Hi Jacques, so how did you start angel investing?
Initially in 2009 I was interested in angel investing because of the tax incentive instrument that was in place in France at the time.
But I also decided that investing in startups was a lot more interesting that putting my money in the funds that banks created for their customers to benefit from this measure as we could decide in which projects to invest.
As an alumnus of Ecole Polytechnique, I received information about the Business Angels Group that had been created and I joined this Group in 2009. From 2010 to 2016 I went to Spain, but still was able to follow the projects via our platform and kept on investing regularly. When I came back in 2016, I involved myself more directly in doing due diligence of projects and being Strategic Committee member representing Badge investors in several companies. Later, I was elected to join the Board of the association. In June 2019, the Board elected me in the position of president.
Can you tell us a bit more about BADGE?
Originally, this network was created by 3 groups of Alumni of French Grandes Ecoles in engineering, (Ecole Polytechnique, Ecole Nationale des Mines and Ecole Nationale des Ponts et Chaussées). Later, alumni of other engineering schools and Ecoles de commerce joined our association.
We are presently partner of 23 alumni associations, but persons with a different profile are welcome as they enrich our expertise. At the end of 2020, we had 286 members. Half of them did invest in 2020, which is the ratio we generally find in French BAs networks.
2020 was our best year since our foundation in 2005, with €5.3m invested in 21 projects. Counting the accumulated investments since 2016 (16 M€), I am pretty sure that we are the biggest angel investor network in France.
How is your organization structured?
We rely heavily on our volunteers. We have a very active group of 15-35 angels who are actively participating in meetings organized by a number of incubators to present Badge and source high potential start-up.
For start-ups coming to us, we have a selection process first with a validation committee of around 12 members, who examine 3-5 propositions every week before inviting the start-up to a pitch where a team of 2 to 3 persons volunteer to do the analysis of the project, negotiate the value and the shareholders agreement before a recommendation is made to all members.
We have 2 employees, our General Delegate and an assistant. They run the current activities (helping start-ups, organizing meetings, publishing our monthly newsletter an news on social networks).
If you look back in the last 10 years, how did you see angel investing develop? And how do you see the market develop in 10 years?
For myself, I would say my first investments were not very good. But on the whole, I have seen our own organization progress significantly. Most importantly, we have a better quality of deal flow. As said, we are working with standing committees of volunteers on deal sourcing, selection and due diligence. We make sure the startups are properly questioned and analysed before they pitch.
And, during our pitches, we vote anonymously through an application, so the results are clear.
I do not see a particular shift to digital investing, although we do partner with crowdfunding platforms. The profile of people investing with crowdfunding or as a Business Angel is different. As a BA, you know the company, its founders, and it is a great reward when you can help them with your experience, your expertise of your networks of contacts.
I think that great work has been done with the BAE Club, I am aware of the comparisons done of tax incentives in various European countries, I also know studies for instant a study of Oxford Economics in UK showing that these tax incentives have a quick payback for the Government. I personally think that adopting measures like the one of UK or Italy would allow the number of BAs to grow and finance much more start-ups.
How, as an angel investor, do you cope with the many deep- and high tech companies you are facing?
Of course, It is not always possible to understand the technologies used or the patents that have been filed. This is a challenge for the entrepreneur : he/she must communicate the product and technology clearly.
An important factor to decide to invest is the quality of the team, its ability to answer the questions in a transparent way. In deep tech investments, the quality of the Scientific Committee surrounding the entrepreneur is good criteria.
What would be a thing that you would have loved to know before you started angel investing? And what are some of the rules you tell to starting angel investors?
We have now various learning programmes helping members : a general training session for new members (2 per year), a training on how to analyze a company (due diligence, 2 per year), a training on how to negotiate a shareholders agreement (also 2 per years).
When I do training for new members, I say to them : use your senses and feeling when working with entrepreneurs. Be comfortable with and have confidence in them.
Naturally I also tell them to make sure their portfolio is diversified: make sure not to use more than 10% of your investment portfolio in angel investments. There is a high level of risks as compared to other investments but the reward may also be high.
Finally: Macron has closed ENA – do you fear for the future of the French Grandes Ecoles model?
Personally, I don’t believe so although there is a risk. Many consider it was a political decision and ENA image was a lot associated to governments or people doing politics with an expertise in running government entities. Grandes Ecoles models train students for working in companies or research centers. Entering such schools is based on merit and there is a risk that they recruit persons with similar profile. They are conscious of this risk and they develop programs to increase diversity.