Venture capital (VC) markets started to develop in France in the 1990s and experienced slow but steady growth throughout the 2000s decade. In 2007, prior to the Great Financial Crisis (GFC), VC investments had reached approximately EUR 0.7 billion, only to decline to EUR 0.51 billion in 2009. Since then, a slow recovery started, with VC investments reaching EUR 0.66 billion in 2013. Between 2013 and 2019, VC investments surged more rapidly, with an annual average growth of 20%. Prior to the COVID-19 crisis, annual VC investments had reached a total of EUR 1.93 billion. In 2021, France experienced strong growth in VC investments (EUR 3 billion, +59% compared to the previous year), which was driven by record low interest rates and much liquidity in markets. More recently, however, like in many other OECD countries, total VC investments have also dropped in France (EUR 1.75 billion in 2023), due to higher interest rates increasing the appeal of fixed-rate financing products and diminished business prospects due to a slowing economy. The decline was more marked in late-stage investments (-63% year-on-year) and start-up and other early stage investments (-27% year-on-year).
Benchmarking government support for venture capital: France
Note: Data for both panels correspond to the aggregation of investment data according to the location of the portfolio companies (France), regardless of the location of the private equity firms. It includes only venture capital investments by formal fund managers, including private equity funds making private equity investments. Investments by business angels, incubators, infrastructure funds, real estate funds, distress debt funds, primary funds-of-funds or secondary funds-of-funds are excluded. For Panel B, seed financing is between USD 1 million and USD 10 million, early stage corresponds to Series A and B, and later stage corresponds to Series C and D.
Source: OECD Data Explorer Venture Capital Investments, (OECD, 2024[1])
Sector-wise, ICT is the main recipient of VC investments (EUR 1.5 billion in 2021), followed at a distance by biotech and healthcare (EUR 0.5 billion), business products and services (EUR 0.48 billion) and financial and insurance activities (EUR 0.42 billion).
Thanks to the expansion of VC markets in the 2010-decade, French VC funds have seen their average size grow significantly, from EUR 39 million during the period 2007-2012 to EUR 105 million between 2013-2021 (Bpifrance, 2023[2]). This growth has been partly explained by the surge in mega rounds (i.e., above EUR 250 million), which accounted for 62% of all fundraising in 2021 thanks also to strong participation by foreign investors (Dealroom, 2022[3]).
The early phase of government intervention: FCPI, FIP and CDC Enterprises
Prior to the GFC, the main government institution in the French VC market was Caisse des Depots (CDC) through its subsidiary CDC Enterprises, which mostly adopted a fund-of-fund model in its investment policies. Furthermore, tax incentives for retail investors in mutual innovation and local development funds (Fonds Communs de Placement dans l'Innovation, FCPI, and Fonds d'Investissement de Proximité, FIP), established in 1994, have also played an important role in the VC ecosystem of France. FCPI and FIP have a similar structure and tax benefits for investors: at least 70% of the funds must be allocated to non-traded innovative SMEs (FCPI) and/or in the same region selected by the Fund (FIP). The total tax reduction corresponds to 25% of the total investment and is capped at EUR 2 160 per person/year. A recent evaluation of these two tax incentives by the French government concluded that both schemes have not led to an increase in private VC investments and called for the phaseout of these two schemes (Inspector Generale des Finances, 2024[4]).
The establishment of Bpifrance (2012)
After the GFC, the French government launched the Fonds Strategique d'Investissement (FSI), a direct investment programme managed by the CDC with a view to increasing funding for SMEs at a time of low liquidity in markets. Shortly after, in 2012, the government merged the SME Agency (OSEO), CDC Entreprises and FSI into Bpifrance (Banque Publique d'Investissement), which has since then become the main reference and source of government support for French SMEs, start-ups and VC funds.
As of 2024, Bpifrance covers all segments of the French VC market (seed, early, and late stage) and offers both direct and indirect (fund-of-fund) investment support, as well as non-financial support in the form of business advice, training and networking opportunities.
In terms of VC activity, between 2013 and 2022, Bpifrance invested EUR 4 billion in almost 450 companies through direct funds and EUR 5 billion in 160 private VC funds. Bpifrance-backed private funds collected overall EUR 27 billion, pointing to a leverage effect of 5.4:1. Private VC funds backed by Bpifrance, in the same period, invested EUR 15 billion into 2 700 enterprises, 900 of which were foreign-based (Bpifrance, 2023[2]).
The total volume of investment activity by Bpifrance (covering both direct investments and commitments into VC funds) rose considerably between 2013 and 2022, from EUR 390 million to EUR 1.6 billion, i.e., a fourfold increase. Both direct and indirect investments have grown considerably over the period. However, relative to the total, the share of direct investments rose by 13 percentage points, from 32% to 45%, to the detriment of indirect investments (from 68% to 55%). This makes the case of France different from other countries such as the United Kingdom or Germany, where indirect investment activity has increased proportionally more than direct investment activity in the last 10-15 years.
Due to the to the expansion the French VC market in the 2010s decade, , the weight of Bpifrance in the total commitments of its VC “partner funds” (private VC funds committed by Bpifrance) increased from 31% in 2013 to 14% in 2022, while the number of committed funds rose from 13 to 27. The average leverage effect of Bpifrance’s investment activities was quite high in this period, i.e., between EUR 5.6-6 from private investors for each euro invested by the bank. Bpifrance’s investment teams are either structured around specific investment themes (digital venture, life sciences, etc.) or the stage of investment (large venture, etc.). Furthermore, Bpifrance is also quite active in industrial activities through the operation of large VC industrial funds.
Direct investment activities
Direct investments play an important (and growing) role in the portfolio of Bpifrance and are used both for countercyclical purposes and for promoting specific sectors and technologies. In its direct investment activities, Bpifrance is always a minority investor and co-invests with other private investors on at least an equal footing (pari passu conditions).
When possible, Bpifrance sits on the boards of directors of its portfolio companies, and voting rights are exercised to ensure that investments adhere to socially responsible investment principles. These include prioritising the social interests of the business, ensuring good governance and transparency, preventing conflicts of interest, and protecting the long-term financial interest of the company and the bank.
The investment decision process depends on the specific VC fund’s business plan (stage of intervention, sectors, minimum-maximum allocations, etc.). More recently, however, there has been an increasing emphasis on the promotion of ESG standards across all investment activities. In the case of direct investments, Bpifrance undertakes a consultation process with the company to identify means for operational monitoring and improvement of ESG risks (Bpifrance, 2021[5]).
The largest direct investment funds of Bpifrance cover either late investment stage or industrial sectors and include the Large Venture Fund and the SPI (Sociétés de Projets Industriels) Fund. The Large Venture Fund was launched in 2013 and, as of 2024, had assets under management (AUM) worth EUR 1.75 billion. This fund has contributed to some of the most highly-valued start-ups in France, being behind 11 of the 31 French unicorns in 2022. The Fund invests a minimum of EUR 10 million per round, asking for at least the same amount from private investors in the same funding round. As of 2022, the Large Venture fund had supported 65 companies and led to the creation of 19 000 jobs and EUR 3.3 billion in cumulative revenue (Bpifrance, 2023[6]).
The SPI Fund has had two vintages so far. The first SPI Fund was launched in 2015 with EUR 800 million from the government, including a small co-investment from the European Investment Bank (EIB). The SPI Fund II was launched in 2022 as part of the government investment strategy “France 2030” and, as of 2024, it had AUM worth EUR 1.1 billion. Compared to the first vintage, the second vintage of the SPI Fund intends to select smaller-size projects to increase the number of beneficiaries. The investment target is quite large, between EUR 5 million and EUR 150 million, while the beneficiary target is between 70 and 100 companies over the lifecycle of the Fund.
Bpifrance’s direct investment activities also cover seed and early-stage investments. The Digital Venture Division of the bank is particularly active in this area, including through the Ambition Numérique Fund (ANF) and the F3A Fund. The ANF, established in 2011 with funding from the government Future Investment Programme (Programmes d'investissements d'avenir, PIA), supports IT-based start-ups in areas such as software development, cloud computing, cybersecurity, robotics, and AI. As of 2020, the ANF had invested EUR 230 million in 35 start-ups through investments ranging between EUR 1-10 million. The fund has followed a pari passu co-investment strategy, generally not exceeding one-third of the total amount of the funding round. In 2015, the Digital Venture Division also launched the F3A Fund, which invests in the seed phase. In this case, the targeted investment range is between EUR 200 000 and EUR 500 000, and investments are undertaken alongside professional business angels up to an investment ceiling of EUR 2 million. Between 2015 and 2018, the F3A Fund invested EUR 11 million in 23 companies, generating EUR 13 million in private investment (1.18x leverage effect). (Bpifrance, 2018[7]).
Indirect investment activities
Bpifrance’s investments in private VC funds increased considerably between 2013 and 2022, from EUR 266 million to EUR 899 million. As of 2022, indirect investments represented 55% of total annual investments (Bpifrance, 2023[8]).
The size of partner funds has also expanded significantly, with the average partner fund growing from EUR 150 million in the 2013-2017 period to EUR 220 million in the 2018-2022 period (Bpifrance, 2023[2]). As the size of private partner funds have increased and markets have matured, the average weight of Bpifrance’s subscription has fallen, from 24% in 2013-2017 to 14% in 2018-2022 (Bpifrance, 2023[8]).
Bpifrance’s Indirect investment activities also cover different stages of investments, as well as industrial projects, and are organised around three clusters: regional development funds, innovation funds, and capital development funds. Regional development funds and innovation funds are those that have expanded the most in recent years. There are two categories of fund of fund programmes: (i) programmes where Bpifrance invests its own equity (“France Investissement” programmes), which have a very broad focus in terms of investment stage or industry focus (ii) programmes which are managed by Bpifrance on behalf of third parties (especially the French State, through the “Programme Investissement d’Avenir” PIA). Some of the programmes part of the PIA had a specific focus on the VC segment and are described below.
One recent example is the National Industrial Venture Fund (Fonds national de venture industriel, FNVI), which is part of the government investment strategy “France 2030”. The FNVI is a EUR 350 million fund that promote the emergence of industrial innovation capital funds and the structuring of this market. Targeted VC funds typically vary between EUR 80 and EUR 250 million, and beneficiary companies are expected to be young industrial companies which are looking to scale up operations.
Like for direct investment activities, Bpifrance’s indirect investment activities also focus on seed and early-stage investments. Two main funds, in this case, are the National Seed Fund (Fond National d’Amorçage, FNA) and the Multicap Growth (Croissance) Fund.
There have been so far three editions of the National Seed Fund (2011, 2017 and 2024), with cumulative government investments of EUR 1.5 billion. VC funds are selected based on the investment strategy (i.e., sector, financing instrument, expected leverage effect, etc.) and the quality of the management team (i.e., past performance, renumeration scheme, etc.). The average investment period of the FNA in a private VC fund is about four years. The initial investment target of the FNA was 60-65% of the total investment volume of the private VC fund; however, as of 2021, the weight of the FNA into subscribed funds was 38%, suggesting that the programme had mobilised more private investments than initially thought (Bpifrance, n.d.[9]).
The FNA has a strong research commercialisation objective. Between 2011 and 2021, the Fund invested in 600 companies, 60% of which specialised in deep technologies. Supported companies spent, over the observed period, EUR 170 million in R&D and generated EUR 1.3 billion in revenue, although the majority of them were not generating any revenue when they first received the equity investment (Bpifrance, 2021[10]). An evaluation by the court of auditors found that the FNA has had a total value to paid-in capital (TVPI) of 1.59, which is comparable to other Bpifrance’s funds of funds (Cour des Comptes, 2023[11]).
Multicap Croissance is a fund-of-fund programme designed to invest in VC funds at a later stage than seed capital. The initial fund was set up in 2014 with an endowment of EUR 400 million, while the last edition received EUR 600 million of government funding. Investment ticket sizes are generally in excess of EUR 150 million and require a matched level of private co-investment, which has increased over time, from 50-50% to 40-60%. The abovementioned evaluation by the national court of auditors found that the initial Multi-Cap Croissance Fund had a TVPI of 1.58, very similar to that of the FNA (Cour des Comptes, 2023[11]).
References
[2] Bpifrance (2023), 10 ans d’impact: 2013-2023, Bpifrance , Paris.
[8] Bpifrance (2023), A l’occasion de l’édition 2023 de Capital Invest, Bpifrance dresse le bilan de 10 années de soutien à l’écosystème français du capital investissement, https://presse.bpifrance.fr/a-loccasion-de-ledition-2023-de-capital-invest-bpifrance-dresse-le-bilan-de-10-annees-de-soutien-a-lecosysteme-francais-du-capital-investissement/#:~:text=Depuis%202012%2C%20les%20montants%20disponibles,de%2028%20milliards%20d'.
[6] Bpifrance (2023), Les 10 Ans de Large Venture : Une Décennie d’Investissements dans la French Tech, https://www.linkedin.com/pulse/les-10-ans-de-large-venture-une-d%C3%A9cennie-dans-la-french-ferrere-klmec/?originalSubdomain=fr.
[5] Bpifrance (2021), Bpifrance responsible investment report financial year 2021, https://www.bpifrance.fr/download/media-file/76873.
[10] Bpifrance (2021), FNA, https://presse.bpifrance.fr/dix-ans-apres-son-lancement-le-fonds-national-damorcage-a-demontre-son-role-moteur-dans-la-montee-de-la-french-tech/?ref=frenchtechjournal.com.
[7] Bpifrance (2018), Bpifrance intensifie son action à destination des startups du numérique, https://presse.bpifrance.fr/bpifrance-intensifie-son-action-a-destination-des-startups-du-numerique-en-investissant-aux-cotes-des-business-angels-a-travers-le-fonds-ambition-amorcage-angels-3a-souscrit-par-le-programme-di/.
[9] Bpifrance (n.d.), National Seed Fund 2 (FNA 2), https://www.bpifrance.fr/nos-appels-a-projets-concours/fonds-national-d_amorcage-2-fna-2.
[11] Cour des Comptes (2023), LES ACTIVITÉS D’INVESTISSEMENT DE BPIFRANC, https://www.ccomptes.fr/system/files/2023-06/20230612-RPEP-S2023-0511-1-Activites-investissement-Bpifrance.pdf.
[3] Dealroom (2022), French startups and venture capital on record track 2021, https://dealroom.co/uploaded/2021/11/Dealroom-LFT-France-Nov-2021-report.pdf.
[4] Inspector Generale des Finances (2024), Évaluation des réductions d’impôt sur le revenu Madelin pour l’investissement des particuliers dans les PME, https://www.igf.finances.gouv.fr/igf/accueil/nos-activites/rapports-de-missions/liste-de-tous-les-rapports-de-mi/evaluation-des-reductions-dimpot.html.
[1] OECD (2024), OECD Data Explorer Venture Capital Investments, https://data-explorer.oecd.org/vis?df[ds]=DisseminateFinalDMZ&df[id]=DSD_VC%40DF_VC_INV&df[ag]=OECD.SDD.TPS&dq=FRA...USD_EXC.A&pd=2007%2C&to[TIME_PERIOD]=false&vw=tb.
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The full paper is available in English: OECD (2025), Benchmarking government support for Venture Capital: A comparative analysis, OECD SME and Entrepreneurship Papers, OECD Publishing, Paris, https://doi.org/10.1787/81e53985-en
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