People taking money from French state related funds should be very careful with the small print and study the case of DailyMotion with great attention to detail. Lest you too end up being deprived of a well deserved exit.
> On 25 January 2011, Orange acquired a 49% stake in Dailymotion for €62 million, valuing the company at €120 million. On 10 January 2013 Orange bought the remaining 51% for €61 million. (source: Wikipedia)
So, the Dailymotion founders, investors and (hopefully) employees got a $123 million exit. (edited to fix the sum)
That said, in my experience government-based funds and grants usually do contain clauses that limit what you can do for a set period of years, in attempts to be able to reap the fruits of the investments (not neccessarily profits, but also employment, more activity and visibility to local IT sector, etc).
As with all funding, there are always at least some strings attached.
The SIF invested in 2009, they could have blocked any kind of exit involving a foreign (likely American) party after that point.
> As with all funding, there are always at least some strings attached.
Yes, but usually those are to make sure that minority shareholders also play ball if/when the bulk of the shares can be sold, not to stop a deal from going through based on Nationalistic grounds.
From my point of view it was just a crappier Youtube clone that managed to remain mildly successful because it tolerated NSFW and pirated content. I saw nothing particularly innovative about it.
For example, in the Netherlands, there's many "provincial development funds" (eg BOM, OostNL, InnovationQuarter), who generally have a pretty good, though somewhat slowish/bureaucreatic, reputation. But in the end they're all government owned one way or another.
If you stifle the ability for such deals to be consummated you remove the oxygen from a lot of the lower levels as well.
That being said, in general, the state is a passive investor. What happened with Dailymotion is way different.
First, the issue came from Arnaud Montebourg, a powerful Minister of the Economy with statist views in the former Socialist government. The current government is very different. (By the way, Montebourg was replaced by Emmanuel Macron, the current President of France, as Minister of the Economy under Hollande.)
Second and most important, by the time this happened Dailymotion had already been sold. It was a wholly owned subsidiary of France Télécom, the largest telecommunications operator in France (commercially known as Orange). That operator was state-owned until 2004, and even today the State is its largest shareholder.
In other words, the State prevented a former public company it basically still controlled from selling a wholly-owned subsidiary which happened to be a startup it bought before. I disagreed with the decision then, and I still disagree today, but it didn't prevent an exit. Rather, the actual exit of Dailymotion was to a company owned in part by the State...
EDITS:
- Looks like I was too slow to post and senko beat me to it.
- The "FSI" articles linked by others talk about, which invested in Dailymotion, is now part of the "BPI" I mentioned (it was merged with other vehicles that invested at different stages).
- Some French people regret Montebourg style, for instance a journalist recently tweeted his disagreement about the governmental OK to the sale of Photonis, a night vision company, to a foreign group (https://twitter.com/VincentLamigeon/status/11742379454543708...).
Not that I know of. The SIF didn't have any ownership of Dailymotion anymore. Their shares had been bought by Orange.
Montebourg just said publicly he wouldn't let Orange sell, and it killed the deal.
Only slightly related: why do French startups need to take State money? Because we have much less private investment, in part due to our social model. We don't have many pension funds because most of the retirement system is state-owned, we have few private universities because the best part of the higher education is state-owned... So basically we have no LPs.
Ah, I did not know that, the way I heard it told - behind the scenes - was that their minority stake had that clause in it which gave them the legal power to stop the deal. I'm not sure on what legal grounds the French government would be able to stop this deal otherwise, if not through their control over Orange, which would seem to be a rather blunt instrument.
> Because we have much less private investment, in part due to our social model.
> We don't have many pension funds because most of the retirement system is state-owned, we have few private universities because the best part of the higher education is state-owned... So basically we have no LPs.
The LPs in most Western European VCs and PE parties are rarely pension funds. More often than not they are successful business people flush from selling earlier ventures. It is the lack of those that causes the dearth of capital in France, coupled with the rather difficult employment climate.
https://techcrunch.com/2009/10/22/dailymotion-raises-another...
Anybody that wants to argue that the Dailymotion is a strategic asset to France or the EU is welcome to do so but I fear that it will be a stretch.
https://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances...
They blocked it because of a misplaced sense of isolationist protectionism. That's arguably very wrong in a global economy but it's not 'just because they could'.