Truffle 100 France

By Bernard-Louis Roques, General Partner IT, Truffle Capital
Last year was a turning point in the history of the French software industry. The acquistions by foreign companies of seven leading national vendors, including the purchase by SAP of Business Objects - France's jewel in the crown -, show that the hour of consolidation has struck. And it's been quite a blow : According the Truffle 100 ranking of French software vendors released. In late April, total revenues in 2007 of the top 100 players plummeted 13.2% to €3.7 billion euros, from €4.2 billion in 2006.

The consquences are clear : to remain viable and dynamic, France's vendors must internationalize early in their development, since only world market leaders will be able to retain their independence and profitability in the face of new challengers from India and China, as well as the more established companies in the US, who remain on the prowl for new acquisitions.

All is not gloom, thankfully, France's software vendors continue to generate jobs – 10,000 over the past four years - and can still boast of R&D spending of €1 billion in 2006, for a total of €3.8 billion over the past four years. Leaders like Dassault Systèmes continue to serve as examples of France's robust creativity in software. What's needed now is a true government initiative to help software vendors gain access to larger markets. A Small Business Act, aid for exports, and opening research programs to small and medium sized businesses could be part of a package to set French vendors on the path to internationalization.

Inside Truffle

We are pleased to annonce that the final closing for Truffle Capital Program II, initially planned for 31 December 2008, has taken place six months ahead of schedule. The reason lies in the unexpected phenomenal development of three of the new fund's seven portfolio companies – GoAdv, MoMac, and Osead, - in both revenues and growth, representing short-term exit opportunities for Truffle Capital.
GoAdv, for instance, has been listed on Alternext since last summer. MoMac recently announced an 80% increase in sales and has acquired a company in France. And Osead listed the Compagnie Minière de Touissit (CMT), a leading Moroccan mining company, on the Casablanca stock exchange this month.

All of this activity is bound to translate into significant value appreciation for early committed investors in the program ; however, because of the conservation valuation methods used by the management company, the impact of this appreciation on the valuation of the fund won't be recorded until later. As a result, the shares of existing LPs would be significantly diluted if the fund continued to accept new investors. For this reason, no further subscriptions are to Truffle Capital FCPR II are being accepted at this time. The success of Truffle Capital II, which close with funds of €130 million, means that we plan to begin raising a third investment program in early 2009. 

Company in the News

MoMac has developed a new product comparison service, dubbed KiesKeurig, which enables consumers to check and compare products. The service is available on a new mobile site launched by Ilse Media, the leading online publishing company in the Netherlands. It provides easy access to 80,000  popular consumer goods, such as LCD-TVs, digital cameras, notebooks, cell-phones, game consoles and navigation equipment. The consumer finds average user ratings on aspects like quality, design, ease-of-use and other features. The mobile site provides detailed product specifications and an overview of shops where to buy it, including different retail prices. The idea is to give consumers increasing negotiating leverage in stores.

KiesKeurig was featured on Dutch national television (RTL NL) recently. In the video, a test-team entered a store in Amsterdam, incognito and carrying a hidden camera, to buy a digital camera. They succeeded in getting a discount of €30 after looking up the product through the mobile version of KiesKeurig and proving that there was a cheaper web-store available.

Portfolio News

• Life Sciences
Vexim, has just received the CE mark for its SpineJack vertebral implant, a medical device which uses an innovative technology for the surgical treatment of vertebral compression fractures (VCF). The medical device will address a global market that is estimated at $1 billion, with more than 200,000 new cases per year.

• Energy
Osead, a French company specialized in the exploration and production of energy resources,  has listed 30% of the shares in its subsidiary, Compagnie Minière de Touissit (CMT), a leading Moroccan mining company, on the Casablanca stock exchange. The IPO was a rousing success, with CMT becoming one of the largest capitalizations on the Casablanca exchange.

Novad, a French spin-off from GTI (Knauf Packaging) specialized in the treatment and decontamination of soils, water and air, has acquired via an LBO Finn'Import, a French manufacturer of houses made of wood. Founded in 1976, Finn'Import is specialized in creating 100% organic houses to order using primarily red pine imported from Finland.

Dietswell, an independent specialist in drilling and in manufacturing drilling equipment for the oil and gas industry has announced strong growth in sales and profitability for 2007, with sales up +79% to €20.7m and net profit quadrupleling to €1.6m. “Our financial performances reflect the soundness of our economic model and the success of our technological innovations, » commented Jean-Claude Bourdon, Chairman and CEO. « Our strengthened balance sheet allows us to continue to invest and to reinforce our high added-value positioning, particularly in offshore. We are already in advanced negotiations for an offshore project involving our new RCR 2000 rig. The start-up of the engineering contract with TOTAL and the continuing operations in Sudan hold the promise of a further year of growth in 2008. »

• Information Technologies
NetMediaEurope recently announced a partnership with Ziff Davis Enterprise, a B2B  information and marketing resource, designating NetMediaEurope as the licensed provider of localized eWeek.com sites in France, Italy, Spain and Germany. NetMediaEurope will serve as Pan-European sales and client services partner for Ziff Davis Enterprise's portfolio of integrated marketing programs, including demand generation, e-seminars and live executive events. With more than 40 sites across Europe, NetMediaEurope, founded in July 2007 when Truffle Capital led a successful MBO with a group of VNU managers of several of the online media businesses from the VNU Business Media group in France, Germany, Spain, and Italy, has become the leading European B2B sales house targeting the IT professional audience and markets. The company's portfolio includes brands such as Computable, The Inquirer, PC Professional, Silicon, and Gizmodo.
"It's an honor to bring the renowned eWeek brand to the discerning European IT community, said Dominique Busso, CEO, NetMediaEurope. « Our insight into the European marketing needs of the B2B technology marketer and Ziff Davis Enterprise's extensive portfolio of integrated marketing programs will be a winning combination for our mutual clients."