French venture capital funds accelerate in crypto

This is doubly dangerous for crypto startups. On the one hand, funding is becoming scarcer and on the other, the prices of bitcoin and other ethers are not looking good. However, these phenomena do not stop venture capital funds (VC).

For several months now, the French have been increasingly active in the sector. Eurazeo and Aglaé Ventures have just led the start of the $30 million fundraiser for Flowdesk, a crypto market maker, along with a dozen other investors including ISAI, Speedinvest and Coinbase. “I really wanted traditional French venture capital funds because I need people close to me. This is my first entrepreneurial adventure,” said Guilhem Chaumont, co-founder of the start-up.

Eurazeo, which has two crypto experts on its team, has invested in other nuggets in the sector, such as Afive (payment in bitcoin) or Sorare (Panini 3.0 cards). “In 2021, crypto represented about 20% of our deal flow,” said Nicolas Debock, director of the fund, indicating he has recently made new investment proposals.

Lots of equity, few tokens

The latter is a former employee of Xange, another French VC who bet on Ledger in 2014, notably owning Dogami (metavers) and Request Finance (crypto accounting). To improve the resource files, the management company just hired Luc Jodet, co-founder of Arianee, software that helps brands create, distribute and use NFTs. “We need to increase our crypto competence. Let’s say we’re a green belt and we need to be a third-than-black belt,” image Cyril Bertrand, Xange’s partner.

Alven has also hired an industry specialist who has also gotten his teeth into… Xange. Since 2019, Bartosz Jakubowski has invested in ten crypto startups and has seen the market evolve as a result. “In the past, crypto projects were seen as highly speculative because they were tied to a token [une cryptomonnaie, NDLR]† Today we understand that there are long-term projects”, underlines the investor, noting a general acceleration with the appearance of the term “Web3”. “It gives the impression that it is an inescapable phenomenon. †

Alven invests in both stocks and tokens in crypto startups. A strategy, widely adopted by American funds, including star Andreessen Horowitz, but little democratized in France due to regulations. European guidelines impose a custodian that is allowed to hold cryptocurrencies.

A more mature ecosystem

In France, there is no player approved by the Financial Markets Authority (AMF). “We are thinking of somewhat exotic structures to enable these investments in tokens, such as SAFT, a future token purchase contract,” said Stéphane Daniel, associate attorney at d&a partners, specializing in blockchain. “Many funds want to invest in tokens and want to structure funds. Their own investors are demanding,” adds Stéphane Daniel. Xange indicates that this is an “ongoing” topic, while Eurazeo is not “for now”.

Cathay Innovation, for its part, will invest in tokens, through its brand-new €100 million fund created with Ledger. To do this, she set up a free general partnership (SLP). “It is a company that is used as a fund,” summarizes Stéphane Daniel.

The enthusiasm for French funds, both in stocks and tokens, is linked to the maturity of the tricolor ecosystem. “Many entrepreneurs have started recently. It’s not the VCs that make the market, it’s the entrepreneurs,” remembers Nicolas Debock.

“We have a lot of talent in France and serial entrepreneurs. It is therefore natural that many projects are emerging now,” added Frank Desvignes, partner of True Global Ventures (TGV), a fund specializing in blockchain that has just completed a new $146 million late stage vehicle. . A portion will be allocated to the next fundraiser for the metaverse platform The Sandbox, on which TGV has been committed since 2019.

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