France's Time Equity Partners is on the hunt for €100m to invest in digital services startups across Europe and beyond.
The Paris-based fund, founded in 2009 by the company's exec team and Yam Invest, has already raised €35m out of the €100m it's seeking to raise before year's end despite what the company's president Henri Bodinat calls "tough market conditions".
To gather the remaining €65m, Bodinat is betting on public investors, such as France's Caisse des Depots; some large institutional investors from the country as well as elsewhere in Europe; companies that manage wealth for individual families; and large corporate funds.
It's there that Time Equity Partners' focus on growth capital has a chance despite the market conditions, Bodinat says: family wealth-management companies "realise they have to invest in the digital economy. And for them, doing it through a dedicated fund can be a good start in such a complex market".
Time Equity Partners is not a venture capital firm itself: it provides growth capital, and focuses on companies that have "already got more than €10m in revenue, that are sustainable and that are growing at a rate of greater than 10 percent", Bodinat says.
Corporate funds "have mostly bet on venture capital", he adds, which tends to keep an eye on developing tech opportunities, whereas growth capital will typically monitor and prepare for future strategic opportunities. Companies from sectors including energy, automotive, construction, have already expressed interest in the latter — "sectors where digital is going to have a significant impact".
Bodinat doesn't expect raising the €100m to be easy, he told ZDNet: "we have good reason to hope but some people are cautious because we don't have any track record yet. But obviously, it's inherent in the nature of our business. Ten years ago, it would not have been possible to do growth capital in the digital economy."
Europe appears to be lagging behind the US when it comes to growth capital, Bodinat says: "We talked about this issue with the director of Fleur Pellerin's [France's digital economy minister] office: growth capital isn't strong enough in Europe and in France."
It's a situation he believes is fuelled by the fragmentation of the European market: "growth capital is there to help national companies to grow into Europe and then globally. The need for European startups is to be strong in Europe first, and then expand to high growth developing economies." And Bodinat is also surprised that the European Investment Fund, which is there to invest in European private equity funds, "isn't moving forward more fiercely with us."
Time Equity Partners finances digital services companies in areas such as health, education, and connected devices. "We have identified those as fast growing sectors deeply transformed by the internet. And we're focusing on companies with a relevant offering," Bodinat told ZDNet. While e-learning is an area of interest for the company, it's "growing at a fast pace with a lot of companies that are too young for us" he added.
Bodinat cites Withings as one example of its investment strategy: the company makes connected monitoring devices which, by encouraging users to prevent or manage health conditions, are intended to cut the cost of healthcare. Time Equity Partners has also invested in companies such as Oodrive, which provides cloud storage services, and CommentCaMarche.net, a community based Q&A website.