21 Sep 2010

Give me the argent!!

Last week, I was invited at the Founder Conference in Paris, organized by the Founder Institute, to participate to a panel about funding and developing a service from France.

I think I made a few people laugh with some of my comments, but everything I said could be summarized like this: raising money is difficult everywhere, and probably more in France.

The French tech scene ROCKS!! But...
There's nothing to say about the French and Parisian startup/tech ecosystem, it's booming, exciting, fresh and full of potential. There are tons of events, and amazing startups been built right now. There are great engineering schools and colleges, and talent to be dug. RWW has a great article on the subject: Never Mind the Valley: Here's Paris.

There's only one weak link in France right now: even if there is, supposedly, a lot of it, money is not easy to find. And the problem lies in a deep level of our culture. French people, in general, seem to be risk-averse.

And I can hear you scream: "Wow, oh my god! Heard what he says? Another one bashing into France!!" or "Hoo, don't stir up the hornets'nest!!". 
But I stand by it - toning it down a little, though :) : French investors are not big risk takers on anything "social". If you look at the recent investments in France, they are pretty much all in the transactional category. Even a great actor like Kima Ventures, with a quite unique investment thesis for a French fund (fund 100 startups in 2 years), invests mainly in transactional businesses. It might be a general trend, and if you look at the last YCombinator promotion, there are some transactional services too. But in France, the majority of the funded startups are.

Why don't we have a Facebook, Twitter, Digg, Tweetdeck, Bitly, Tumblr, ... in France? For many reasons, but mainly because we don't fund social startups. But hey!, a contrario we have some of the best eCommerce sites.

Money is here, but billionaires aren't. 
In New York alone, there are 667,200 millionaires. Twice as much as in France. During the panel, I spoke about my first venture in the US, 6 years ago. I raised a decent amount of seed-money ($150K) on a business plan. No product, no tech team, just a plan. But the people who trusted us trusted the team, the vision, but more importantly the potential. They knew that old adage: "win some, lose some". The biggest money is made on the biggest bets. It's risky, but it works on the long run if you calculate your risk well.

Trust me, I can do good. 
There are funded startups that are in the social space in France. Yes, there are. Trust me, I've seen some. But who are they founded by? Seasoned or experienced entrepreneurs. Good for them, but what about the myriad of aspiring wantrepreneurs dying to launch the next Twitter from France? And here we touch another issue I spoke about during the panel. 
In France, you have to win people's trust. In the US, you have to be careful not to lose it - ™ :) In other terms in the US, you start off with a "trust capital", and you build on it. In France, you start off with, well, nothing. So your job is to build trust first, than ask for money.

Com'on guys (with money): Google is Larry and Sergey's first company. Yahoo is Jerry and David's first company. Facebook is Mark's first company. Tumblr is David's first company. ...
Just saying.

 
So, to conclude this (longer-than-expected) post, I'll just say this: we (in France) clearly have the potential to build the next twitter or facebook - we just need some wealthy guys to trust us with their money, and be ready to lose some on the way to their first billion.