"In 2007, we invested in Synthesio, an online reputation management firm. When we left in 2012, our initial investment had undergone a 27-fold increase." These are not the words of a London financier. The speaker is Julien Morel, director of ESSEC Ventures, an investment fund backed by French business school ESSEC and the Paris region chamber of commerce.
While Synthesio’s success story is unusual, Morel’s remarks capture the mindset of the few French universities that have made forays into venture capital. These schools generate revenue by buying and trading shares in businesses, often startups with high growth potential.
Investment funds like ESSEC’s invest in both listed and unlisted companies. The process is similar for French mutual funds like the one launched by the university Paris Sciences et Lettres (PSL) in 2018. Both aim to obtain a return on their investment, unlike foundations, which reinvest all profits.
ESSEC Ventures, founded in 2007, remains separate from the school and its two incubators, yet it provides funding for 90% of the incubators’ projects. ESSEC receives no income from the fund but it does appear on the school’s balance sheet.
ESSEC Ventures systematically reinvests its income in new startups, creating a virtuous cycle. Morel explains, "We buy 5–10% of startups’ capital, an average of €70 thousand. We don’t invest €2 million at one go. That’s not our role. We want to enable them to grow so they can raise more funds later."
The Lille Way
The University of Lille decided against creating an investment fund, focusing instead on its foundation. "Our goal is not to invest and make money. [Our goal is] to support academics and if that makes money, all the better!" explains foundation president Xavier Vandendriessche.
The university’s foundation, which was formed in 2015, received €15 million in funding from the sale of bio-pharmaceutical company stock purchased by the university in 1999. The investment generates roughly €400 thousand per year in income, which is used to fund new companies, especially businesses working in the health sector.
Jean Chabod-Serieis, Translated by Nina Fink | Publié le