How to Make a Fortune in Startups with Our Top-30 Business Angels

This is the other facet of a vibrant French startup ecosystem, fueled by growing fundraising and the proliferation of incubators and coworking spaces. In just a few years, thousands of business angels have emerged, early contributors to the financing of start-ups. They managed to make themselves indispensable in the new economy, as they made their donation to the young shoot from the start, when venture capital funds were not yet daring to invest in it.

This little world of “angel investors”, in French in the text, is in full expansion. The profession has become more professional with the arrival of a new generation of entrepreneurs who have made a fortune and are eager to reinvest in others. But it is not reserved for Pierre-Edouard Stérin, Fabrice Grinda, Xavier Niel and other stars who dominate this third Angel Square-Challenges ranking of business angels. There are now almost 11,000 players in this niche, which now includes start-ups as well as managers and freelancers. Each according to his own means: “We can speak of a business angel from a commitment of 10,000 euros per year”, says Tanguy de la Fouchardière, president of France Angels.

All business angels – or almost? Perhaps thanks to a small revolution: the end of the wealth tax (ISF), one of the most important measures of the financial law of 2018. And with it the end of the ISF-PME, a device that allowed wealthy taxpayers to withhold their wealth from tax 50% of the amount of their investments in SMEs, up to a limit of 45,000 euros. What will be the effects of this reform? The debate is open, as the previous device has proved effective. For the year 2016 alone, €516 million was raised under the ISF-PME, through FCPI (Community Funds for Innovation) and FIP (Local Investment Funds), according to the French Association of Investors for Growth (AFIC). “More than half of investors in business angel networks are claiming ISFPME tax exemption,” notes Tanguy de La Fouchardière. He feared in September that the disappearance of the device would lead to “investments in innovative companies divided by two”.

But the effectiveness of the niche that was the ISF-PME was questioned by the Court in November 2015. “It’s the importance of the tax benefit that makes the system attractive to savers, more than the hope of investment profitability,” she deciphered. Another complaint: this tax niche had clearly failed in its original goal of bringing wealthy savers closer to start-ups. According to France Angels, in 2016, taxpayers invested only €43 million directly in companies without recourse to investment funds. In all likelihood, at the end of the budget discussion in Parliament, a new tax instrument should appear: an extension of the IR-PME, which would reduce its income tax to 18% of its investments in SMEs.

Tax ceiling at 18,000 euros?

Afic, France Angels and France Digitale have prepared a joint amendment urged by LREM MPs Amélie de Montchalin and Olivia Grégoire. The idea is to raise the ceiling to 30% of the investment, and from 10,000 to 18,000 euros. Some are even dreaming of adapting the UK’s SEIS system to allow for the deduction of lost income. “This forces angels to take risks,” emphasizes Jean-David Chamboredon, executive chairman of Isai Gestion and co-chairman of France Digitale. While the only tax advantage on entry threatens to create an opportunistic effect. »

Will amplifying the IR-PME be effective? While the ISF-PME offered a 50% discount, with the IRPME you have to take 100 out of your pocket to exempt 30 from tax. Many people don’t have the 100 cash available and prefer to pay the 30 in tax, says Marc Ménasé, one of the Top 30 French business angels. Mobilizing cash is too important given the benefit.” Jean-Baptiste Danet, president of Croissance Plus, is more optimistic. According to him, the reform will regenerate the environment by “already Allowing those who have not paid the ISF to invest in a company would send a strong signal.” Also for those, many in the AngelSquare-Challenges ranking, whose tax residence is not in France, in addition, Jean-David Chamboredon believes the reform could “bring back entrepreneurs who have left because of the ISF”.

2017 Ranking Methodology

The ranking was prepared by AngelSquare, based on information collected from September 16 to October 16, 2017 through a questionnaire sent to several hundred individual investors in young French companies. The overall ranking takes into account investments made on a personal basis by French business angels since January 1, 2016, whether they live in France or abroad. Their investments in French and foreign start-ups are counted. The business angels who refused to participate in the survey and who could have been in the Top 30 do not appear.

Our ranking of the 30 largest business angels:

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