To Raise Money, Use Your Network Well! – interview with Gonzague de Blignières from Raise

Photo Officielle GONZAGUE DE BLIGNIERES_2016_couleur-1.jpgGonzague de Blignières is the cofounder of RAISE. At 61 years old, he’s an accomplished man, a father of four and grandfather of nine.
After scientific studies, he learned the job of investor on the ground, a profession he has practiced for 35 years. During his career, he directly or indirectly invested in around 250 companies in all sectors. Gonzague always has been very implicated in entrepreneurial philanthropy: involved in “Business Angels des Cités”, he also created “Réseau Entreprendre Paris” in 2004 alongside Hugues Franc (Beeleev’s CEO), participated in the Mulliez family “Fondation Entreprendre” and to ADIE’s (Agency for Economic Initiative Rights) endowment fund.

He agreed to answer a few questions and give some tips for entrepreneurs seeking to raise funds.

Hello Gonzague, thank you for agreeing to meet us! For a start, could you tell us about RAISE?

Hello Beeleev! RAISE is an investment company founded with Clara Gaymard, which is based on an unique model and a virtuous ecosystem. The idea is simple: gather within a club Big Companies (Total, Danone, AXA, Michelin, Engie, etc…), French success stories (Dassault, Betancourt,…) and institutions, in order for them to invest through long term minority tickets ranging from 10 to 40 million of euros in medium sized companies.

“The specificity of RAISE is that the team donates 50% of its ‘excess remuneration’ to a RAISE foundation dedicated to entrepreneurs.”

This foundation helps, in a purely philanthropic approach, what we call “growing young companies”. They generally are companies that are beyond the proof of concept stage, having 2 to 5 years of existence, recurring sales and a small dozen of employees, but who all lack the financial means to cross the next step. We’re the missing link between the Start-up and the SME.

“We therefore created a virtuous circle: Big Companies are joining hands to help medium sized ones to grow, and the success of the latter finances a foundation which, itself, finances growing Start-Ups.”

Today, RAISE Investment raised 400 million euros and invested in 8 companies like “Nature & Découvertes”, “Babilou” or “Jifmar”, for the most popular ones. When it comes to the Foundation, it hosted more than 1.500 young growing companies. We support around 130 of them through 5 well defined programs such as 0% 100.000 euros loans of honor, tailored coaching with the biggest consulting agencies, and all that for free… That’s RAISE’s concept in a nutshell: an ecosystem based on benevolence, transfer of success and the search of performance.

“Nature & Découvertes”, “Babilou”… RAISE invests in already well developed companies, which are those investment’s goals?

RAISE is a development capital company whose goal is to invest in already mature companies. For scale, the gross sales of companies we invest in are around 40 million and a billion of euros. Those companies are medium sized companies (between 250 and 5.000 employees) or promising SMEs.

What tips could you give to an entrepreneur looking to raise funds?

I’d have 5 small tips to give him. Let’s begin with the external factors :

Be well prepared before deciding on the timing of your fundraising: the timing is of the essence. Indeed, you have to analyze the context and decide accordingly. There might be circumstances external to the company’s life that oppose a fundraising (elections, bad conjecture…). You should not take the risk of getting a refusal because of circumstances exogenous to the company. For the internal factors:

First, a good project file that isn’t limited to a “good idea”.

  • Use your network well. Entrepreneurs do not have the habit of immediately surrounding themselves with a Board of Directors when creating their company. It is important to have senior members backing or championing the idea and giving credibility to the project.
  • Master your Pitch perfectly. A bad Pitch could cost you an investor. The pitch needs to be rehearsed, even if with friends or colleagues. If the pitch is performed by 2 persons, they should have equal speaking time. If alone, express yourself in simple sentences and observe your interlocutor well to make sure he understood.
  • Do not be deterred by self-doubt. All great entrepreneurial successes went through many strategies and business models before finding the right one. You need overcome obstacles and keep sight on the main vision and the final goal, despite the turns in the road.
  • See big. When seeking to raise more than a million euros, you need to have ambition. If the project is able to succeed on a local level, the investor will then be interested to see if the project can be scaled on broader markets.
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RAISE organises the Mardis-RAISE : events and conferences on specific thematics

What could be the sign that the project lacks ambition?

There might be several signs. If all the investors answer you that they won’t makeenough money in the project, it means that the evolution of the business plan is not sufficient. The second sign could be offering you more than you asked. For instance, if the idea is to sell your product through a salesforce and to hire 3 of them with 300k euros and the investors ask you why you don’t hire 10 of them for 1 million euros instead, it is a sign of lack of ambition.

An entrepreneur is a dreamer and a “Doer” altogether. He must be pragmatic and an utopist at the same time.

What are the mistakes to avoid?

  • Lacking flexibility. As entrepreneur, one should always question himself, change the business model if necessary. Therefore, all critics should always be taken into account while remaining convinced of your product and, above all, never think that the customers are wrong.
  • Forgetting to specify to the investors the distribution of the funds. You should, for instance, indicate that on a 1 million euro fundraising, 20% will finance real estate, 20% for the acquisition of means of production, 30% for human resources, etc… It is important to know how the raised funds will be affected.
  • Forgetting to plan the worst case scenario when you are in a partnership. Creating a company with partners is like a married couple, there is work involved. You should be able to anticipate crisis, knowing in advance that it will happen and decide of the right course of actions to follow at that moment. It often happens that entrepreneurs decide to launch a business between friends. At a certain point, they might find themselves in front of a dilemma: lose the friend or the partner.
  • To finish on a very personal view: you’ll perform better during the day if you sleep well at night. You need a strong personal balance.

 

“You can’t do everything in life, being an entrepreneur requires great balance between private and work life.”

Is it important to be supported when seeking funding?

Of course! There are many associations created around mentoring, coaching, support. “Réseau Entreprendre” was the first in France. All studies show that a funding that beneficiated from support is more lucrative. On average, 50% of Start-Ups close after 5 years. In the case of entrepreneurs networks and, especially in the case of “Réseau Entreprendre” which I know well, this number falls below 17% (83% of loans of honor are paid back).

What you need to do is, as I said in the beginning, to be supported by a board of seniors to guide you better. This board will channel you the right contacts and inspire you the strategies you didn’t have yet. It will help you in personal reflections you do not manage to have or can’t seem to achieve because of lack of time. By the way, at RAISE, we lend honor loans only to companies that enjoy such support. It’s not only a matter of choice, it’s a matter of strategy.

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Start-up supported by Raise with honor loans

Finally, last question: About reporting, which might be the good practices towards investors according to you?

I will tell you a story. 30 years ago, when I worked at BANEXI, I had met an entrepreneur who explained to me the method he used to monitor his cash flow. You have to remember that, at the time, there were no Excel or smartphones. He pulled a small stick from his drawer that was only a dozen of centimeters long. He laid the stick on a board on his desk that listed his gross sales, his backlog, his orders and cashflow. The stick equated exactly to his burn rate (fixed monthly rate added of a 3 month margin). This simple stick incarnated his method: if the orders were below the length of the stick, he would go and seek new customers.

“There are 3 very simple numbers: Gross Sales, Orders Volume and Cashflow. With these 3 indicators, reporting is enough and there is no need to build complex reports.  If you are an entrepreneur, those are the numbers you need to follow daily.”

I do not know of a single entrepreneur who doesn’t go to sleep watching his expenses to know where he stands. When it comes to financial reporting, I think that the right rhythm is monthly and you should maintain it.

“Finance folks get worried when they have no news.”

It’s stupid to generate worries because you forgot this month’s report. You should know the burn rate and monthly expenses. They are simple numbers, but all that is most needed!

Thank you very much Gonzague!

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