While Emmanuel Macron announced that he wanted France to have 25 unicorns by 2025, <\/b>this figure was reached on January 17, 2022, and is now at more than 27 French unicorns. But how are these unicorns born?<\/b> Thanks to the fundraising done by their founders. These fundraisings are constantly increasing and reaching ever more enormous amounts. However, is the amount of funds raised really an objective indicator of the company’s economic health?<\/b><\/p>\n\n\n\n
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Read more: <\/b>Fundraising rankings: which university has graduated the most entrepreneurs?<\/b><\/a><\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n First, let’s look at how fundraising works.<\/b> When a company is created, it needs funds to develop, pay its expenses and buy the raw materials that will allow it to sell its own products. However, all these costs are often important and prevent the company from developing as it would like<\/b>. So, to compensate, the founders decide to raise funds. But how does fundraising work? The company looks for investors <\/b>(institutional, such as investment funds or banks, or individuals, such as business angels). If the investors believe in the company’s project and trust its business plan, they decide to invest in the company. To do so, they buy shares in the company and ask for a pre-determined return on investment.<\/b><\/p>\n\n\n\n By doing so, the startup gets cash to develop, but loses part of its sovereignty<\/b> and must then face its investors who demand a quick return on investment. <\/b><\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n With a record of \u20ac11.6 billion raised in 2021<\/b>, FrenchTech continues to break every record. On average, it is estimated that \u20ac15 million is invested per fundraising. This figure is THE amount highlighted in the press and in the media<\/b>, which turns it into a sign of economic health. Indeed, if a company has 100 million euros (amount raised) at its disposal, one can only imagine that it is profitable.<\/p>\n\n\n\n However, this amount does not say how much the company is supposed to pay back<\/b> its new partners. On the contrary, an indicator such as the profitability of the company for one euro invested <\/b>would be much more meaningful. Let’s remember that less than 10% of the companies that have raised funds reach profitability. <\/b>Most time, they end up in judicial liquidation in order to be able to pay back their investors. <\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\nHow does fundraising work?<\/b><\/h2>\n\n\n\n
Fundraising: the new indicator of a company’s financial health<\/b><\/h2>\n\n\n\n