Didier Lallemand's interview | SG Ventures
SG Ventures: A strategic and invested venture capital partner
Since the acquisition of Fiducéo by Boursorama in 2015, Societe Generale Ventures has creating powerful synergies with startups and continues to leverage on the strength of Societe Generale group’s Business & Service Units to accelerate growth and develop the world’s future tech leaders. Societe Generale Ventures has been funding disruptive startups to foster the growth of their businesses.
SG Ventures is building a portfolio of investments to accelerate Societe Generale digital transformation and develop new business models to provide responsible and innovative financial solutions to our clients.
1. SG Ventures was created at the end of 2018: with what ambition?
The SG Ventures portfolio consists of 35 companies, for a total investment amount of nearly €200 million since 2015. We are a Societe Generale investment fund for start-ups launched at the end of 2018 and which I manage. Our objective is to create value for our clients through the launch of new offerings or new products but also to shorten our time-to-market and increase operational efficiency. The acquisition of stakes in start-ups is a means of developing a strong competitive advantage over the long term.
The Group initiated this strategy in 2015, when Boursorama took control of Fiduceo, a personal finance management tool. It was swiftly followed by 4 other acquisitions but also minority investments and investments in consortia such as We.Trade or Komgo.
SG Ventures is located within the Group’s innovation department and the General Management. This is because we consider it to be a tool serving the innovation strategy, innovation itself serving the Group’s strategy around the pillars Clients, efficiency and responsibility. This central positioning makes it possible to implement a portfolio strategy encompassing all capital investments in start-ups worldwide and to ensure their financial supervision
2. What differentiates SG Ventures from a venture capital fund?
First of all, the similarity with a venture capital fund is our commitment to support visionary teams in the growth of their business over the long term. However, what differentiates us is our investment approach whose cornerstone is the creation of synergies between the start-up and our business lines, and therefore ultimately strategic value for the Group. Unlike venture capital funds, our structure does not have a limited lifespan and we have no constraints in terms of liquidity maturity and horizon for withdrawing from the capital of our start-ups. This enables us to enter into a long-term commitment alongside founders and their teams.
3. What is SG Ventures’ investment approach?
As you have understood, our main investment criterion is based on the prospect of achieving substantial operational synergies with one or more of the Group's business lines. In terms of investment target, we target early stage start-ups that are sufficiently mature to work effectively with the Group. We therefore focus on start-ups that have developed a Minimum Viable Product already benefiting from certain commercial traction, and that have already raised initial pre-seed or seed funding. In the case of minority external investments, we preferably participate in Series A or B investments involving amounts of between €1 million and €10 million. The sectors in which we operate are related to banking activities, from retail to wholesale, as well as insurance and mobility, in geographical regions where the Group is present. Today, we are carefully looking at new models around open banking, crypto-assets, mobility-as-a-service and responsible saving.
The diversity of our types of investment is also a specific feature of our structure. SG Ventures includes majority or minority investments in external start-ups, investments in internal start-ups created by the Group’s employees, investments in market initiatives with other financial institutions, and lastly “indirect” investments in venture capital funds to access their deal flow and identify new investment or partnership opportunities. For example, in 2021, our two retail banking networks in France have formed partnerships with start-ups supported by the Partech VC management company: Societe Generale with Papernest around the management of contracts for individuals, and Crédit du Nord with Agicap around corporate cash management.
4. How does SG Ventures operate?
SG Ventures’ role is to support all the business lines in the acquisition of stakes in start-ups for strategic purposes. Everything begins with the definition of Priority Investment Areas with the strategy and innovation teams of our business lines. Then, our connection to the ecosystem enables us to identify investment opportunities corresponding to these PIAs, in addition to those identified directly by the operational teams; since January 2021, SG Ventures has analysed more than 100 opportunities through our relations with investment banks, incubators or other investment funds. In some cases, the business lines have teams dedicated to investment and the launch of new models, such as KB Smart Solution in the Czech Republic.
Our role within SG Ventures is to help the business lines define and maximise the expected synergies by involving all the entities in the Group that could benefit from the investment. We work in close collaboration with the Group Strategy Department which is responsible, in particular, for carrying out capital transactions. Once the transaction has been carried out, SG Ventures endeavours to create the conditions for the successful implementation of operational synergies. The structure also supports the cross-functional perspective of the portfolio during the strategic dialogue with the General Management.
5. How are the portfolio’s start-ups supported?
Our promise with regard to the external start-ups in which we invest is to facilitate their access to the Group's assets, in the broadest sense. We give them access to our clients or prospects through our distribution networks, such as the neobank for professionals Shine, through the Societe Generale network or the renewable energy crowdfunding platform Lumo distributed by our private banking advisers. The start-ups also benefit from our technical and regulatory expertise, such as the InsurTech Mutumutu which is backed by Societe Generale Assurance as exclusive risk bearer, and the FinTech Lemonero which has a credit line with Komercni Banca to finance marketplace sellers. Finally, the portfolio’s start-ups can access some of our data and infrastructures. This is the case of We.match and Opensee in respect of the Global Market Incubator managed by our Global Markets Department.
We have a different approach for internal start-ups, which we support in the transition from idea to project, and then from project to structuring as a subsidiary and finally scaling up. In this case, we are also involved in internal issues related to development financing, the recruitment of new resources, and adherence to the Group’s compliance rules.
6. The Group has acquired 5 start-ups since 2015: what is the motive for these acquisitions and how are they integrated in the Group?
These acquisitions are part of the Group’s commitment to offer responsible and innovative financial solutions to our clients. In the face of constantly changing regulatory and competitive environments, we need to demonstrate agility in our models and strengthen our strategic assets. The acquisition of start-ups is a lever to considerably accelerate our digital transformation. For example, the acquisition of Treezor in 2019 marked a turning point in the Group’s open banking strategy. Its technology platform supports internal projects such as Crédit du Nord’s neobank for professionals Prisméa and Societe Generale’s offering for teenagers Banxup. It now has 80 clients and nearly four times more employees than when it joined the Group. The teams are focused on managing the hyper-growth of the start-up that has maintained its creativity, as demonstrated by the launch of consumer credit with Franfinance scheduled this summer. At the end of 2020, Societe Generale acquired control of Reezocar, illustrating our long-term commitments with our partner start-ups. The Group was initially a minority shareholder of this platform specialised in the online sale of used cars through our subsidiary CGI Finance, for which it was a major distribution channel; Reezocar has 2 million unique visitors per month. The synergies then increased, particularly with our insurance subsidiary, and led to our strategic partnership being strengthened by the start-up joining the Group.
7. How are you organised internally, and what motivates you every day?
Today, we are a team of five people: Caroline de Barros, Start-up Success Manager responsible for the successful integration of start-ups and the implementation of synergies, particularly with Treezor; Amélie Royer and Alexis Riou, responsible for sourcing and defining resulting opportunities and synergies with our business lines, execution alongside the Group Strategy Department and coordination of the portfolio; me, who supervises the team and also works on these different projects and Claire Clamejane who, through her cross-functional perspective, supplies the deal flow and provides the link between the activities. However, we also work with the scouting teams, open-innovation teams who rely on Start-up Radar to manage a base of 5,000 correspondents across the bank and the many start-ups who want to work with Societe Generale.
It's an exciting job, at the crossroads between enthusiastic, fascinating and inspiring entrepreneurs and all Societe Generale’s business line teams. Our objective is essentially to identify avenues for synergies and value creation that can be implemented between the start-up and our business lines, making the investment even more strategic. Finally, once the investment has been made, our role is of course to ensure that the synergies are actually implemented, and value is created for Societe Generale, the start-up and our clients.