00:00:00
Voice-over: "100 days to success". This is the G_NIUS podcast. Guichet national de l'innovation et des usages en e-santé. With Lionel Richard, meet e-health innovators and key experts to help you succeed in your projects.

00:00:20
Lionel Reichardt: Hello everyone, you're listening to one hundred days to succeed, the podcast aimed at innovators and entrepreneurs in digital healthcare, but also at anyone curious about this field. This podcast is produced by G_NIUS, the Guichet national de l'innovation et des usages en e-santé. In this episode, we talk about the successful fund-raising of a start-up. To do so, we welcome Arnaud Rosier, cardiologist, founder and CEO of Implicity, a telemedicine platform for cardiologists. It enables patients to be monitored remotely, preventive actions to be taken and their quality of life to be improved thanks to data and artificial intelligence. We also welcome Jean-Marc Patouillaud, managing partner at Partech Partners, an investment fund. Arnaud Rosier Good morning, and thank you for accepting our invitation. First of all, could you tell us a little about your background and training?

00:01:09
Arnaud Rosier: My name is Arnaud Rosier. I am, as you pointed out, a cardiologist by training. A little more precisely, I'm what we call in France, Rythmologue, meaning a specialist in cardiac rhythm disorders, the heart's electricity. Alongside this professional background, I've always been immersed in technology. I went on to do a PhD on artificial intelligence methods applied to health knowledge modeling. And of course, now I'm first and foremost an entrepreneur.

00:01:42
Lionel Reichardt: Effectively, you created the Implicity company in 2016. What is its ambition?

00:01:48
Arnaud Rosier: Implicity is a digital Medtech company whose ambition is to provide doctors like me, cardiologists in hospitals in particular, with the best tools to manage remote care, remote monitoring of their patients equipped with connected medical devices. Nowadays, healthcare and hospitals don't just mean looking after patients who are present, but also managing patients at a distance. And it's clear that there are plenty of connected objects out there, providing information. But there's a huge issue for medical teams: how do we manage this information coming in from outside? From patients who often aren't even aware that they're transmitting this data. Our first product is a platform that recovers all the data from all the pacemaker manufacturers who are connected and whose data is magically uploaded to the cloud, enabling them to manage patient alerts, and ultimately to manage patients who need to be seen. And we're developing artificial intelligence and software medical devices to improve scalability. Scaling up this activity and also getting to predict events in patients.

00:03:00
Lionel Reichardt: In 2017, you made an initial round of financing of 800,000 euros. In 2019, you raised 4 million euros from several French funds. How do you know when it's the right time to raise money? How do you go about it?

00:03:14
Arnaud Rosier: It's not inevitable, it's good to be reminded of that. I would say that the best method is to develop the business and not need to raise. But it's not just a question of raising capital. There are certain business models where, of course, it's a bit the initial mode of financing, the time to have a product, the time to set things up and have a business model. I'd say that in our case, we're part of an extremely strong underlying trend that has been further amplified by COVID. And we're somewhere in a race. In other words, what we're doing is global in the geographical sense of the term. We really do have the capacity to operate in Europe and the United States and to solve this problem with digital methods on a global scale. Right from the start, he had the idea that we had to hurry up to take our place and become a leader. And so, in this case, the method for accelerating is generally a good reason for raising funds. It's the fact that you want to accelerate because you see that it's possible to succeed. In the start-up ecosystem, fund-raising and the use of investment funds is a bit of a default method for many entrepreneurs. You get the impression that everyone measures themselves by how much they've raised. So I'm not a serial entrepreneur. I'm someone who learned how to be an entrepreneur with this company. And I think I learned a lot through contact with other entrepreneurs who were either much more mature or a little more mature than us, and through porosity, as it were.

00:04:54
Lionel Reichardt: Is it more thanks to the incubators you're in or thanks to events you've attended or you've met other entrepreneurs? Or did you rely on fundraisers, those people who help organize fundraisers? How did you learn the codes and imperatives for successful fund-raising?

00:05:11
Arnaud Rosier: With Implicity, when we started out, we were incubated very early on at Agoranov, which was one of the iconic incubators in Paris. And at Agoranov, not only do we have the support of business managers and the incubator itself, but we also have the ability to connect with other companies that are similar to us. In the sense that these are companies involved in digital disruption, sometimes healthcare companies. And, of course, entrepreneurs and CEOs. And we get to meet people and move on. Ultimately, the role of the CEO is to have the vision. It's to set up the key recruitments in his company. But ultimately, it's also about learning and growing with the company. As part of the responsibility of financing your company, for me, this learning process essentially involves talking to other entrepreneurs and trying to learn from other people's mistakes before making your own. And of course, learning from their successes and methods, and seeing what could be replicated. At the time, I had had quite a few discussions with Yann Fleureau, who had just set up Cardiologs and was one or two years ahead of us. So it was a very rich exchange. And then there were other entrepreneurs. There was Alexis Mathieu from FeetMe. There were a whole host of extremely brilliant entrepreneurs, including a number of Polytechnique graduates, but not only. Who, in the end, had already been exposed to this problem of raising funds with a time lag. And that was something that was extremely enriching for me. For my part, in any case,

00:06:54
Lionel Reichardt: Did the question of going through a leveur arise? Have you met any?

00:06:57
Arnaud Rosier: Exactly. In fact, it's a funny question because it seems to come up again every time we think we're going to Shift funds. You say to yourself: Well, what would I do? Should I use a fundraiser or not? What's always difficult is to finally say to yourself: Why? Why use a lifter? And often, we say to ourselves that we can use a leveur, perhaps because we're lacking in confidence, etc. And I think it really depends on the level of confidence. And I think it really depends on how totally committed you want to be to fundraising. For me, there's something quite eco-substantial in the role of the entrepreneur, in the embodiment that the entrepreneur has of his vision and what he wants to do with his company. As a result, it's true that we've never worked with fundraisers at Implicity. But we have met a number of them. And in fact, a number of them told me, when I wanted to do our seed round, when we raised 4 million in 2019, I'd met some of them and they said: We don't think you need us and we think that where you are now, that'll do. And that was that. Well, I don't know if it's because they didn't want to work with us or if they really meant it, but it just happened. At the same time, I'm not passing any value judgement on those who go through fundraisers, because we see some incredible companies that go through fundraisers and raise considerable amounts of money. Let's just say that, in our case, we didn't do it through fundraisers. And I think that a certain number of funds, particularly in the United States, don't necessarily like companies to go through fundraisers. They want to have this direct contact with the entrepreneur.

00:08:33
Lionel Reichardt: How do you know who to approach when you want to raise funds? On what criteria should you choose on both sides? How should the investment fund choose the entrepreneur? How does the entrepreneur choose his investment fund?

00:08:44
Lionel Reichardt: As an entrepreneur, you have a choice. That is, you have enough funds on the table, as it were, that tell you, we want to invest. When you have several term sheets, etc., you have a choice. Which was our case, to be quite honest. And we had the ability to be able to, in quotes, choose who we wanted to work with. Because, as the funds often say, it's a meeting of minds. There has to be a human feat. In other words, one of the main criteria for funds, as we often hear in podcasts, is that there should be a feat between the fund's partners and the entrepreneur or team. I think it's also true in the other direction, and I think that very often, when we go looking for funds as entrepreneurs, we say to ourselves I want money and I'm going to look for money first, which is true. Otherwise, you wouldn't go to investment funds. But I don't think we should underestimate the extent to which it's a joint adventure. And the funds are going to be on the board and we're going to have to discuss a number of things. And in the end, it's a bit like a marriage. So, they're in it for the long haul. They're not going to come out straight away. So I think it's extremely important to try and get into that situation. To really be able to go with people you want to work with. So that's an important point. Then, how do you find the funds? Here again, the best situation is when they come to you. In other words, when you've got enough people talking about you. And so, there's an exercise in fund review that's a little surprising, in the end, which is an exercise in seduction that you prepare a little in advance. It's not simply an exercise in making appointments. We meet, we have paintings, we look at paintings. Everyone decides purely rationally. There really is something that surprised me a lot, because I didn't know these codes. There really is a fund-raising culture. There's the way it's supposed to happen. And so, as an entrepreneur, you have this role of being able to clearly express your vision and highlight both the company's vision, what you want to move towards and which will therefore explain the potential. But also the way you execute. And then the good news and milestones of the company that will reassure you of your ability to deliver that vision. And that's really something that's obviously of considerable importance in the culture of the meeting between entrepreneur and investment funds.

00:11:24
Lionel Reichardt: For your part, what were the decision-making criteria for choosing investment funds? What convinced you?

00:11:30
Arnaud Rosier: In our case, we're a digital healthcare company. There are a few digital healthcare funds as such, which are really in this niche. But the majority of funds are funds that invest in tech-type companies, often in Be To Be, people who do airlocks, digital platforms. And these are the biggest funds, the most numerous. And these funds bring specific expertise in terms of scaling methods and company organization. On the other hand, there are more health-oriented funds, but these are often more biotech funds, used to working on molecules, which are therefore focused on completely different strategies. So we wanted to combine a digital fund with a healthcare fund, and if possible a digital healthcare fund. And so, from the outset, we already had this constraint of associating and syndicating funds. And so we found, and were quickly won over by, Serena and Camel, a partner with whom I immediately got on very well. There was an extremely strong human feat right from the start, and an investment thesis that was compatible with them. Then we asked ourselves: Which healthcare fund would support us? Honestly, there were several very good ones around the table, and we ended up going with Arista, which was called cap décisif at the time. And they had a lot of experience specifically in digital healthcare. We also had another digital fund, Exchange, for which, to be quite honest, we hadn't necessarily planned to take on three funds. We had planned on two, but in fact, they showed an extremely strong capacity to be a partner in their discussions with us. And it seemed obvious to me that having three people around the board table with partners of different experience was a strength. So, in the end, it was the idea that it would be a strength that made us decide on this syndication.

00:13:41
Lionel Reichardt: The funds you've raised from are French funds, isn't it tempting to turn to the foreign market, particularly the US market?

00:13:48
Arnaud Rosier: So yes, I'd say it's arrived, but it's arriving rather now, after all. When we raised our seed in 2019, the ambition was to accelerate in France and Europe, at that point. We didn't yet have the dream of becoming an American leader. We were in the process of becoming a French leader. Secondly, I think we have a really good capacity to raise seed capital in France and Europe. And it's shifting. In other words, funds will tell you that it's becoming more and more competitive on the seed side, so they're moving more and more towards companies in ballast. I think that for an entrepreneur, beyond the temptation, if you don't really already have the capacity to do things in the United States or a market that from the outset appears global with things to convince you, you may want to launch in the United States and raise Americans from the outset. But this can also be ultimately destructive. Because you have to raise funds successfully. The aim is not to spend an infinite amount of time on it. And then, there's always the pitfall of raising too much in relation to your ability to accelerate. Because you have to take responsibility for adding value to the company. And you have to take responsibility for it through fund-raising. Generally speaking, when you raise funds, you put your finger in a positive gear to accelerate the company, but it's still a gear where you're generally not going to be profitable after six months. And so, very often, you're going to want to keep accelerating and have to Shift, so having an excessive valuation because you're raising too much money, and valuation is generally proportional to the money you raise, can also be a trap for the entrepreneur. So, I think it's something to keep in mind.

00:15:47
Lionel Reichardt: You were talking about gearing, another gear is bringing new shareholders into a project. How do you make sure you stay in control and have the right vision?

00:15:56
Arnaud Rosier: It all depends on what you intend to keep your hand in. I don't think investment funds think they're going to run the company for you, quite clearly. Above all, they don't want to be legally responsible for bad decisions, should that ever be the case. And I think this goes back to what we were saying earlier. Work with people with whom you can disagree and come to constructive decisions. That's why feat is extremely important. It's like in a marriage, you have to get married to people with whom you can disagree and come to the right decision collectively. After all, collective doesn't necessarily mean collegial or democratic. But in the end, the entrepreneur has to listen. He has to listen to what's going on inside his company, and he has to listen a lot to what's going on outside, in his market, with his customers and with his investor partners. Because the investor partners he already has in his capital are only examples of the partners he has. But there are all those with whom he needs to talk who could come to his capital and all those with whom he needs to talk because they are valuable lessons. Once again, I think the absolute advice is really to listen and to confront yourself with people who have more experience than you do.

00:17:14
Lionel Reichardt: To conclude Arnaud Rosier, what advice would you give to a digital health innovator who would like to raise funds?

00:17:20
Arnaud Rosier: As I said, I'm not extremely experienced. I've just discovered the codes of fundraising, etc. And so, I'll give the advice, finally, that saved me time and for which I really felt it helped me succeed so far. It's really to talk to people who have already done it close enough to your own experience. So, not necessarily companies who've done it ten times, but people who've done it one or two times more than you have, and so entrepreneurs, CEOs. Finally, there's something quite magical about entrepreneurship. There's a kind of benevolence that's extremely strong between CEOs and C-levels. These are people facing the same challenges as you. A kind of incredible wall that you want to break down or climb over, and they have an unfiltered discourse. Absolutely in private, but unfiltered. And that's how you learn. A few little tips, even in half an hour or an hour, that will radically transform your vision, your understanding of fund-raising culture. Which is really a very particular culture, with codes, but one that you need to understand to be able to understand how investment funds work and how to talk to them and how to work well with them.

00:18:44
Lionel Reichardt: Arnaud Rosier thank you for your testimonial. Do you have questions about fundraising and how to raise an investment fund? Elements of an answer with Jean-Marc Patouillaud, managing partner at Partech Partners, an investment fund. Hello, Jean-Marc Patouillaud. First of all, can you tell us about your background and education?

00:19:04
Jean-Marc Patouillaud: Jean-Marc Patouillaud, trained as an engineer on the Saclay plateau. What is now called Centrale Supélec. A career in the nuclear industry. In the six years that followed at MBHEC, on the other side of the Saclay plateau. And then, after entering the VC religion, "VenShare" in 1990, never to have left.

00:19:31
Lionel Reichardt: You head up Partech Partners, an investment fund that originated in the US, but has operations on four continents. Among your feats of arms are companies like Fork, in the healthcare field, companies like Lifen, Alan, Cardiologs. What is an investment fund? What are Partech's missions?

00:19:49
Jean-Marc Patouillaud: An investment fund isn't often presented that way, but that's the way I like to present it. It's a relay between money, money that's expensive and to which we pay a lot of attention. It's our investors' money. It's an intelligent relay, towards investment in technologies that will anticipate tomorrow's world. In a way, it's an adventure in which we have to be very careful with the money entrusted to us, while at the same time helping us to build this world of the future. In the middle, at the center of the chessboard, of course, is the entrepreneur, with whom we're going to forge a relationship that is absolutely crucial.

00:20:38
Lionel Reichardt: This relationship starts with an initial contact for the entrepreneurs who listen to us. How do you get in touch with an investment fund? Who should make the first move?

00:20:46
Jean-Marc Patouillaud: We're used to saying that fundraising. Fundraising is not a battle, it's a war. It's not a meeting of the minds. And then, I try to sell you a carpet in the best conditions. Or I, the seller, will try to get the carpet at the lowest possible purchase price. It's a real encounter between two people. It's something you prepare for. And to be very prosaic, I'd say there are two ways to get this relationship off to the best possible start, and that's either to be introduced, presented by people who are credible with investment funds or credible in their industry. Or I'd say it's a bit like the Annunciation process in the New Testament. That is, well in advance, a year, maybe six months, but not month 1. Make yourself known, have nothing to sell, simply make yourself known, share the vision, share the mission of the project you want to present, so that you can meet a year later, but this time with facts. And then, if possible, a business plan. So, it's a war plan rather than a battle plan.

00:22:19
Lionel Reichardt: What are the aspects that will most interest you in a project and a company? Is it the entrepreneur's vision? Is it the financial aspects?

00:22:28
Jean-Marc Patouillaud: It's all in the numbers. Nevertheless, the numbers aren't going to count in the same way depending on the stage the entrepreneur is at. There are several aspects. Once again, there's the company's stage of development. If it's just out of the garage, commonly known as the seed stage in our jargon, it's clear that we'll be relying above all on the vision presented by the entrepreneur and the personality of this entrepreneur. If this is the case, the way in which he has surrounded himself. And as we progress through the company's development stages. We also come across companies at the "VenShare" stage, or even at the development capital or Growth stage. What we call Series C. Series D. Here, we're going to have some notions to take into account. Of course, figures are everything. As I said earlier, but also the notion of matching a product to a market. So, it's a multi-criteria analysis that aims to measure the size of the market to be established. The suitability and differentiation of the product in relation to what is present in this market. And then, in a much more refined way, the entrepreneur's ability to surround himself with people. As the old adage goes, a good entrepreneur is someone who knows how to surround himself with people who are better than he is, in every field. To use perhaps a metaphor of my own from the world of theater. The ideal scenario or team for us is a bit like that of Louis Jouvet, the famous director and incidentally actor, who described his way of putting together a real theater troupe. He said that there was the one who looks at the stars, the visionary, the one who sees far ahead. And then there's the person who has to keep the troupe going, who has to manage the troupe, make sure everyone is present at rehearsals, make sure the money is flowing into the theater's box office. Well, the company is probably the combination of these 2 personality types in the same team.

00:24:51
Lionel Reichardt: Once the agreements are signed between the start-up and the investment fund, what are the day-to-day relationships like?

00:24:56
Jean-Marc Patouillaud: Once you've made the investment, things change, since for the time being, the entrepreneur and the investor are on the same side of the table, i.e. sharing the same interests. They are both shareholders. Their only common goal is to increase share value. So, a priori, all's well. We're pulling in the same direction. But if this team is to move fast, it must fulfill all its promises. We investors can't be content with being, if you'll pardon the expression, "yes-men". Success will come from asking the right questions. We're able to challenge the entrepreneur so that, even when things are going well, we try to tell him or her that things could go even better. Conversely, it's clear that in the little holes, the chaos of the company's history, we must also be able to accompany and support the manager. It's not schizophrenic, but in any case, it's dual, to be both the best challenger, the best itching powder, and also the confidant in difficult times. Because let's not kid ourselves, in such cases, we'll be the person closest to him, even before his customers, his suppliers and even less so his bankers.

00:26:33
Lionel Reichardt: If I'm a project owner, how do I choose which investment funds to apply to? Are there any specificities between funds?

00:26:40
Jean-Marc Patouillaud: Fundraising is a war, not a battle. So, it's actually very important to spend time on selecting the fund you want to work with. I'd go even further, perhaps even with the person or partner within the fund you want to work with. You need to prepare and anticipate these meetings, to show the investor that you've done your homework, that you know exactly what you're capable of investing in, what you're capable of helping with. Or, on the contrary, what we won't invest in. And that's a sign of professionalism that, in a way, foreshadows the entrepreneur's ability to anticipate. It's much appreciated. Then, as you said, there's the alchemical side, i.e. making sure there's compatibility. No, just strategic, industrial compatibility with the background you're going to be working with. But there must also be an alchemy of people with this investor, and you mustn't hesitate to ask him for lunch or dinner to go beyond the purely financial or strategic conversation. When you go to the Partech website, you see our tagline, which reads "Think bold, move fast, and be fair", and it sums up exactly the attitude we expect from entrepreneurs. And I think that's exactly what he can expect from us too. Think bold means having ambition. To do better than the average. Doing better than the competition. That's what we sell to the entrepreneur in terms of dedicated time and financial expertise. Move fast, because you need to be able to make decisions very quickly. This is true for us because we are often in competition. There are several funds looking at the opportunity at the same time. But it's also true for the entrepreneur, who must never be slow to make sensitive decisions, particularly when it comes to recruiting or, on the contrary, letting go of employees. And then, be fair, because we believe that you can't have a long-term relationship or build trust without this Fair attitude. And we never take contractors by the back door. We're always very direct. We can sometimes be criticized for being too direct, but we can never be criticized for being "Unfair". And that's the kind of behavior we expect from entrepreneurs, which can translate first and foremost into great transparency about what's going on in the company, whether it's the big moments or the bad news.

00:29:56
Lionel Reichardt: To conclude, Jean-Marc Patouillaud, what advice would you give to a project owner wishing to raise funds and approach an investment fund?

00:30:03
Jean-Marc Patouillaud: He has to make sure, first of all, that he really needs this investment fund. You don't go to an investment fund because it's fashionable and because other companies, competitors or colleagues are raising money. You can't go to an investor if you don't have a real project. So the project, the vision, the ambition, is what guides the entrepreneur's approach. Money is just the means. So this way of highlighting vision and ambition will only strengthen the investor's desire to invest in the company.

00:30:51
Lionel Reichardt: Our episode is coming to an end. Thank you for listening to us. We thank our two guests for their availability. Feel free to subscribe to the podcast on the listening platforms. We look forward to seeing you soon for a new episode of 100 Days to Success.

00:31:15
Voice-over: Those who are making e-health today and tomorrow are on the G_NIUS podcast and all the solutions to succeed are on gnius.esante.gouv.fr