By Caroline Lebel and Yassine Soual
**** Article en Français plus bas

Organic growth is not the only path for startups! While US entrepreneurs are quite familiar with mergers, “acqui-hiring” and build-ups, there is only a minority of French startups/scaleups which use fundraising as leverage to carry out acquisitions. A subject at the heart of the round table organised at BIG 2020 by Bpifrance Large Venture, in partnership with Dassault Systèmes (see in replay here), below a snapshot.

Michael Jais, the CEO of Launchmetrics could be seen as a pioneer in France: very early on, he favoured external growth over exclusive organic development to accelerate the development of his company, in which Bpifrance Large Venture invested in 2018.

His company (Augure at the time), a specialist in analytics for luxury, fashion and beauty, joined forces with the American Fashion GPS in 2016 to give birth to what is today Launchmetrics. This choice for Michael was self-evident: “to go much further into the value chain and to have a platform logic, there is a race for size and speed: the build-up strategy was obvious” he explains.

Four years after this merger, and smaller acquisitions, gains were measurable for Launchmetrics: “our strategy enabled us to quadruple the size of the company between 2014 and 2020, while keeping 80% of the founders of the acquired companies. The company has grown both in terms of skills and revenue,” explained Michael Jais.

[Ed: Launchmetrics just announced the acquisition of PARKLU, a major influencer analytics platform in China, see Press Release].

But size and new skills are not the only advantages of such a strategy: for Eliott Reilhac, co-founder of Tvty, it is the complementarity of the teams and the possibility of creating combined offers for customers which motivated the merger with Holimetrix in 2019, while for Marc Frouin of Bioserenity, it was access to the US market and data that led to the acquisition of Sleepmed.

Taking into account the benefits of build-ups (geographical expansion, size, gain in expertise, economies of scale, etc.), Fatine Layt from LionTree regrets the insufficient use of this lever by startups. She nevertheless sees it as a real accelerator. “But it’s an accelerator which can be scary, she says, “as entrepreneurs are going out of their comfort zone and risk losing control, or will at least have to manage governance differently.” She therefore emphasises the importance of being supported in this process, by mentors or seasoned investors, who will help to find the right financing and balance (cash, equity, both or other mechanisms) and governance arrangements.

Although build-up is still far from being the go-to-strategy for entrepreneurs, things are gradually evolving: apart from Launchmetrics, Bpifrance Large Venture’s portfolio is already rich in several examples of successful build-ups, such as Ekinops, which has made two structural acquisitions in recent years (OneAccess in France and OTN-Switch in Brazil) or ContentSquare, which has accelerated its development in new areas with the acquisition of Clicktale in 2019.

These are only a few examples among many of Bpifrance Large Venture’s portfolio companies which are increasinlgy considering external growth opportunities. We continue to support the external growth ambitions of our investments, whether it is aimed to consolidation or to diversification. This is part of Bpifrance Large Venture’s investment thesis.

Furthermore, Covid is believed to be an accelerator for M&A opportunities in tech for different reasons: “the crisis will slow down the possibility of acquisitions by corporates. In our market in any case, exits are going to be a little less of an option in the next 6–12 months” says Eliott Reilhac. An observation reinforced by Michael Jais who adds: “our customers are choosing, for savings reasons, to work with a more limited number of service providers. We are entering an incredible period for build-up strategies in order to widen companies’ value proposal for customers.”

It will still be necessary to be on the right side, as Pascal Daloz, Deputy CEO of Dassault Systèmes and moderator of the session, points out in his conclusion: “Imagine yourself consolidators! It is not an ambition we have in Europe, let alone in France. […] It’s all in the head. Heroes of modern times are not entrepreneurs who achieve great exits, but the the ones who conquer the world.”

If build-ups are part of your growth strategy, do not hesitate to reach out!

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Le build-up : un levier de croissance et de performance pour les startups et scaleups

La croissance organique n’est pas le seul modèle de développement possible pour les startups ! Si les entrepreneurs américains sont familiers des fusions, “acqui-hiring” et build-up, les startups françaises sont encore peu nombreuses à utiliser les levées de fonds comme levier pour mener des acquisitions. Un sujet au coeur de la table-ronde organisée à BIG 2020 par Bpifrance Large Venture, en partenariat avec Dassault Systèmes (à voir en replay ici).

Michael Jais, le CEO de Launchmetrics pourrait faire figure de pionnier en France : très tôt, il a privilégié la croissance externe à un développement uniquement organique pour accélérer le développement de son entreprise, dans laquelle Bpifrance Large Venture a investi en 2018.

Sa startup, spécialiste des analytics au service du luxe, de la mode et de la beauté, s’est en effet rapprochée de l’américain Fashion GPS en 2016 pour donner naissance à ce qui est aujourd’hui Launchmetrics. À l’époque, ce choix s’est imposé de lui-même : “pour aller beaucoup plus loin dans la chaîne de valeur et avoir une logique de plateformisation, il y a une course à la taille et à la rapidité : la stratégie de build-up s’est imposée comme une évidence” explique-t-il.

Quatre ans après cette fusion, suivie d’autres acquisitions, les gains sont clairement mesurables pour Launchmetrics : “notre stratégie nous a permis de multiplier la taille de l’entreprise par quatre entre 2014 et 2020, en gardant 80% des fondateurs des entreprises rachetées. L’entreprise a grandi aussi bien en termes de compétences que de revenus” explique Michael Jais.

[NDLR : Launchmetrics vient d’annoncer l’acquisition de PARKLU, une plateforme d’influencer analytics majeure en Chine, cf. communiqué de presse].

Mais la course à la taille et l’intégration de nouvelles compétences ne sont pas les seuls intérêts de telles stratégies : pour Eliott Reilhac, co-fondateur de Tvty, ce sont la complémentarité des équipes et la possibilité de créer des offres combinées pour les clients qui ont motivé la fusion avec Holimetrix en 2019, tandis que pour Marc Frouin, de Bioserenity, c’est l’accès au marché américain et aux données qui ont conduit au rachat de Sleepmed.

Malgré les nombreux intérêts du build-up (extension géographique, taille, gain en expertise…) Fatine Layt regrette que ce ne soit pas un réflexe pour les jeunes pousses. Cette experte du sujet y voit pourtant un véritable accélérateur pour les startups. “Mais c’est un accélérateur qui peut faire peur, précise-t-elle, parce qu’on va sortir de sa zone de confort et qu’on risque de perdre le contrôle de son entreprise, ou en tout cas d’avoir à gérer la gouvernance de manière différente.” Elle souligne donc tout l’intérêt de se faire accompagner dans ce processus, par des mentors ou des investisseurs aguerris, qui aideront à trouver les bonnes modalités de financement (en cash, en action, en ou les deux) et de gouvernance.

Si le build-up est encore loin d’être un réflexe pour les entrepreneurs, les choses évoluent pourtant progressivement : outre Launchmetrics, le portefeuille de Bpifrance Large Venture est déjà riche de plusieurs exemples de build-up réussis, à l’image d’Ekinops, qui a réalisé deux acquisitions structurantes ces dernières années (OneAccess en France et OTN-Switch au Brésil) ou de ContentSquare, qui a accéléré son développement dans de nouvelles zones géographiques avec l’acquisition de Clicktale en 2019. Il ne s’agit là que de quelques cas parmi beaucoup d’autres : nombreuses sont les entreprises du portefeuille à s’intéresser aux stratégies de croissance externe, afin d’accélérer leur croissance ou de se positionner sur un élément additionnel de leur chaîne de valeur.

Nous supportons les ambitions de croissance externe de nos participations, que ce soit dans une logique de consolidation ou de diversification. C’est d’ailleurs une partie intégrante de la thèse d’investissement de Bpifrance Large Venture : la création de valeur est possible de façon organique, mais aussi via des rapprochements. Les deux stratégies ne sont pas incompatibles.

La situation particulière du Covid devrait accélérer encore les choses : “la crise va freiner les possibilités d’acquisition par des corporates. Dans notre marché en tout cas, les exits vont être un peu moins des options dans les 6–12 mois” estime Eliott Reilhac. Un constat partagé par Michael Jais : “nos clients vont choisir, pour des raisons d’économies, de travailler avec un nombre limité de prestataires. On rentre dans une période incroyable pour ces stratégies de build-up.”

Encore faudra-t-il être du bon côté, comme le souligne Pascal Daloz, DGA de Dassault Systèmes et modérateur de la session, dans sa conclusion : “Imaginez-vous consolidateurs ! Ce n’est pas un réflexe qu’on a en Europe, et a fortiori en France. […] C’est dans la tête. Un héros des temps modernes ce n’est pas celui qui a bien vendu sa société, c’est celui qui a conquis un marché mondial.”

Si vous travaillez sur des projets de build-up et de développement par croissance externe, n’hésitez pas à nous contacter pour échanger !

M&A: a growth and performance driver for startups and scaleups was originally published in Bpifrance Large Venture on Medium, where people are continuing the conversation by highlighting and responding to this story.

By Maïlys Ferrere and Yassine Soual

This is the first article of our series Why Did We Invest. In this article, we’ll go through some of the key drivers of our investment in Contentsquare! (other than the SaaS KPIs that the company shows 🚀).

First things first, for those who are not familiar with the company and its activity. Contentsquare is an experience analytics software that tracks and visualises digital behaviours, delivering recommendations that brands, marketers and publishers can use to grow revenue, increase loyalty and optimise experience and features.

When we first met Jonathan, the CEO and founder of Contentsquare, he simply explained his roadmap towards becoming The experience analytics category leader. It took about 5 minutes, covered value proposition, product-market fit, clients’ pain point and the company’s long-term objectives. You could feel his passion in talking about the company’s journey and the excitement about the challenges to come.

Product and Value Proposition

If you ask any company if they sell (or generate leads) through their website, most likely, the answer will be “yes.” You’ll get the same answer if you ask whether they monitor conversion performance. But when it comes to taking data-driven measures to improve conversion, the odds are the answer will be “no.” Most brands focus on bringing the customer to their sales channels, but very few go towards enhancing each component of the user experience to optimise conversion.

This is where Contentsquare plays a key role. Contentsquare’s product continuously analyses every data point related to a visitor behaviour on a website or an app. In terms of value proposition, this is a complete change of paradigm.

Without Contentsquare, Marketing used to think about what items to track, then ask IT to implement the appropriate trackers, a few weeks later, IT would implement the appropriate code. Only from this point on, data would be collected. Marketing teams then would have to wait for enough data to be collected for their analytics to be statistically significant. If they wanted to track something else, then it would all start again … (sounds like a scene from The IT Crowd 🤓 but it’s close enough to reality — with the exception of some pre-existing session replay or a/b testing point solutions).

With Contentsquare, IT implements beforehand a tag to their websites and apps, and from this point on, every single data is collected (pageviews, mouse movements, hesitation, hovers, revenue generated, conversion per zone, etc.) regardless of specific marketing needs. Once users have identified items to track, visitors’ interactions are already stored, and analyses can be conducted immediately. It is sort of a “Boil the Ocean” approach but thanks to Contentsquare’s comprehensive view, clients are not only able to reach high standards of customisation but can also benchmark performance vs. their own industry’s.

Contentsquare’s ability to collect such a large set of interactions is made possible thanks to a best-in-class data and backend architecture allowing very high standards in terms of functionality, performance, storage optimisation and security. The latter is one of the key focuses of the company.

Market positioning

Contentsquare is a B2B SaaS company focused on the “experience analytics” space. A sector which at first sight is seen as a nice to have. We can genuinely state that experience analytics is nice to have vs. SaaS solutions focused on IT performance, payment processing, cybersecurity and other low-level business needs. At least, that was our initial guess 🤷‍♂️!

At the time of our investment, the “UX optimisation” market was estimated at around $8bn, a market large enough to see multiple competitors, and investors’ money pouring into it, but not too large that traditional analytics giants (Adobe, Google, IBM) would prioritise it too soon.

In terms of future growth, obviously most drivers pointed towards a growing need for digital experience analytics tools (not to mention the current Covid-fuelled race towards digitisation and “phygitization” for all brands and retailers).

What clients think

Contentsquare offers one of the widest product ranges in terms of functionalities vs. most of the solutions in the market. This seemed to be one of the key purchasing criteria for customers. Marketers are overwhelmingly confronted to thousands of point solutions and there is a clear trend towards preferring one-stop-shop solutions in the Martech space (see marketing technology landscape — way too many point solutions 😱).

To address this need, Contentsquare continuously adds new features, thus answering more and more of their customers’ needs (new features being 100% driven by customer feedback). This not only enhances the product experience but also allows Contentsquare to expand its user base from marketers only to new categories of users (IT, devs, site designers, etc.) => UPSELL UPSELL UPSELL 💸💸💸 ?

Diving into topline performance, we expected to see the following: a long sales cycle as for most B2B SaaS companies focused on large accounts, a ~6 figure ACV, and as a result of this seemingly “nice-to-have” space a relatively high churn and some difficulty in upselling clients. Looking at usage metrics, we quickly understood how wrong we were. For users, Contentsquare is a must-have tool. Connections per user were skyrocketing and users were definitely sticky. Current users even acted as ambassadors of the solution in their companies and ecosystem.

While we were looking at Contentsquare as this nice tool of optimisation, customers were using it on a ROI approach. Conversion increases are seen as a result of changes conducted thanks to Contentsquare. With Contentsquare having developed a range of new features to offer alerts, site zone qualification, recommendations, event-triggered analyses etc. Contentsquare clearly became in the eye of clients a must-have to understand and quantify the impact on conversion of each website/app evolution.

Team

Most investors value experience, with a choice to rather trust serial entrepreneurs (with successes or failures in the past) rather than first-timers. While this may be a great way to track great executives that would have built on their previous journeys, most great companies are still found by first-time entrepreneurs. In our experience, serial entrepreneurs seem to take faster routes to success or failure (vs. first-timers), but serial entrepreneurship does not seem to be the most critical factor to success.

Jonathan Cherki is a first-time entrepreneur, a passionate one, who managed to build a remarkable team doing two things, (i) retaining first key employees (as long as he could) while (ii) strengthening the team with new experienced executives. Achieving both in tandem is not that frequent.

One of the reasons that might explain Contentsquare’s success is the corporate culture instilled by Jonathan, which drives the whole company, from top management to every team in Contentsquare. Jonathan and his team managed to retain a culture driven by passion, ambition and team spirit. The acquisition (and integration) of Clicktale, one of Contentsquare’s key competitors, would not have been such a success without this great leadership and corporate culture! 🦄

Bpifrance Large Venture | Why did we invest (WDWI) — Episode #1 Contentsquare was originally published in Bpifrance Large Venture on Medium, where people are continuing the conversation by highlighting and responding to this story.