FRANCE Law and Practice Contributed by: David-James Sebag, Donald Davy and Marie-Sophie Chevreteau, Gide Loyrette Nouel
2.4 Particularities Venture capital initiatives are strongly supported by the French public authorities, and this market is expanding quickly. This is the case, for exam - ple, with Bpifrance (the French public investment bank), which finances and/or structures a large number of venture capital funds to enable the growth of developing companies in the fields of innovation (Bpifrance is behind around thirty (30)% of the amounts invested in seed and ven - ture capital in France). The “Tibi” initiative should also be highlighted. The aim of the Tibi label funds is to develop the financing of tomorrow’s technological lead - ers while promoting the decarbonisation of the economy. Institutional investors, including the Caisse des Dépôts et Consignations and Bpi - france, have committed to investing in these funds. To date, EUR7 billion has been commit - ted. Data available for the first half of 2024 suggest that fundraising for investment funds dedicated to the innovation sector was lower than for 2023. More than EUR754 million was raised during the first half for over 41 vehicles. Consolidated data for 2024 is expected to be available soon. Continuation vehicles are expending on the French market and the French private equity association (France Invest) published guidelines at the end of December 2024 indicating how such funds could be established and managed. 3. Investments in Venture Capital Portfolio Companies 3.1 Due Diligence For early-stage companies, VC investors con - duct red-flag legal due diligence, in addition
• marketing regime (the AMF’s prior approval is necessary for a VC fund to benefit from the marketing passport or to be authorised to market under the French local marketing regime). The available, limited, private placement exemp - tions are mostly: • contact with an investor on a reverse solicita - tion basis; • contacts with managers of funds authorised to operate in France (either by the AMF or through an EU passport) if the VC fund is marketed as an eligible investment for the funds managed by those managers; or • contact with managers of third-party accounts authorised to operate in France (either by the AMF or through an EU pass - port) if the VC fund is marketed as an eligible investment for the portfolio managed by those managers. “Corporate ventures” are the only types of structure that are not regulated as such, and involve a single institutional investor. These funds are often set up by large groups and specialise in the group’s sector of activity. Depending on the type of investor, the regula - tory requirements are more or less flexible. Retail investors are entitled to a higher level of protec - tion than institutional investors. VC Funds must in any case comply with the rules applicable to the type of fund set up, whether these are the relative rules contained in the French Monetary and Financial Code or the rules established by the AMF for each type of VC Fund. The rules governing the AIFM and the depositary of the fund should also apply.
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