- il y a 12 heures
Exit Strategies In Times of Uncertainty
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00:00Bonjour tout le monde, merci pour toujours être ici avec nous, avec Viva Tech.
00:05Je suis heureux d'avoir trois grands speakers pour cette panel sur l'exit stratégie en temps de l'incertitude.
00:14Je vous présente Ala Fadel, qui est le manager de l'agriculture à Eurasio.
00:22Benoît Fouillon, qui est le chef de finance à Canton Square, un de nos grands unicorns en France.
00:30Rémenine Novak, VP at Dawn Capital.
00:33Thank you again.
00:35So, we're not going to talk about fundraising, which is like the huge topic in the startup ecosystem,
00:42but I think it's a more important topic, exits.
00:46Especially now, after two years of slowdown.
00:50So, my first question is simple.
00:52Is there a good time to succeed an exit or not?
00:58You can start, you know you are the only one.
01:02I'm not on the investor side, I'm on the company side.
01:05So, I would say, I would look at when is it the best time for the company to maximize its
01:10potential.
01:11So, that's what would guide to me the exit strategy.
01:15I think we're going to talk about IPO.
01:17Let's be very clear.
01:18IPO is not an exit view, at least from my eyes.
01:21It's just a window opening on a new world that can be a wide world, by the way.
01:26So, I would look at it through when can we maximize the potential of the business.
01:32When is it, what are the signals that would give us the view that this is the right time, from
01:36a company perspective.
01:37Investor might have a different view.
01:40And you are an investor.
01:43Yes, very proud investor into Content Square since 2018.
01:48A beautiful story out of France.
01:50And I've actually known Benoit for a long time because I was an investor in Business Object where he was
01:56already the CFO, I think, more than 20 years ago.
02:00So, very...
02:01That was yesterday.
02:02That was yesterday.
02:04So, very, very seasoned CFO.
02:07And I think it's part of the recipe of the timing.
02:11So, there are some exogenous factors around, you know, market timing.
02:14I would say that the market timing only matters for people to really listen to your story.
02:19Like, if you want to go out at a time where everybody's worried about geopolitical issues or about valuations,
02:28or this is going to dilute a bit your story and you're going to have more questions around an event
02:35that's punctual rather than on the fundamental story that you're trying to sell.
02:42So, for this reason, this is why it's better to maybe optimize the timing.
02:46But if you're a good company, then there's no timing for you to exit.
02:50And a good company is a company that is, you know, has good management team.
02:54I think it's back to basics.
02:56It's positioned on the market that is growing.
02:59It is growing itself.
03:00And it has sound unit economics.
03:03So, if we have all those boxes ticked, then the market timing, of course, can be optimized, as Benoît was
03:10saying,
03:10in terms of where you maximize your potential.
03:14But there will always be a good exit for this type of companies.
03:22And for you, Firmina?
03:24Yeah, I would like to just highlight one thing, as Benoît has said, which is really for the earlier stage
03:30side of things,
03:30which is perhaps where I focus a bit more around series A, B, C companies.
03:35It's really about founders creating value, right, for their customers, for their employees.
03:40And so, that is captured in pricing.
03:43It's captured in churn.
03:44And that should really always be the guiding star, right?
03:48And whether that exits or continues as an IPO company, it's a decision for the board and the founder.
03:56But it's really about how can we capture as much value as a company.
04:00And that should be the guiding principle, always.
04:03So, for a good company, it's always time.
04:06And for the, I'm not going to say the bad ones, but the ones that, you know, have more difficulties,
04:13so they have to wait a little bit longer to have a better valuation for you or not?
04:21So, way to fix those problems and hopefully become a good company.
04:26I think there is a timing where markets are more tolerant with companies that are, don't have all the boxes
04:34ticked
04:35when it comes to unit economics or growth rates.
04:39So, we came from an environment where we had zero interest rates.
04:42So, investors had more appetite when it comes to risk, and they were closing their eyes on a number of
04:51things
04:52that fundamentally were obvious to most of us.
04:56But it was okay because, you know, it was an environment where you could afford to take this type of
05:03risk.
05:04But in the long term, everybody goes back to basics and to fundamentals and reverse to the mean,
05:12which is a portfolio company.
05:15I mean, a company that has a good management, a good market, top-line growth, and good margins.
05:24But you, Benoit, you were just in a successful company, so you can't answer the question.
05:30Yeah, that would be difficult.
05:32But I can give you a few ideas, not having experienced it myself, obviously.
05:36But I think I will go back to this value creation framework.
05:40If you are not in the best position to exit from a metric standpoint, from the quality of your metrics,
05:46from the quality of your business, from your growth perspective, from a profitability perspective,
05:51the first thing to do is, can we fix it?
05:54If you can fix it through execution, if you can fix it through strategic moves,
05:58that would, you know, increase the value ultimately, then definitely you have to do it first before looking at an
06:07exit.
06:08If you truly believe, if at the board level, after analyzing all of the factors,
06:13you believe that it's going to be difficult to fix it, then you have to put yourself in a different
06:18mode,
06:18which is, now, let's put it for sale and do it in the best manner possible.
06:22Fortunately, I've never experienced that situation.
06:26Jimena, did you experience this, yeah, that through, of course, one startup of your portfolio?
06:36On the question and timing, yeah.
06:40Well, I've experienced more than what happens when you get lucky in the markets that Hala was referring to.
06:46I was very fortunate to be part of a Depop story, which is a company in the UK.
06:50It was sold to Etsy at the peak of the market for about 1.6.
06:55and that was what happens in a very frothy market, both from an IPO perspective, but also from an M
07:00&A perspective, right?
07:01And there was, we saw a lot of very opportunistic and very aggressive M&A.
07:05So that also matters and being ready at the time and becoming a critical asset for someone in that market
07:13is also the other flip of the coin.
07:15I think in today's market, where we are, and as Hala was mentioning, it's more around being intentional
07:22and it's more about being prepared, whether it's through creating value and fixing the problems you have,
07:27if IPO is where you're going, or it's getting to know your universe of potential buyers
07:33and being super intentional around this, right?
07:35And we encourage a lot of our portfolio companies in Europe to familiarize themselves,
07:40to have those discussions, both commercially, strategically, understand where their product may fit
07:47in the portfolio of an acquirer as well.
07:51So yeah, I know we're going to touch a bit on M&A, so I'll hold the floor.
07:55If I may add something, I think this is when also, as a private company, it's important to choose,
08:02you know, good investors, especially beyond the initial early stage phase,
08:08because if you're facing problems, as Benoit was saying, and you need to fix them,
08:14then it's good to have a team that will support you in doing that.
08:17So for example, we work with operating partners that are very hands-on into the life of these companies,
08:25whether on M&A, if they need to make a strategic acquisition to fill a gap in their market positioning,
08:33or recruit talent, or rethink the strategy.
08:37We've done a lot of work.
08:38I mean, I would say this past year was a lot of work within the portfolio companies.
08:44Not in Benoit's company, actually, because he's there to do that.
08:48This is when good management matters.
08:50But really positioning the asset for an exit, like working with operating partners to see, you know,
08:59what are the geographies that they need to be present in,
09:04what are the product gaps that they need to fill for them to be an attractive asset if they were
09:09to be acquired,
09:11what are the most profitable niches.
09:13And this, of course, the management team can do it,
09:16but, you know, when you're moving from an early-stage company to a growth company,
09:20and then you're aiming for an exit, you're so busy, the growth is overwhelming,
09:26and you might need some support from people with experience.
09:30So we surround ourselves with operators that have over 30 years' experience in technology, in specific sectors.
09:38We have a fintech partner, for example, but also someone who focuses on technology.
09:43And this is where fixing the problem becomes a partnership between us and the portfolio company,
09:49rather than something that, oh, this company is not performing, I move on to another company that's performing.
09:57No, it's a partnership from the day we invest, we fix problems together.
10:01So about M&A, I wanted you to know, when does a startup have to think about an M&A
10:08deal,
10:09and how long do you think that it can take, you know, to go through that, Jimena?
10:17So here I would distinguish between two types of M&A.
10:22One is strategic, if you will, and another one is almost existential to the company.
10:28So if your company has been providing value to some other company through integrations,
10:35through commercial partnerships, through, yeah, distribution, for example,
10:42an example in our portfolio was LeanIX and SAP, which we sold last year, end of last year,
10:49and actually they had been in a commercial partnership for so, so long.
10:53They knew each other very, very well.
10:54It made a lot of sense for SAP to acquire LeanIX and fill a gap, as Hala was mentioning.
11:00Other times, like you see with, you know, Figma and Adobe, for example,
11:03it's much more around an almost existential threat or really something very, very big
11:09that needs to shift in your product strategy.
11:11And so I would say that those are typically the two types of M&A that we see.
11:16In terms of preparation, again, I mean, the second one perhaps can be more opportunistic,
11:23but typically it's, again, it's like a developed relationship.
11:27You know the other party very well.
11:28I would say that the former, so when it's more of a strategic alliance or a commercial alliance,
11:34that can take just as long, right, to prove value, to showcase where you fit in this other person's portfolio
11:40and this other person's product and technology.
11:43It can take many, many years.
11:46Another example, for example, in our portfolio is Tink, which also sold to Visa.
11:51Sure, yeah.
11:53To Visa, and that was, again, that was many, many years of strategic commercial partnership before the outcome.
12:00So I would say even in, you know, these very successful M&A cases,
12:04and I say successful because not just from a number,
12:07but I think really from what these companies can achieve combined
12:10and the value they bring as a tool,
12:14it was in the works for at least two years, if not more.
12:18So typically almost just as long.
12:20A bit cheaper than running an IPO maybe in fees,
12:23but just as long in getting to know the other company.
12:27Hala, you agree, two years?
12:30Yeah, I agree, two years of preparation.
12:33We share actually a number of investments with Dawn.
12:36They do a fantastic job on the early stage.
12:39So I could not disagree with what she said.
12:45Maybe I would add, because I know in our side conversation that we had before this panel,
12:51maybe a bit more complexity that there is today around M&A
12:54because of the scrutiny of regulators and antitrust issues, but also sovereignty.
13:02So M&A, of course, still exists as an exit path,
13:06but has become a bit more difficult when to go above a certain size.
13:10And because I'm at a growth stage and the companies in our portfolio are usually fairly big,
13:17have our unicorns for most of them,
13:21it becomes more and more complex for these companies to be absorbed by players.
13:27First, because of their size, so the list of players that could acquire them is short.
13:32And if they do, I mean, we've seen it a number of times with, you know, she mentioned Adobe and
13:39Figma,
13:39but there are other examples where the regulator put a lot of scrutiny around the deal,
13:44whether for antitrust issues or around sovereignty of certain assets in healthcare, for example,
13:50or in semiconductors, although we mainly do software,
13:53but there are sovereignty issues around that.
13:57So I would say M&A is still a valid exit for the smaller profiles.
14:04So companies sub-1 billion in terms of valuation,
14:10and they require a lot of preparation from the management,
14:15from our side also to know the market and best position the asset in terms of how they fit potential
14:25acquirers.
14:26And LeanIX and SAP, I think, is a very good example.
14:30They had a partnership with SAP for the longest time that, yeah.
14:37Benoit, your experience, M&A.
14:38Yeah, I would have a lot to say.
14:40I don't know how much time do we have to talk about M&A.
14:42In fact, M&A to me is a very powerful tool in the strategic toolbox on both sides of the
14:48equation.
14:49So maybe let's talk first as a startup because we are a perfect example at Content Square
14:55having used M&A as a motion to accelerate our growth.
15:02So we've done eight M&A in the span of 10 years or less than 10 years.
15:07Out of those three were really, I would say, cornerstone in our development.
15:14One was really to get an initial presence in the U.S. with customers.
15:20One was to enter a new segment, a new market segment with OJAR.
15:25And the most recent one was really to complement very elegantly our product offering.
15:33And you can do very complex deals even as private companies.
15:38You know, the last M&A we did, it was a share deal between two private companies across the Atlantic.
15:45So with all of the complexity of having a pretty long cap table on the acquirer side, so that is
15:54possible and that can be very powerful.
15:57Now, coming back to the exit, when I was saying that an IPO is not an exit, there M&A
16:04is a real exit.
16:04So it's the best way, so I'm going to talk for the investors now, it's the best way to get
16:08your liquidity as an investor.
16:09So you don't get your liquidity, even if you do a small secondary, when you do an IPO.
16:15And I have a few interesting examples there.
16:17I would use one.
16:19At the early stage, when SAP did the first large acquisition, I happened to be at Business Object at that
16:25time.
16:25And Business Object was acquired by SAP for $6.8 billion at that time.
16:30So large deals are possible.
16:33You know, we were public, obviously, so it makes it easier.
16:36But I think the learning for me, which is really very important, is you need, if you want to get
16:43the optionality of getting the right exit,
16:46you need really to be prepared, to be super alert about whatever happens in your industry.
16:52And we are in industry moving super fast.
16:55If I take the example of Business Object, in the span of three years, this entire industry consolidated.
17:01So we were, now we can tell, you can speak about it, it was more than 20 years ago.
17:06We were in talks with Hyperion to acquire Hyperion.
17:10That discussion, ultimately, at the very end, did not, you know, lead to a deal.
17:16Hyperion was acquired by Oracle.
17:18Immediately after, we talked to both SAP and IBM.
17:21We were acquired by SAP.
17:24And Cognos, the third player in that market, was acquired immediately after by IBM.
17:29So if you're not alert, if, you know, you are going to be subject to what happened in the market,
17:35why we could anticipate on, be on the move.
17:39And the last example I would use, which is not in tech, is more recent for me.
17:43I happen to be the CFO of Firminich, one of the, you know, largest perfume and test company in the
17:51world,
17:51which was still private.
17:52We did a, we did a drag track between preparing an IPO on being very alert about consolidation
17:58and ended up doing a very large M&A with, with DSM to form the new group DSM Firminich.
18:06So even for large cap, it was a 40 billion plus deal.
18:09This, this is possible to, to do that.
18:12If you are alert, if you are prepared, you can execute fast.
18:16And Jimena, are corporates and big techs, uh, are still, you know, the, the, the best options for, for startup
18:25today?
18:27I don't know about the best.
18:28I think it's so, it always depends.
18:30Um, but they are definitely the one we spend a lot of time nurturing.
18:34I think, I'll let Hala speak about private equity in a second, uh, because that's probably the other way to
18:40exit earlier startups.
18:42Um, I think what's very nice about, um, strategics or corporates is the power of synergies and the power of
18:49having a home where two, uh, one plus one equals three.
18:53Um, so yes, it's where we spend most of our time.
18:56I would say private equity historically has also been the bread and butter for horizontal and vertical software in Europe.
19:02Um, and there's been a lot of roll-ups.
19:05There's been a lot of very interesting things done, again, with the view of getting liquidity, right?
19:10And, and exits, which are real exits for founders, for the teams.
19:14Um, so I would say it's probably where we as investors don't spend a lot of our time mapping, getting
19:21the connections, getting to know them, uh, asking our founders to be, you know, post-series C.
19:26I think the, the founder mentality also starts to shift, right, from just reporting metrics to really understanding the value
19:34behind those metrics.
19:35And, you know, I come also from late stage investing as a GA before, and it really is about how
19:41you use those metrics to, to show more than just, uh, a board KPI.
19:45And so I think that's also when the founder mentality should start to shift in terms of getting familiar with,
19:53uh, the wider market, what's happening more to, to Benoit's point, and then whether that ends up being, uh, an
20:00M&A, an IPO, a private equity, a bolt-on, uh, you know, that is at your fingertips.
20:05But, uh, it's interesting to see the shift as well in founder mentality and how founders mature, uh, throughout this
20:12journey as well.
20:13And, Alain, yes, for private equity and growth equity, you seem to see there's a new source of, uh, position.
20:19Yeah, maybe first a comment on what Benoit said.
20:22So, um, I just wanted to clarify that I didn't say it's not possible if you're a big company to
20:28exit through M&A.
20:29It's just more difficult.
20:30Um, but, yeah, it, it is definitely possible and he definitely led, uh, a great, uh, exit, like 6.8
20:41billion for business subject as it, at the time was just huge.
20:45Um, and, yeah, maybe to complement what, uh, was just said, um, so we're seeing and, uh, we're announcing an
20:54exit next week, uh, on great metrics.
20:57We're seeing a new, uh, at least in Europe, because in the U.S. it has been there for a
21:01while, a new type of exits around P players or buyout players getting involved in, in technology.
21:08So now we have, uh, three kind of exit paths.
21:11So the M&A, because it's, uh, the real exit, as, uh, Benoit said.
21:15Uh, IPO, which is not a real exit, the beginning of a new journey, but, uh, could provide liquidity to
21:21investors.
21:22And now the third path is really, uh, PE firms and not PE specialized in tech, but really buyout firms
21:29that are starting to be interested in, um, tech companies that are showing good unit economics.
21:35So as soon as you start being profitable and you show good EBITDA, you're tackling a good niche, uh, that
21:42still has some growth, um, and, uh, maybe it doesn't, um, necessarily make sense for the company to do, um,
21:51a journey on a standalone basis, but needs more investors to, uh, uh, continue the journey as a private company.
21:58We're seeing more and more interest, um, on, on, on that side.
22:03So in this particular deal, it's, it's a tech company that we've had for six or seven years in the
22:07portfolio.
22:08And, uh, we had a number of P players that were interested and now we're selling it to, um, to
22:15a P firm.
22:16Um, so that's, uh, a new type of, uh, of investor, uh, and potential exits for, uh, the tech world.
22:24Yeah, and you can find this announcement, of course, next year, next week in, uh, Les Ecos, obviously.
22:31And, uh, yeah, but do, uh, entrepreneurs know about PE, growth equity, uh, not, or not?
22:39Are they aware?
22:40Because it's, it's quite new, so.
22:42Well, let's say there's no entrepreneur that you meet probably at her stage that would tell you, oh, I want
22:47to sell to a PE firm.
22:49Right?
22:49Like it's not the aspirational exit for sure.
22:52Um, but I think it comes with time when the journey, uh, maybe, uh, I think it, it, it goes
23:01back to relating to the, the size of the market.
23:04Maybe the size of the market or the market you play in is not as big as you thought at
23:08the beginning.
23:09And then your, uh, growth rate is still good, but you're never going to become, and we'll come to the
23:15question of, uh, IPOs.
23:17You're never going to become a $10 billion company.
23:20You, maybe you're going to stay around $400, $500, a billion, which is already, you know, you've built something great.
23:27But then finding an exit for that, if you have no strategic that really is interested in your asset, what
23:34do you do?
23:34You have investors that's been there forever.
23:36They really are looking for liquidity.
23:38So you, uh, start a journey with a new type of investor that will bring other things to the table
23:44and, uh, will, um, will provide you with the, uh, independence that you need without being crushed by, uh, the
23:53public markets where there isn't room today for, um, a player that is subscale in terms of, uh, liquidity and,
24:01and size.
24:03Jimena, do you agree?
24:05Yeah, completely.
24:06I, I mean, it's, it's, it's, yeah.
24:08Nobody tells you at the beginning that's the, that's the desired path, but I think it's a journey and it's,
24:13some entrepreneurs are definitely more familiar with it, have seen it in their, you know, if you're a really young
24:18first-time founder, you're unlikely to have heard or, or spend much time.
24:22But I think it goes, again, to that maturity.
24:23They also haven't necessarily been reporting about their metrics or they, you know, and these are things that great entrepreneurs,
24:30of course, learn along the way and surround themselves.
24:33Hopefully as investors, also, we help coach them and guide them, uh, and introduce them to the right people.
24:38And then there's CFOs who are brilliant, like Benoit, and also get involved.
24:42And, um, I think what's interesting about this exit sometimes is, yeah, whether it's the market is too small or,
24:49you know, sometimes entrepreneurs also run out of the market.
24:52And they want to do something else or they find their mission in something else.
24:56And I think what's exciting is having people like Benoit who have seen journeys and who come back and come
25:01more experienced.
25:02And so there's a constant, you know, recycling, if you will, of great talent.
25:07And we have it then in our portfolios as advisors and we have them as coming back again.
25:12And so I think it shouldn't be demonized either, right?
25:16That the, you know, it may not be as, as planned, but many things don't go as planned.
25:20And sometimes for the up, sometimes for the down.
25:22And I think it just allows founders and early teams as well, right?
25:25To, to get liquidity.
25:26Because I think it's important to think about the founder and the management team's liquidity and what they can do
25:31with that.
25:32And sometimes they, they just want to find a different purpose.
25:36Benoit, can you give us maybe one piece of advice for, you know, the founders in the room to, to
25:42prepare an M&A deal and to succeed?
25:45And maybe one mistake that entrepreneurs do.
25:49So, so the first thing I would say is let's be alert about what's happening in your industry.
25:54Because what you want is to, to be ready from a position of strengths, whether you're on the acquire side
26:02or being acquired.
26:04If you are being acquired, you want to be on the position of strengths as well.
26:07So, be alert, be very well connected in your industry, understand, and it's sometimes difficult, but you can use your
26:15investors, their network to do that.
26:17I think the companies that are able to be opportunistic and are smart in doing that are very connected and
26:23have mapped very well their industry.
26:25From a player standpoint, but also understanding the value chain on how things are evolving.
26:31The piece of advice or thing to avoid is, is to rush into a deal if you're not prepared.
26:39In my view, if you're not prepared, it might be a, not the best journey in your life, you know,
26:47because it's, it's hard to do a, to do a right deal, to execute well.
26:50And, you know, if you're not on the position of strengths, your option can close very quickly.
26:59I still want to talk about IPO, sorry, even if you, you say it's not an exit.
27:05But, no, why is, it's not like the natural way for startup, you know, in Europe, especially, Gina?
27:14Well, we were discussing this earlier in the, in the, in the lounge.
27:19And I think it's a, a combination of things.
27:22I'll touch on a few and, and we'll let Hal and Benoit as well.
27:25It's a combination of the markets.
27:28I, well, I think the reality is that a lot of great European companies have IPO'd in the U.S.
27:32So, it's not to say that there weren't any IPO-able candidates in Europe.
27:36It's just to say that often those companies end up being very big global companies.
27:41And, you know, if they have 40% of revenue coming from the U.S., 50% of revenue, even
27:4530% of revenue,
27:46you're going to get a better multiple for that extra dollar of revenue in the U.S.
27:50Plus, the IPO markets have traditionally been deeper, and they continue to be deeper in the U.S.
27:57Your competitors are typically also in the U.S.
27:59So, there's a bit of a virtual circle.
28:01But it's not to say that there haven't been great European success stories in IPOs.
28:07And I think this will change.
28:10It will take time.
28:12But today, it's a reality that the deeper markets with the more willing investors as well have historically been in
28:20the U.S.
28:21I think one example that I can point to in Europe, I mean, it was a very U.K., and
28:26it is still a very U.K.-based business,
28:28which is Deliveroo, which IPO'd in the U.K. a couple of years ago.
28:33That was not seen as a great IPO story, right?
28:36And I think part of it is the company is a very London-based, not even U.K., but a
28:42very heavily London-based company.
28:43But also, the conservatism for smaller market-cap IPOs in Europe is tough.
28:50We'll let the team.
28:52Yeah.
28:53So, I'll take a contrarian view here.
28:55I'm quite optimistic about IPOs in Europe in the future.
29:00I think we just need to position Europe in the tech world where it is today.
29:06It is still a good 20 years behind the U.S. ecosystem.
29:11So, Europe hasn't produced yet those large tech companies that are ready to be IPO'd.
29:18Some of them are still private.
29:19I think we'll have a good wave of IPOs in Europe in the coming three, four, five years.
29:26But we're not there yet when it comes to the size of the ecosystem that could be a good candidate
29:32for IPOs.
29:32And as was just said, size matters when it comes to IPO.
29:41You cannot go and be exposed to European market and be just a $1 billion company.
29:47Most investors, unlisted companies in technology in Europe, are still U.S. investors.
29:54They're not going to cross the Atlantic to put a $2 or $3 million ticket into your company.
30:00And liquidity matters.
30:01So, I had done the calculation that if you were an investor with a $10 million ticket in Believe Digital,
30:09for example,
30:10that just got delisted and taken private, you would need, I don't know, 10,000 days to get out of
30:17that $10 million ticket.
30:19So, this is more than two years.
30:21So, it's as if you were private.
30:23Whereas for Adyen, which is a successful IPO in Europe, you need less than two hours.
30:29So, this is what the offer, we forget that capital markets are technical.
30:35It's a marketplace.
30:37You need supply, you need demand.
30:39And if you don't match supply with demand, then, and you're subscale, it's just not going to work.
30:48Maybe one last point about the journey of being a listed company.
30:53It's a ruthless world out there.
30:56So, also, I mean, you need a large pipeline, a large pool of potential candidates before one or two actually
31:03succeed.
31:04So, it goes back to the idea of the ecosystem is still small.
31:08We're getting there.
31:09We're seeing, you know, on the early stages, like what Don is doing, we're seeing lots of pipeline.
31:14Growth stage, we're getting there.
31:16And then, it's only when growth stage, we'll have a lot of companies, then we'll have enough candidates to IPO
31:22in Europe.
31:23We're not there yet, but we're on the right track.
31:26Benoit, you experienced IPO.
31:29Yes.
31:30Two.
31:30Yes.
31:30Okay.
31:31Can you just tell us it was Criteo's?
31:34So, I think it's a great example to illustrate what was said when we took Criteo Public.
31:39Now, it's dating a bit.
31:41It was more than 10 years ago.
31:42It was 2013.
31:43Now, it's important because things have changed a lot in the ecosystem and I would share your optimism on the
31:49fact that there is a cohort of companies that should have, at least for some of them, the ingredients to
31:56go public potentially in Europe and offering more, I would say, meat to large cap potential for technology companies in
32:03Europe.
32:04At the time of Criteo, very clearly, we chose the U.S., and we chose the U.S. because of
32:11the depth of the market, the depth of the ecosystem.
32:14It was quite a complex solution, Criteo.
32:18AdTech was not known at all in Europe.
32:21There was nobody following high tech on the sell side in Europe.
32:27It was not a large IPO.
32:28I mean, we went public on a market cap of 1.2, 1.5 billion.
32:33So, it was very clear that there was a significant risk of liquidity for the investors.
32:38So, it was obvious as a choice, and we never regretted it.
32:42However, I think for large cap companies that can have the aspiration to be, you know, north of 10 billion
32:51on the day of IPO and grow from there,
32:54I think the story can be quite difficult, quite different, quite different in Europe.
32:57I think there should be appetite in the years to come for those companies.
33:02Now, the question is, when you are there preparing for it, you want to minimize risk of execution.
33:09So, that's a trade-off on your investors, certainly, the management, but the investors want to minimize risk of execution.
33:15And the reason why I think we are going to see still more companies going public in the U.S.
33:21for that very reason.
33:23But I'm hopeful that this will change over time.
33:26One thing I would mention about going public, there, you should really be prepared, because this is a wide world.
33:37And, you know, there is no chance, no forgiveness, no chance of, you know, missing earnings once in the first
33:47two years.
33:47Even later, it's not a good thing, but in the first two years.
33:50Otherwise, you know, the market is going to discount you almost forever.
33:55So, it's a risky business to go public.
33:59And you need to do that once you have super solid business, super solid metric with a reservoir of growth
34:06in front of you.
34:08Because it's just a start of a journey.
34:10It's not the end.
34:11It's a start.
34:11Maybe a comment on what he just said.
34:15It's so true, because I come from public equities.
34:18And the way companies communicate to public investors is very conservative.
34:25And then I switch to the world of private equity.
34:27And everybody is telling you next year they're going to grow 60%.
34:31And then the year after, in fact, they only grew by 30%.
34:34And they're like, oh, I'm sorry.
34:36And then you paid for 60%.
34:38And you have to completely shift mindset when you're going public.
34:42You shift from a mindset where you're overselling next year to a mindset where you're underselling next year.
34:48And this, I think, is what companies are not really understanding and where the gap could be in terms of
34:56what he says about the European ecosystem.
34:59I think they don't realize that it's, first of all, a communication exercise.
35:04And the mindset in the entire company needs to change from budgeting to how salespeople look into the future, how
35:13they read their numbers, how they do their...
35:15So it's the tooling that needs to be ready to provide you with the right information, but also the mentality
35:21of under-promise, over-deliver, from over-promise, under-deliver that I witness every day in the private market.
35:31On predictability, predictability is critical.
35:34So you need to get your business to a level of predictability that allows you to under-promise.
35:40And one last question, because we talked a lot about exit from the startup perspective, but from your perspective, you
35:49know, as VC, we see you need to do secondaries.
35:54And are you, today, pressured by your LPs you have here to do exit for that?
36:02I think it depends.
36:05I think funds are definitely doing secondaries in general, as a general statement.
36:11I can speak about, Don, some of our very early funds.
36:14I think there's a few things at play here.
36:17One is how long have those funds been in deployment, whether it's a sort of 10-plus horizon or not.
36:23I think the discount that you're getting on that secondary, whether it's, you know, 10% to NAV or whether
36:31it's 30-40% dramatically changes.
36:34You know, LPs would be much happier with only a 10% discount, and typically they would encourage that.
36:41And then it depends when there's a need for liquidity, whether it's on the GP side or whether it's on
36:46the LP side, right?
36:47Sometimes LPs need to show DPI before they can commit again, or likewise if a GP needs to fundraise again.
36:54So these are probably the different elements that are at play.
36:59I wouldn't say, you know, pressure like crazy now that, you know, but for older funds, there's always a conversation
37:07to be had, especially if you can get a good price for those.
37:13And often it's a number of positions.
37:15It can be the whole fund.
37:17It depends, yeah.
37:19And Hala, you have 30 seconds.
37:21Very briefly, yeah, the song of my generation was under pressure, and I think it's definitely played today, just because
37:31companies have stayed private for much longer than before.
37:35So LPs, our investors, experience also this lack of liquidity, and if they are to reinvest in our next fund,
37:43we need to show liquidity because the proceeds of these funds will be reinvested in the next fund.
37:51And, yeah, probably also, time is off, but we're just paying the price of a bit of exuberance that happened
37:59in the tech market in 21, 22, and, you know, we just have to be patient.
38:06Well, thank you very much again for being here today.
38:09Thank you.
38:10Thank you.
38:13Thank you so much for that awesome panel on exit strategies and IPOs.
38:17Charlie, great moderation.
38:18Thank you.
38:18We'll see you back here tomorrow.
38:20We are right now going to put into place our exit strategy at stage four.
38:25It's been a fantastic startup day.
38:27We're going to be back here tomorrow, however, for more speakers, masterclasses, Ask Me Anything, Meet and Speaks, and we're
38:34going to be focused on future science and resilience, future societies, I beg your pardon, and resilient ecosystems.
38:41Have a great evening.
38:42Thank you so much.
38:43See you back here tomorrow.
38:44Ciao.
38:44Ciao.
38:45Ciao.
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