It is hardly a sign of dynamism for a company to take more than five years from identifying a problem to doing more about it by setting up a corporate venturing fund.
That France-based advertising agency Publicis Groupe has this week committed to co-invest with local phone operator France Telecom-Orange up to €150m ($200m) in digital economy companies is nontheless to be welcomed.
France Telecom already invests in minority third-party equity through its Innovacom and Orange corporate venturing funds but the investment committee for the new fund will be drawn independently of both the phone operator and Publicis. This potentially opens the way for Innovacom to manage the new fund as its team is indepedent and already has third-parties committing capital to its funds.
Irrespective of management, the fund has a whiff of lateness about it. Maurice Lévy, chief executive of Publicis in late 2006 wrote a report on the intagible economy with Jean-Pierre Jouyet, now chairman of the Autorité des Marchés Financiers (AMF), the French securities regulator, but at the time was part of France’s Ministry of Finance.
In announcing the fund, Lévy said: "All over Europe, there are young companies with powerful, game-changing ideas, and they’re not getting the financial backing they deserve. The need for a major, dedicated venture capital fund became obvious while Jean-Pierre Jouyet and I were writing our report on the intangible economy in November 2006, and it became even more clear during the e-G8 Forum on the digital economy that took place in Paris in May."
Publicis was unavailable to comment on the delay between report and launching the fund but the major focus of the intangibles report was rather to encourage the creation of the Agency for Public Intangibles of France (Apie), which occurred in April 2007. Although the goal of the report was aimed at the French state, the implications for firms was also spelled out as inflexibility placing a brake on innovation through having few information and communication technology companies and financing difficulties for innovative small and medium-sized enterprises.
And the report ended: "In order for France, along with other countries and adopting an intangible – that is to say collaborative – approach, to turn this corner successfully, it will have to act quickly [and] act on all fronts."
This tardiness to set up a corporate venturing fund is less a reflection on Publicis than on many European companies in general – if France Telecom can have a successful unit in Innovacom investing for more than 20 years, why are others so reluctant? Global Corporate Venturing has tracked more than 115 fund launches in the past 18 months – the majority from outside of Europe (see the news below for the latest additions) – but lost count of the number of European companies that have talked about it and come near to making a decision at board meetings but failed to act in this period.
The opportunity to develop the growth companies of the future is being lost and Europe falling back to being a history museum for overseas tourists. As the European Central Bank pointed out in 2009, only three European companies in the world’s 500 biggest were formed after 1975, compared to 26 in the US. While the US has created Groupon and Facebook, Europe has sold CityDeal and Bebo to American firms rather than built them independently or sold them to European businesses.
Levy and Jouyet were right five years, but what have the companies they oversee done about it? Answers most welcome.