barometer 2016: social and economic performance of french digital business start-up
TRANSCRIPT
Social and economic performance of French digital business startups
Barometer 2016
Summary
1. Edito
2. Executive summary
3. Lessons
3.1 Methodology
3.2 Revenues
3.3 Fund raising
3.4 Innovation support
3.5 People
3.6 Value sharing
3.7 Hot topics
4. Contacts
Edito1.
Edito11/ Hyper and sustainable growth
Startups revenues increased year over year, +39% of growth for 2014-2015 period, with an aggregate of 4,2 B€. No matter the size of startups participating to the survey is, respondents are growing astonishingly. Another remarkable point: growth is sustainable. Even if we observe a 25% increase revenues in France versus 2014, growth also comes from revenues outside of France. Ever since the 2013 Edition, revenues made outside France constantly increased to reach 51% of total revenues in 2015, a record in the FD-EY barometer history. France has now not only worldwide digital champions but also “born global” players developing their activities worldwide extremely quickly.
2/ Startups are looking more than ever for talents
Total staff of the barometer grew significantly, i.e +27% versus 2014. In average, there were 13 jobs created per startups in 2015, a significant number taking into account that there are thousands of digital startups in France. The trend should be the same in 2016: 94% of participants confirm they will hire.
Even if, workforce is mainly located in France…Even though French startups keep growing their business outside France, data show that they still focus on hiring talents locally. For each new job created outside France, more than two jobs were created in France in 2015.
…Talents and labor costs are the biggest threats to their development The n°1 brake to development is the difficulty to find the right talents, especially when it comes to hiring IT developers, the most difficult talents to hire. Labor costs are also pointed out as the second major brake to development by 37% of French entrepreneurs.
3/ Financing remains one of the main priorities for startups
Participants are considering “Financing” as the third main brake to their development. In 2015, respondents raised more than 1 B€* which is remarkable. Whatever their size, startups succeed in raising funds. Another key point is the growing role of foreign investors. French ecosystem is favorable. Participants are massively using state incentives and benefit from BPI France actions (equity investments, grants…). However, the percentage of startups using incentives has been steadily declining for the last three years (68% in 2015 versus 77% in 2013 for Research Tax Credit), which shows that criteria used to be a beneficiary of Research Tax Credit need to be adapted for fast-growing digital startups which heavily spend in sales and marketing to grab market shares and increase revenues.
4/ Digital startups are designing a new organization model
Founders and managers are working on a new model where employees are interested in the performance of the startups through use of equity instruments to motivate their teams. 98% of the respondents are today using this kind of instruments! In average, 51% of total staff own equity shares. For “+ 50 M€ revenues” category startups, this percentage increases to 75%, demonstrating that ambition is fully shared by both management and employees.
Franck SebagPartner, EYVC & IPO Leader France
Xavier LorphelinManaging Partner Serena Capital
*from Business Angels, VC, IPO, and Follow-ons.
Executive summary
2.
Social and economic performance of French digital business startups
PeopleHyper, sustainable and global growth
www.ey.com/fr/FranceDigitale
50%
+39% of revenues vs 2014
29% of startups have a foreign investor
that already invested in the firm
91% of startups have positiv « EBIT »
when reaching 50 M€ of revenues
51% of revenues are generated
abroad in 2015
+27% of employees vs 2014
92% of permanent contracts
For 1 job created abroad, more
than 2 jobs are created in France
65% of the participants have
difficulties to hire developers
Innovation support53% of the sample used « Young
Innovative Company » tax incentive
68% Research Tax Credit remains
the preferred state incentive
51% of total staff own equity
instruments
98%98% of startups use equity
instruments
97% never distributed dividends
Value sharing
Lessons3.
Methodology3.1
Methodology
► Barometer based on data from digital business startups financed through business
angels, venture capital, IPO and follow-ons.
► Survey sent by venture capitalists to companies they invested in
224 participants
(171participants in
2014)
Averageage: 6 years
2,8 M€invested by VC (median)
Key figures from financialdata 2014 &
2015
► EY as a third-party to consolidate the data and ensure that the figures are kept
confidential
3.1
Revenues3.2
3.2 Revenues
3 013
4 200
0
1 500
3 000
4 500 55%
35%40%
0%
20%
40%
60%
0 to 5 M€ 5 to 50 M€ + 50 M€2014 2015
Growth of total revenues (in %)Analysis by revenue segment
Total Revenues (in M€)
+37%
2015 Edition
+33%2014 Edition
+39%
2016 Edition
Growth of revenues (in M€)
1 644(55%)
2 053(49%)
647(21%)
915(22%)
722(24%)
1 232(29%)
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2014 2015
France Europe International
+25%
+ 57%
Part of revenues outside France out of the total revenues (within the last three Editions of the barometer)
3.2 Revenues
51%
45%39%
33%2014 Edition
2016 Edition
2015 Edition
2013 Edition
Fund raising3.3
Total of funds raised by category(in M€)(From Business Angels,VC, IPO and Follow-ons
Total of funds raised (in M€)(Since startups inception)
3.3 Fund raising
2 794M€
1 787M€
Year 2015
Year 2014
No matter what the
size of startups is,
they all succeed in
raising funds.
Raised in 2015
336
780671
488
1 2161 090
0
200
400
600
800
1 000
1 200
1 400
0 to 5M€ 5 to 50M€ + 50 M€
2014 2015
Average and median* of funds raised(in M€)Analysis by revenue segment
4
23
64
3
11
20
0
10
20
30
40
50
60
70
0 to 5M€ 5 to 50M€ + 50M€
Average Median
Percentage of startups that are International investors backedPercentage of foreign investors funding French
digital business startups. Analysis achieved by
revenue segment.
3.3 Fund raising
* Median : middle value in a series of values arranged from smallest to largest
27%29%
50%
0%
10%
20%
30%
40%
50%
60%
0 to 5 M€ 5 to 50 M€ + 50 M€
% of digital startups that raised funds
50%
42%
25%
0%
10%
20%
30%
40%
50%
60%
0 to 5M€ 5 to 50M€ +50M€
3.3 Fund raising
Number of startups that raised funds in 2015 by sales category
Innovation support3.4
Did you use Research tax credit ?
68%Yes
32%No
30%No
70%Yes
*Analysis based on a sample of 145 startups* Analysis based on a sample of 128 startups
3.4 Innovation support
As a reminder, in 2014
Edition of the barometer,
77% of respondents
were using research tax
credit.sample of 86 startups in 2014
edition
Did you use Competitive employtax credit ?
Did you receive BPI France grants ?
*Analysis based on a sample of 128 startups
53%Yes
47%No
* Analysis based on a sample of 103 startups
3.4 Innovation support
51%
37%
of companies declare receiving BPI grant in 2015
of companies declare receiving
BPI grant in 2014
Did you use the label « Young Innovative Company » ?
People3.5
People
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2014 2015
13 809
10 864
2083 hired in France
3.5 People
2 945
2016 Edition
jobs created
For one job created abroad, more thantwo jobs are created in France.
862 hiredabroad
Type of work contracts (2015) People qualification (2015)
92%permanent
contract (CDI)
3%Temporary
contract (CDD & Interim)
1%Professional
training contract
4%Internship
4%
20%
74%
2%
High-school diploma or less Bachelor Degree or less
Master Degree PhD
*Analysis based on a sample of 131 startups
3.5 People
*Analysis based on a sample of 100 startups
Employees breakdown by revenue segment
41%5 to 50 M€
42%+ 50 M€
17%0 to 5 M€
*Analysis based on a sample of 201 startups
3.5 People
39
31
0
5
10
15
20
25
30
35
40
45
Average ageManagement
Average ageEmployees
Average age of staff
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
Minimum Average Maximum
0,5
2,4
13,2
Ratio Management / Staff wages (2015)
3.5 People
Serial entrepreneur Chief Executive officer (men or women)
48%Yes
52%No
92%Men
8%Women
* Analysis achieved on a sample of 147 startups * Analysis achieved on a sample of 105 startups
3.5 People
Value sharing3.6
BENEFITS
Rewards
EBIT (Earnings Before Interests and Taxes)
22%
39%
91%
0%
20%
40%
60%
80%
100%
0 to 5M€ 5 to 50 M€ + 50 M€
Percentage of positive “EBIT” by revenue segment
31%Gain
69%Loss
Did you distribute dividends since the creation of the company ? 97%
No
3%Yes
3.6 Value sharing
* Analysis achieved on a sample of 182 startups
* Analysis achieved on a sample of 182 startups
* Analysis achieved on a sample of 201 startups
Are you using equity instruments to motivate your team ?
2%No
98%Yes
* Analysis achieved on a sample of 107 startups
70%
12%
18%
Warrants (BSPCE)
Free shares (actionsgratuites)
Stock-options &common shares (BSA)
Type of equity instruments ?
3.6 Value sharing
Percentage of employees owning equity instruments
Percentage calculated by doing the ratio: number of employees owning equity instruments divided by total
number of employees. First chart gives global data and the second chart is presented by revenue segment
2016 Edition
* Analysis based on a sample of 105 startups
47%
30%
75%
0%
20%
40%
60%
80%
0 to 5 M€ 5 to 50 M€ + 50 M€
3.6 Value sharing
51%Of staff owning
equity instruments
Hot topcis3.7
Do you plan external growth to pursue your development ?
30%Yes
70%No
3.7 Hot topics
* Analysis based on a sample of 141 startups
Barriers for development ?
3.7 Hot topics
* Analysis based on a sample of 215 startups
20%
17%
15%
10%
10%
14%
11%
8%
16%
8%
10%
9%
10%
10%
10%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Talent
Labor costs and charges
Financing
Partnerships and contracts
Laws and regulations
First Choice Second choid Third choice
Focus on recruitments for the year 2016 ?
94%Will hire in 2016
33%
9%8%
50%
Sales representatives / Marketing
Consultants /Customers supports
Data Science / Business Intelligence
Programmers / Developers
* Analysis based on a sample of 114 startups
Looking for**
Looking for**
Difficulties to hire
3.7 Hot topics
65%Consider that IT
Developersare the most difficult
Staff to recruit** Analysis based on a sample of 134 startups
*** Analysis based on a sample of 109 startups
Contacts 4.
4 Contacts
Xavier Lorphelin
Managing Partner Serena Capital
@Xlorphelin
Franck Sebag
Partner, EYVC & IPO Leader France
@frsebag
About France Digitale
France Digitale brings together the champions of digitalentrepreneurship: startups with strong growth plans and potentialinvestors (venture capitalists and business angels). To build analliance between digital entrepreneurs and investors, so thatFrance becomes fertile ground for the creation of digital championsof International stature. For more information,please visit www.francedigitale.org.
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EY has been supporting entrepreneurs and fast growing companies for more than 30 years. 1500 collaborators in 15 offices in France are dedicated to serving the unique needs of high-growth companies to help them grow into market leaders, whatever their size or sector.
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