For many entrepreneurs, internationalization is first thought of as a business development operation: new customers, new markets, incremental growth. The growing establishment in Silicon Valley of a new generation of European financing players, like Entrepreneur First, of startup studios like Hexa in San Francisco is significant, because it poses the question of setting up in the United States in a new way. The central question is no longer just that of the market, but that of place where structuring decisions are made.
Financing a growth phase, establishing a long-term industrial partnership or preparing an exit are not only about operational performance. These steps also depend on an ecosystem capable of absorbing risk, understanding the technology and projecting its uses on a large scale. And today this ecosystem remains, for the most part, American.
It is precisely this shift in the center of gravity that we explore in this episode of DECODE VC with Augustin Sayerco-founder ofUFO Capitalwhich has just opened an office in San Francisco.
To evacuate the question, OVNI does not seek to enter into head-on competition with the major players in American venture capital. “Investing in the United States means competing with American funds. And that’s really not what we want to do. » The Californian office responds to another logic: that of supporting European companies in their American trajectory.
This presence is justified, according to him, by three structural realities. The first concerns refinancing, because despite the rise of certain European funds, “there is still not enough money for our European startups to become international champions only with European money”. Building upstream relationships with American Series A funds then becomes a condition for access to scale.
The second concerns outputs. “Above $300 million, 90% of exits are made by American players. » However, recalls Augustin Sayer, a merger-acquisition operation does not take place ex nihilo. “You don’t buy a company if you haven’t been working with it for twelve to twenty-four months, knowing it. » The on-site presence therefore aims to put European startups on the progressive radar of corporate development teams.
The third concerns long-term relationships. “Create this link with the American players, so that they get to know you as the company develops. » A common practice in the United States, where certain companies have functions dedicated to ongoing relations with investors, well in advance of financing rounds.
Be there, or stay peripheral
Augustin Sayer emphasizes a point often underestimated in Europe: the relational density of the Californian ecosystem. “Yesterday, I was sitting next to the corp dev manager of a company that raised 200 million in photonics. I could have been in contact with him from France, but it’s much harder to create a real connection. »
The scene may seem banal, but it is revealing: being present allows you to transform an informal conversation into a strategic opportunity. “I told him that I had invested in photonics in Europe. He said, “I’d be interested in meeting them the next time they’re in San Francisco.” » This type of relational continuity remains difficult to recreate when we are at a distance.
A thesis constructed in advance
Unlike certain a posteriori support initiatives, OVNI inscribes this American logic from the beginning of its strategy. “Our thesis, from the start, is to invest in European deep tech which will scale in the United States. » Augustin Sayer knows the terrain well: schooling, university and early career in the United States, before returning to Europe eight years ago, then five years at Newfund.
This trajectory nourishes a nuanced reading of past attempts, he particularly salutes the pioneering role of The Refiners: “They started when no one was doing it. These are the trailblazers. » But the context has evolved. “Today the market is much more educated. Entrepreneurs know that they have to go to the United States. » Where, in 2017, internationalization was planned for several years, “80% of entrepreneurs today understand that we must be present there very quickly”.
Deep tech: more favorable terrain for Europe
This acceleration is also part of a sectoral shift; for Augustin Sayer, the software cycle has not been structurally favorable to Europe. “When you look at the number of software unicorns created in the United States, China or India, Europe pales in comparison. »
Deep tech, conversely, corresponds more to European assets. “Europe is known for its R&D, its research, its universities. » UFO thus targets sectors that it describes as critical: quantum, semiconductors, photonics, energy, health, cybersecurity. Areas where the barrier to entry is scientific, industrial and capital intensive.
But these forces come up against structural limits. “We have no unified market, no pension fund, and fragmented taxation. » Hence an assumed reading of the transatlantic space: “I see today a unified market between Europe and the United States because if we think “United States against Europe”, we have already lost. »
Leave early, sometimes too early
One of the most striking comments concerns timing. For UFO, American establishment must occur very early. “I would say from the seed. » The reason is very basic: “American funds do not attribute any value to the turnover you make in France. »
If he recognizes that this choice is not without risk. “When there are five of you in a company and a co-founder leaves for San Francisco, it creates a strong disorganizational risk. » according to him, “the game is worth it”.
The recommendation is to keep research and engineering in Europe, while gradually moving product, sales and leadership to the United States. And favor San Francisco over New York. “Statistically, New York does not produce decacorns. San Francisco is a city of builders. »
A fund as a trajectory operator
With a fund of 60 million euros, OVNI is now looking to take the lead in its seed rounds, with tickets worth around two million euros. “Our objective is to co-invest with international funds, to help companies deploy in the United States, and then raise with an American fund. »
The example of Ncodin, a European startup specializing in photonic interposers, illustrates this mechanism: initial European investment, international co-investment, then entry of a Californian fund a year later, while the founder prepares to set up in the United States.
This approach is generally well received by co-investors. “For them, it’s a free add-on. » In a competitive market, having a credible relay in San Francisco constitutes an advantage rarely internalized by European funds.
