They play a key role in supporting the start-up of young businesses. Who are these business “angels” who finance start-ups and whose added value lies in the support and advice provided? Meeting with three Vendée investors who have decided to put their experience at the service of innovative ideas.
“The financing of the seed does not exist in France”, protests Alain Foltzer vice-president ofAbab, a network of business angels (BA) born in Nantes 11 years ago. Since then, the association has spread to Vendée, with the creation of a territorial delegation in 2017, of which this multi-entrepreneur in the private hospitalization sector has taken the lead.
“The truth, he continues, is that bankers don’t know how to finance companies that don’t have a balance sheet. The only alternative for development is either love money (financing by relatives), or business angels, private investors who accept to take a risk by betting essentially on the confidence inspired in them by the project leader and the idea he defends! “However, insists Alain Foltzer, “the role of a BA is not only financial.
THE TRUTH IS THAT BANKERS DON’T KNOW HOW TO FINANCE COMPANIES WITHOUT BALANCE SHEET.
It lies above all in supporting entrepreneurs. “And to add:” if we had to paint a composite picture, it is often retired male entrepreneurs who have sold their businesses and have a little capital in front of them. That said, the typical profile is beginning to expand. Women, younger profiles are starting to join us! This makes it possible to tease traditional visions by challenging certain established models. You should also know that it is a choice subject to risk, the objective is not really to make profits. Start-ups are based on fragile models, therefore there are as many successes as failures in the investments made. Unicorns, these super start-ups valued at more than a billion dollars remain extremely rare. Very often, a business angel is content to find his initial bet. »
TRUST AND TRANSPARENCY
In terms of qualities, a business angel must have an analytical mind and be attentive to his environment. “We can’t practice the language of wood, warns Sylviane Raynaud, business angel at Abab. It is necessary to dig a file before validating it, to understand the motivations of the project leader. The relationship that is established from the first contact must be based on the transparency of information. This is the condition for creating trust and moving forward together.” She specifies: “I work on affect, I choose my files according to the personality of the person in charge, even if I am more sensitive to eco-responsible initiatives, linked to the protection of the environment for example. Coming from a traditional economic background, it can sometimes be disturbing to be faced with immaterial projects with strong uncertainty. It’s the entrepreneur’s ability to inspire confidence that will decide whether or not to invest. Of the eight files in the Abab portfolio, there is only one on which I have not bet. That said, I find it fabulous to be open to change and participate in the emergence of new models. I took a liking to living all these entrepreneurial adventures. This is where my main pleasure lies.” The young retiree ran a business for 16 years before selling it to a group in 2018. “We were tailor-made manufacturers for the pharmaceutical industry, says Sylviane Raynaud. In retrospect, I had a dense active life, without ever being part of any club, except my professional union. I felt that I was already taking enough time from my family not to go running the networks in the evenings and on weekends. A choice that leads despite everything to a form of assumed loneliness from which she is extricating herself today with this new activity. “For the first time, I have a feeling of belonging to a group of peers and I really like that!”
Being a woman in a male environment is not an obstacle according to her. “Of the 21 members of Abab Vendée, we are only two women. This can be explained quite easily. Firstly, to be a BA, one must have funds personally. It is clear that women entrepreneurs are still in the minority even if the younger generations are quicker to take the plunge! Secondly, it is necessary to have a matrimonial regime allowing total freedom. I think this is an argument that works more women than men. There is a more marked form of prudence with us, a responsibility not to spend household money. When I invest, I commit my own money, taking care to protect my family from risk.” According to Catherine Abonnenc, vice-president of Femmes business angels, out of the 5,000 to 6,000 individuals who invest in France, no more than 9 to 10% are women.
KEY DATA From ABAB VENDEE
Date of creation : end of 2017.
First case : early 2018.
Founding principle: each business angel positions themselves individually by investing the amount they want in the start-up they want.
Number folders educated : eight files have been and are still supported by Abab Vendée. A financing exit was carried out this year following the buyout of 100% of the shares of a start-up supported by the network.
Ticket medium investment by BA : €10,000
Transaction amount: The Vendée association has 21 individual members who have invested nearly €2 million overall since its creation. More than a dozen additional financings have been carried out to support the growth of the start-ups in the portfolio.
THE WILL HAVING URGE
For Frédéric Mandin, a former entrepreneur in the agri-food sector, the motivation still lies elsewhere. “My national and then international professional experience caused me to lose the direct link with the wealth of the industrial fabric of Vendée, which I greatly appreciated. I promised myself, the day I sell, to share my experience with people from the area. Today, I am a business angel while carrying out salaried functions in the company of which I was a shareholder and which was bought by a world leader. If I had to take stock of this experience, I am torn between the desire to help and the frustration of not being able to devote more time to it. Being a business angel remains an energy-intensive activity. My main objective is to transmit desire, will, knowledge and ambition to those who need it. I am convinced that there is a rather powerful mental part in professional success. At school, you are given tools and means to succeed, but you are not told how difficult it can be sometimes. My role, beyond the financial aspect and the prospect of immediate profits, is really to instil in all these neo-entrepreneurs more combativeness and the will to have desire” he concludes.
MY MAIN OBJECTIVE IS TO TRANSMIT DESIRE, WILL, KNOWLEDGE AND AMBITION TO THOSE WHO NEED IT.
Since its creation, Abab Vendée has been processing between two to three files despite a “trough” linked to the Covid period. “These are essentially start-ups in the start-up phase, the more advanced structures do not concern us”, declares Alain Foltzer. Sourcing is done in close collaboration with the Vendée Chamber of Commerce and Industry. A delegate from the CCI ensures the administrative follow-up of the files while two instructors designated among the members of the association are responsible for personally accompanying the project leaders. “There is quite a bit of direct sourcing, laments Alain Foltzer, but we are working on our notoriety until it becomes a reflex for every entrepreneur in the area wishing to bring out new ideas! In this respect, we will organize an information meeting, in Vendée, by the end of the year”.
WHAT STEPS FOR THE EDUCATION OF A CASE ABAB?
The pre-selection of files is done in close collaboration with the CCI Vendée and Abab. Once a potential has been detected, the project leader is invited to pitch to a selection committee. It is about all the member business angels who decide, together, to continue or not the instruction. Two BA instructors are then appointed to study the dossier in depth with the contractor. At the end, the instructors write a report giving their opinion on the presentation of the file to the next decisive stage: the investment committee. In the event of a favorable opinion, this is where each business angel positions himself individually as a future shareholder of the company at the level he wishes. The project leader is then regularly monitored by his instructors who accompany him throughout his entrepreneurial adventure.