Bpifrance: strengthening the equity capital of SMEs and start-ups in times of crisis

Bpifrance

Entreprise

On 27 March, after its actions to ease companies' cashflow problems due to the Covid-19 crisis, Bpifrance launched the SME Strengthening Fund (Fonds de renforcement des PME), endowed with nearly €100mn, and the French Tech Bridge, €80mn for start-ups that were to raise funds shortly. The aim is to strengthen the equity capital of these companies.

The SME Strengthening Fund (FRPME)

Underwritten by Bpifrance Participations and the Program of Investments for the Future (French acronym: PIA) for €100mn, the FRPME is designed to assist SMEs or small mid-sized companies, whether industrial or service companies, with a turnover of at least €5mn, in their redeployment after they have been confronted with a sudden shock, the impact of the Covid-19 epidemic in particular.

The FRPME will provide €0.5 to €5mn in development capital, mainly via bonds with share subscription warrants (OBSA), to finance working capital requirements and to strengthen or restructure companies' balance sheets.

The French Tech Bridge

As part of the €4bn emergency plan to support start-ups announced by the government, a €80mn budget to finance equity bridges (periods between two fundraising campaigns) has been set up.

Financed by the PIA and managed by Bpifrance, the French Tech Bridge is primarily aimed at start-ups that were expected to raise funds in the coming months but are facing a contraction in venture capital due to the Covid-19 crisis.

This financing, which could range from €100,000 to €5mn, takes the form of Convertible Bonds (CBs), with possible access to capital, and must be co-financed by private investors. In total, with the leverage effect, the French Tech Bridge will make it possible to raise €160mn in equity capital for French start-ups.