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How investment funds support companies during growth phase

Omri Benayoun and Bruno Crémel, who head up the Partech Ventures Growth Fund, tell us about the challenges that companies need to tackle to steer a successful course through this key development stage.

Widely varying profiles, yet similarities as well

Companies in the growth fund may vary widely in terms of their revenues, business sector and even track record, but they all meet the crystal-clear criteria set down by Partech Ventures. “We decide to invest in a company if, and only if, it satisfies four criteria”, Bruno explains.

First and foremost, the firm must have the potential to be a game changer. “That is our number-one prerequisite. Every one of our investee companies offers some kind of breakthrough innovation, whether that be a technological development or a new kind of business model. The company must have the capacity to truly disrupt its market”, explains Omri. Next, the existing teams need to be up to the task. “We make sure that the project is being taken forward by outstanding, well-structured, sound teams that already have a track record of achievements.” The company also has to be growing strongly and heading towards profitability: “We are looking to fund companies whose annual income is generally – and of course this depends on the sector – in excess of €10 million”, adds Omri. In other words, they need to have reached a certain level of maturity in their home market. “The firms that we back through the growth fund are leaders, at least on their local market. Made.com, to give one example, had already built a name for its brand in the UK before we financed it”, Bruno elaborates.


Supporting entrepreneurs day by day

The fund does not only provide financial support. Bruno and Omri cite assistance for executives making strategic and operational adjustments, and access to a network of business and tech partners as key factors in forging successful partnerships between investee companies and the fund.

Senior execs working to transform a company in order to boost its growth have to grapple with new challenges on a daily basis. They face many questions, and advice is extremely precious. The fund can help by, for example, assisting the company to structure its go-to-market strategy, identifying new distribution channels or developing a new business line. “We are always on hand and talk to senior executives as often as we can – every day if need be”, says Bruno. It is not unusual for the team to spend several days with the company to help it make progress on identified topics. Omri and Bruno both feel that providing a listening ear is a crucial part of what they do. “Senior managers are constantly faced with new challenges, so we need to keep the channels of communication open and identify the points that we can help with”. The members of the Partech Growth team – Omri and Bruno in Europe along with Mark Menell in the USA – therefore have the job of advising senior executives across a wide spectrum of issues, drawing on their own past experience in running companies. “The more the fund team is invested, the better”, says Bruno.

A second key factor in success is the Partech network, which helps to accelerate business development. “We try to make sure that companies get the maximum benefit out of the network built by Partech Ventures. With around 150 companies in our portfolio, we can, for example, put executives in touch with other leaders dealing with similar issues, from tech questions to international development or sales force organization”, explains Omri.

 

The challenges of international expansion

Investee companies have grown to become leaders on their home market, but now they need to push on. This is a key stage and the moment at which growth funds like the one run by Omri, Bruno and Mark come in. “Following its success in the UK, we assisted Made.com to grow its business in France and then Germany last year. Similarly, FreedomPop, originally based in LA, launched ten months ago in the UK market and more recently in Spain. We want our local leaders to become global leaders!” says Omri.

To do this, companies have to meet three big challenges. The first involves intelligently planning the framework for the expansion. Firms will naturally gravitate towards sufficiently large markets offering a favorable competitive environment. But, as Bruno says: “It’s rarely possible to carve out your place on a new market by merely copying an approach that worked elsewhere”. The second is to strike a balance between the company’s fundamentals, which need to be safeguarded, and the changes that must be made to adapt to the local setting: “At this stage in their development, companies have to preserve the DNA that was the foundation for their success, while adapting to the specific features of new target markets. This can be a mammoth undertaking”, Omri explains. Companies also have to get the balance right when it comes to structuring their resources. With annual growth of up to 50%, investee companies experience a radical change in dimension with every passing year. The task at that point is to find a harmonious equilibrium between the initial employees, the founders and the new hires needed to get the company through this decisive stage.


A final word of advice

“Entrepreneurs who get to this level have already built great companies. I usually advise them to take their dreams as far as they can”, says Bruno. “These firms are incredible innovators. To keep developing, they have to hold onto their culture of asking questions and taking risks. And stick by their determination to be game changers!” adds Omri.

 

 

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