By Jérôme Faul – Président du Directoire d’Innovacom
In principle, the researcher and the entrepreneur are opposed. While the former shines to transform money into intelligence, the latter aspires to turn intelligence into money. Can one excel in both areas at the same time, how can one reasonably succeed in developing a technological startup?
Breakthrough innovations, those that radically change the way we live or work, are today the achievement of startups. They are carried by entrepreneurs who have identified a market opportunity that is not or poorly covered by an existing product or service and who have the human and financial resources to seize it. It is therefore essentially marketing in the noble sense of the term.
France is a country where there is little culture of customers and services in general. While the development of a startup involves a series of rapid trials/errors, it is very important to understand customer reactions, analyze them and take them into account. This requires a good analytical capacity and a good dose of experience which is difficult to acquire with a domestic market who is too small.
France is a country with a deep technical culture. The inventors of French Tech were not mistaken in characterizing our ecosystem of innovative startups this way… whether they are technical or not. In fact, we have many engineering schools, research laboratories, large groups with their incubators that are a crucible for new technologies requiring only to initiate innovative startup projects.
The phenomenon of creating pure technology startups has become so fashionable that it has been given a name: deep tech. Some examples: a propellant for nanosatellites, a super battery without chemical agents, a flow multiplier in optical fibres, an automatic analysis of electrocardiograms, a living light source without electricity…
Startups of this nature have always existed. Currently, they benefit from an additional infatuation on the part of investors tired of the subjects of previous fashions: social networks, marketplaces, Internet of things, online commerce, etc.. Watch the traps.
No one buys technology for the pleasure of technology. We must focus on a customer need that is not well served and for which the technical innovation that the entrepreneur has a real interest. Product marketing is more necessary than ever. It requires real professional work that the inventor of the technology does not necessarily master. It must be firmly accompanied.
This accompaniment will be long. Few investors today have the capacity, or even the will, to support startups over time.
However, starting from a technology operating in a laboratory, you have to give it time to find a market, industrialize it, set up distribution channels, convince customers, then generally start all over again… there are almost no examples of successful startups that have developed their initial business plan in a linear way. With innovation capital funds planned to last a maximum of 10 years, whose subscribers are looking for quick liquidity, synonymous with better performance, there is something to think about.
This duration logically increases the financing needs which are already substantial, by nature, for a technological startup. It will consume a lot of capital and require a lot of working capital as it finds customers. The current increase in available capital is favourable but is currently used to finance more projects without increasing the amounts invested project by project. You probably need to be more selective about initial investments and keep a reserve over time.
Exits are difficult in a country where the stock market and the secondary market are not very active. It is therefore necessary to turn to industrialists and French industrialists pay little. Thus, projects that have consumed a lot of cash over long periods are structurally unprofitable unless foreign buyers are found. There, we fish for lack of anticipation and internationalization of our ecosystem. Supporting entrepreneurs in their relations with foreign companies, if possible early in the company’s history, is an important success factor.
Despite the pitfalls, some of which have been mentioned here, the development of technological start-ups is a real opportunity that France can turn into a strength and a trademark. The transition from French Tech to French Deep Tech requires a support effort that should not be underestimated
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