deems that the banks are being “a bit timid” in financing these risk-taking endeavours. “Banks want something solid. They will lend to buy a machine, but will not make it so easy to develop Google-compatible APIs for Oceania”. Since banks are no longer willing to support companies taking on commercial, market or integration risks in their search for growth, investment funds are becoming a prerequisite for financing these choices.

“Every sector is using investment funds”, specifies Nicolas d’Hueppe. He cites the example of O2, the leader in home services, Babilou nurseries, Devoteam technology company and Atelier des Chefs.

“The best funds are more than just sourcing experts for euros”

What are the expectations of business leaders when they opt for the support of an investment fund? Financial support, of course, but that’s not all. “Best practices observed in the United States and Israel show that funds are no longer just sourcing experts for euros”. The network provided by the investment fund is one of these practices. “An investment fund is a relationship accelerator: it enables a leader to be well-connected with highly-skilled people to accelerate the growth of his or her business”. Consulting firms, headhunters and lawyers are also part of this strategic networking.

The second non-financial input mentioned by Nicolas d’Hueppe is the contribution to the company’s strategic vision. “In terms of the day-to-day, the leader is very involved in tactics – sometimes less in strategy. Investment funds help management teams to gain perspective”.

Finally, leaders rely on investment funds to inform them of market and growth opportunities in their sector. “Access to information is crucial in order to purchase the right company or to find new business”.

The question of timing

The relationship between an investment fund and a leader is not all smooth sailing. In Nicolas d’Hueppe’s opinion, the main pitfall likely to disturb the relationship is temporality. “Exit timing for the fund does not always match that of the business”, he notes. “In the digital field, we are dependent on large driving forces like Google, Apple and Facebook. We have to wait for their strategic decisions because they can be transformational”. It is up to the funds and the leaders to “resolve the timing issue together”.

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Apax Talks is a digital magazine aimed at company managers. It presents growth levers for SMEs, with a focus on TMT, consumer, healthcare and services sectors.