Paris-based global technology investment firm, Partech, has closed its fourth seed fund, the Partech Entrepreneur IV, at its €120 million hard cap, making it Partech’s biggest fund yet. The European VC plans to invest between €300,000 and €3 million in around 50 startups.
Backers included financial institutions and corporations, as well as 35 entrepreneurs who were previous recipients of Partech investments. Romain Lavault, General Partner at Partech, joined TFN to discuss Partech and his thoughts on the future of the tech sector.
An entrepreneur turned investor
Lavault started France’s first AI software company in 2002, receiving the largest seed round France had seen at that time, €5 million. He joined Partech after exiting in 2011. “That is how I made the jump from being on the other side of the table to investing,” he says. “Now, that’s the case for all of our partners. And two of us were backed by Partech!”
The use of former entrepreneurs gives Partech a strong insight into the startup world, as well as an enormous wealth of experience for its portfolio. The result has been an impressive track record, including Alan, the health insurance app, Sorare, the NFT fantasy sports platform, and the south-east Asian payment infrastructure, Xendit.
A challenging economy full of opportunity
Lavault recognises that it is a challenging time for startups. But he also reflects that this is not that unusual, the 2008 downturn affected investment, and he started when confidence in the tech sector was low following the dot-com bubble. But he believes this is a good time to invest.
“The middle of a crisis creates new types of opportunities,” he says. “There are new problems that emerge. And, in a crisis, there’s a search for more efficiency.” Lavault sees opportunity across a whole range of sectors, from the growth in mental health awareness, to the increasing opportunities to invest in space tech.
To take advantage of this, the fund is not limited to specific sectors or geographies. Lavault notes the benefits of encouraging a diverse set of investments. “Diversity is essential, even more so in seed,” he declares, giving an example, “in seed, we are looking at real-world problems, things that are really impacting people.” He believes that without that diversity, they risk missing opportunities.
However, Lavault also recognises the industry has some way to go. “If you look at partners, because they are all former entrepreneurs, it reflects the lack of diversity ten years ago.” He continued, “I don’t think the diversity at the entrepreneur level has changed dramatically.”
To help address the issue, Partech has signed up for the Sista Pledge. “It’s been taken by almost all VCs in France,” he explains. “Everyone commits to 30% female partners by 2030, and 50% female partners by 2040. That’s the journey we’re on. It’s not a problem you fix overnight.” He also notes that their increased geographic reach is also helping. “We were not doing anything in Africa five years ago, and now it’s almost 25% of all activity.”
Looking for the next big thing, and passion
Lavault also shared his thoughts on some current trends in tech: crypto and the metaverse. In both cases, he feels they are having a maturity crisis, the equivalent of difficult teenage years, where they are still finding their role. In crypto, in particular, the lack of regulation has created uncertainty.
The metaverse, however, is experiencing a different type of growing pain as it struggles to find its place. “A lot of planets must align. It’s the technology itself, the infrastructure, the content,” he said. “What are people going to be using this for?” Lavault suspects that augmented reality is the key, and while he says he isn’t quite ready to emerge himself into virtual or augmented worlds, he can see use cases that would attract him: “When I’m riding a bicycle, I’d prefer GPS on my glasses, rather than having to look at my smartphone. Or if I’m at a party and have augmented reality to point out my friends or people I should meet.”
For those hoping to benefit from Partech’s latest fund, Lavault offers some advice.
The first is that personal approaches work best. Even when indirect, an introduction can make a huge difference. “I don’t trust a LinkedIn request. I don’t trust a cold email. I don’t know that person,” he says. “But even if it’s just being bounced by someone in my network, then this changes everything.”
Noting that he has, just once, invested in a startup from a cold approach, he also reflects they had two things in common with some of his best investments. The first is having great employees, “because the people they recruit are not founders, they’re risking a lot. The reason they join is that they believe in the mission. This is the best indirect due diligence we can have.”
The second trait is storytelling. “I want to be blown away, it’s about how they convey the vision, their motivation, and how it’s rooted personally,” he said, because that story is the key to success. “It is the same story they will deliver to future employees, to bankers, partners, and VCs in the next round, and ultimately to the market when required.”