This is the translation of an article written by Arthur le Denn and published in Maddyness on December 21, 2021. You can find it in its French version by clicking here.
In the increasingly crowded investment landscape, funds are multiplying… and are all unique. Because raising money is not just about cashing in, we decided to paint a picture of funds to help entrepreneurs find their way around and choose the right investor. Karista’s turn.
This company has established itself as one of the key players in the French venture capital industry. Karista, which will celebrate its 20th anniversary on December 17, 2021, has evolved over the years to gradually broaden its range of activities. The company, which has raised some €220 million since its creation, has supported 95 innovative companies, mainly in the digital and healthcare sectors. Karista completed its latest closing in 2018, in order to feed its eponymous fund with €50 million. “We are at the halfway point of deployment, i.e. 8 companies out of a total of 16 that we want to support,” explains Catherine Boule, its managing director, who says she invests in seed and series A. Currently, 70% of investments are made in France and 30% in the rest of Western Europe. This balance which is likely to continued.
Investing from 500,000 to 5 million euros
The main fund is financed by Bpifrance as well as by major groups, such as the Dutch household appliance and medical equipment expert Philips. Karista is a leading player in e-health in France. Each year, the management company updates a map of investment funds active in the field. The company itself invests “between €500,000 and €5 million” in startups that meet its criteria. “We like solutions that are at the crossroads of digital and healthcare and that rely on a multidisciplinary team,” says Olivier Dubuisson, president, who also says he looks at “the profile of the founders, the depth of the potential market and the intellectual property” of the candidate company. Most often, it is a question of “identifying a niche likely to open up” according to the investor, who assures that “the most complex files are riskier, but also more innovative”.
At the heart of Karista’s investment decision is the ability to listen of the startup’s managers, because Karista systematically involves itself in the management of the companies it supports. “We are represented on the board of directors, in the traditional way. But we also organize regular meetings outside the board, where we speak about possibilities of refinancing as well as strategic decisions,” says Olivier Dubuisson.
In fact, Karista has created its own sort of focus group in collaboration with its investors. “We bring together our LPs in a think tank to discuss the digitization of healthcare. We analyze the key success factors and the major trends in the sector,” says the president. This helps to sharpen investment decisions and provides a framework for the operational monitoring of startups in the portfolio. In addition, the system is backed up by ongoing experience sharing between the Karista and the management of the portfolio’s startups.
Among the startups that have benefited from an investment from Karista are Implicity, an expert in remote medical monitoring, Incepto, an artificial intelligence company for medical imaging, and BabySafe Solutions, a health insurance company. “After the first investment, experience shows that you have to reinvest as the rounds go by. We get out when we have a merger-acquisition or a stock market listing,” says Catherine Boule. Catherine Boule explains, adding that she has made “between 25 and 30 exits” since the management company was founded. The most emblematic exit was that of DBV Technologies, a specialist in diagnostic solutions and treatment of food allergies, now listed on the stock exchange and valued at 2 billion euros in 2014. Karista says it helps its portfolio companies to go international. This is a complex task, as “the organization of healthcare systems varies” from one market to another, which complicates the task of young innovative companies across Europe.
An opening to space technology
About 15 people work for the fund management company, which recruits both scientific and managerial profiles. Its managing director, for example, is a biologist by training, but then went on to complete an MBA (Master in Business Administration). “The team includes eight investors and two venture partners. One of them is in London (UK), another in Munich (Germany) and the rest of the team in Paris”, explains Catherine Boule. She adds that she is considering the possibility of opening an office in Toulouse. The pink city is of particular interest to Karista, which launched a fund dedicated to NewSpace in 2021 after winning a call for tenders issued by the French National Center for Space Studies (Cnes). Named CosmiCapital, the fund made its first closing at €38 million in August. “We will finance upstream [manufacturing and sending satellites into space, editor’s note] and downstream [exploitation of data collected by satellites, editor’s note] operations.”
This fund follows the investment thesis of its equivalent dedicated to digital health, namely that 70% of investments will take place in France and that tickets will range from €500,000 to €5 million. “The Cnes is contributing to the fund, but also brings its expertise to help the investment team make a decision among the reviewed technologies. We have already received some 700 applications, and the first two operations will be announced in the first quarter of 2022,” says Olivier Dubuisson. Karista’s President also says he has formed a partnership with the European Space Agency (ESA) and has dedicated a team of three people – among the 14 working for Karista – to this subject. A second closing is already being prepared for 2022, with the aim of “doubling the investment capacity” of CosmiCapital. Note that the management company was no stranger to the space sector, as it had already invested in the startup Exotrail – which develops, among other things, propulsion systems for satellites -.
Karista, which has also operated the local Paris Region Venture Fund for the past 10 years on behalf of the Île-de-France region, says it has no shortage of projects for the new year. It is preparing the next generation of its main fund, dedicated to e-health, with a desire to make it even more “European by devoting half of the operations to France and the other half to other European Union countries”. The management company, which claims to be moving from “a Paris-based fund to a national and then a European fund”, says it does not want to go beyond this ambition, which will also lead it to “move away from the all-prime stage” and invest in series B in cases where it has a good command of its subject. “We will be very active in 2022, with three funds to deploy and another to raise,” says Olivier Dubuisson.