Business angels and venture capital in France: tax issues (Policy Brief 237 - September 2011)
Administrative barriers to business creation were much flatter in France in recent years. For this policy to full fruition in innovation, quality of funding is crucial.
It allows to move towards creating a rare skill, now often attracted to big business or the public. The financing chain of "ups" in particular need of business angels - people outside the private sphere (family, friends, etc..), whose financial standing is sufficient to initiate high-risk investments and high yield. Their capital base provides entrepreneurs a minimum level of income over the past two or three years needed at launch an innovative concept. In the U.S., these investors "begin" each year tens of thousands of projects with an average content of 100 000 to 200 000 dollars. Further downstream in this channel selective financing, venture capital funds take over, with values over $ 1 million, to support the development of 3 000 to 4 000 projects with higher potential. Further downstream still, redemption or quotation allow the valuation of companies mature and efficient. Neither France nor continental Europe does have a chain of financing of this magnitude. The angels are fewer and occur on amounts of around 40 000 euros on average. On output, the stock market growth remains segmented and illiquid.
This note discusses the tax issues that would drain the savings of the wealthy to the issues of support and financing of startups, either directly or via specialized funds. The current incentive framework is fragmented by financial vehicle and relatively unstable. In addition, accreditation is provided for investors renegotiated regularly, which creates uncertainty about the sustainability of these devices. In this context, the definition of a few principles will avoid the stratification of devices hampering their effectiveness.
Contents:
- The need for financing channels dedicated to the boot
- Weaknesses of the seed funding in France
- The distorted structure of the fundraising
- Authors: Caroline Le Moign and Olivier Passet, Economy-Finance Department
with the assistance of Bernard Zimmern , President of the Foundation iFRAP
Press Contact:
Jean-Michel Roullé, Head of Communications
Tel. + 33 (0)1 42 75 61 37 - jean-michel.roulle@strategie.gouv.fr