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Seed capital: a vital stage in business development

Capital amorçage

After a sharp downturn in 2023, financing for innovative companies is on the up again. In France, seed funding, i.e. in the early stages of a company’s development, is doing well. Here are some explanations and analyses from the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.

French Tech stands out in the race for innovation. After a shortage of funding in 2023 – the total amount of funds raised by French Tech companies was €9 billion, down 36% year-on-year – 2024 looks set to be a more dynamic year.

From concept to product

One area of funding in particular stands out: seed capital, also known as early-stage funding. This type of financing is designed to support the development of start-ups at an early stage, enabling them to work on new concepts that will later lead to the creation of new services or products. This is highly strategic funding for the development of French unicorns (companies valued at more than a billion dollars). Without seed capital, innovative companies don’t have the resources they need to develop new technologies.

Public and private funding

In 2011, to promote the emergence of French start-ups, the French government launched a national seed capital fund (FNA) worth €600 million, to be deployed over 6 years. In 2018, FNA 1 was strengthened by FNA 2, providing €500 million over 5 years. As part of the France 2030 Plan, the French government’s investment office, in partnership with Bpifrance, launched FNA 3 in March 2024. This is the third generation of the national seed capital fund. Endowed with €400 million, it aims to support the development of technological champions, particularly deep-tech companies. This brings the total amount invested by the Fonds National d’Amorçage to €1.5 billion. This public initiative is complemented by private investment. More and more business angels, early-stage investment funds and venture capital funds are investing in companies at an earlier stage. Their financial participation, which very often enables research and development to be funded, gives them a stake in the company. The younger the company, the greater the risk of failure. On the other hand, if the company is successful, the return to the shareholder is greater.

Fostering the Deep Tech ecosystem

Against this backdrop, Elaia Partners recently announced a first round of €60 million for DTS3, the third generation of its Deep Tech seed fund. Two-thirds of the fund will be allocated to investment in ‘Future of computing’ technologies, including generative AI, infra-Cloud and cybersecurity. A small portion (20%) will be reserved for photonics and quantum. The remaining third will be earmarked to the ‘Future of life / health’ and ‘future of industry’ sectors. In healthcare, the focus will be on biotech, with a small budget dedicated to oncology and agritech.

Our experts at your side

Early-stage financing is fundamental to the emergence of French tech companies. In addition to public investors, more and more private investors are moving into Deep Tech. These financiers are still very particular about the make-up of management teams and the technologies deployed. Solutions involving generative AI are under particular scrutiny. AURIS Finance experts are specialised by sector and will support you in your search for financing.

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#Financing & Fundraising