Entrepreneur Financing deeptechs: step on the accelerator!

Financing deeptechs: step on the accelerator!

Disruptive start-ups, mostly from basic research, promise to revolutionize our daily lives. These “deeptechs”, as they are called, also bear the seeds of the industries and services of tomorrow, and therefore our future jobs. Since 2019, the development of deeptech start-ups has been a priority for the public authorities. A first assessment makes it possible to draw up an optimistic report on the development of this ecosystem. 200 deeptech start-ups were created in 2020 that is 40% more than before. Also, to support their development, Bpifrance, the main donor, will increase its funding.

France has in all about 1,700 deeptech start-ups. “Almost 40% of them are medtech or biotech, 20% are in the digital sector, the rest are cleantech or industrial”, says Pascale Ribon, Deeptech director at Bpifrance. To nourish this fertile ground, the public bank is therefore reassessing its support plan of 1.3 billion euros of contribution in equity to 2 billion euros by 2023. “In detail, the envelope provided for 300 million euros of direct investment and 1 billion euros in funds of funds. We are already at 360 million and 500 million euros respectively ”, details Pascale Ribon. The financing part in the form of repayable advances, grants or unsecured loans will rise to 120 million euros in 2021 against 70 million euros in 2020.

Funding from the start

On the research side, too, the outlook is changing. 44% of doctoral students now consider entrepreneurship as a possible path after their thesis. This should make it possible to achieve the objective set by the government plan: the creation of 500 deeptech start-ups per year by 2030. A showcase of this desire to boost the sector, the lesdeeptech.fr platform was opened in mid-March 2021 to help project leaders to unite and get in touch with potential co-founders or investment funds.

The support ecosystem, as close as possible to laboratories and engineering schools, is strengthened. But the sinews of war is obviously funding, because feasibility studies for a deeptech are very cash consuming. In their first phase of maturation, the average deeptech financing tickets can reach up to 90,000 euros in subsidies and represent 70% of the project leader’s expensesor even 90% in some cases. An amount much higher than that allocated to start-ups in general of the order of 25,000 to 30,000 euros.

Interest from investment funds

Bpifrance then intervenes during the development phase of a first prototype by covering 50% of R&D costs, in the form of reimbursable advances. On average, these expenses reach 1 million euros. “Our financing then makes it possible to create a leverage effect on the intervention in investors’ equity”, explains Evelyne Scuto-Gaillard. The entry into the capital of Bpifrance can also take place at this stage, managed by the Dealflow division at the bank’s head office.

However, these interventions remain a minority compared to the 2.5 billion euros raised in total by French deeptechs over the 2019-2020 period, i.e. more than the 1.4 billion euros raised for the 2015-2018 period, a sign of the growing interest of private investors. Ynsect, TherAchon, Prophesee, Snips, Nawa, Cybelangel, Diabeloop, Carbios, Navya, Vulkam … the list is long of these start-ups which have had some great fundraising in the last two years. The increase in Bpifrance’s ambitions in terms of deeptech financing has one objective: to bring out the industrial leaders of tomorrow.

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