July by D’Ornano + Co.: Seizing the opportunity of cherry picking the right Tech companies, how Climate Tech should prove to be more resilient this time, and french stock-options ("BSPCEs") decoding
This is our monthly newsletter dedicated to Tech x Investments.
Dear all,
Last week’s heatwave in Europe was a brutal reminder of the “climate emergency” we are facing. In this context, the private markets are embodying the crucial role they can play to mitigate the dramatic impacts of climate change through putting billions into Climate Tech.
This is all the more interesting amidst the continued decline (or collapse?) in Tech valuations that we have observed over H1 2022. Indeed it seems that those modern private investors, those that embrace the new Technology * ESG paradigm that is profoundly transforming the private markets and creating an unprecedented wave of new investment opportunities, understand that things are different now. Historically green startups have seen funding collapse in previous market downturns. But things should be different now with a broader understanding of the specific growth and profitability drivers of these companies whose playbook is very different than other innovative companies.
Also, and perhaps more generally here, investors are starting to play offense and see the current valuation landscape as an opportunity to cherry-pick the right companies, i.e. those that have the right unit economics and that show an impact on our economy and beyond. So let’s be optimistic for the second part of the year and I wish you all a great and sunny summer break. See you in September!
Making sense of Tech valuations
The collapse in Tech valuations, recently illustrated by the 85pp drop in European Fintech Klarna’s valuation, is far from uniform. Unequal according to assets, it turns out to be much more brutal for unprofitable companies. But as Tech continues to transform our economy, some of these companies will likely turn out to become highly profitable ones, and constitute perfect targets for Private Equity funds seeking high-growth companies with a proven business model. So how can we make sense of what is unfolding in Tech valuations?
French stock options: Cash-out or continuous incentivization in Tech transactions?
The multiplication of Tech deals raises the question of reinvestment by managers and employees vs. their exit. In particular, the incentivization through BSPCEs (a specific type of free stock options dedicated to French companies) requires finding the right balance between sharing the value creation with the managers and employees and their continuous participation in ever-growing organizations where they will need to find purpose. Our Associate Partner, Arthur Leclerc, explores the implications of such choices here.
Climate Tech Investors Can't Afford to Repeat Past Mistakes | The Information
“Climate emergency”. Yes, this is where we stand and which last week’s heatwave has recalled us, if we ever forgot. Thankfully, climate tech investors are responding in force all across the globe. Nonetheless, to fuel the right investments towards climate tech companies it will be key to not repeat the mistakes of the precedent clean tech wave, and to truly understand the key differentiating aspects of these companies, quite different than classic software businesses. This article explains why.
Four Futures for Economic Globalization: Scenarios and their Implications | World Economic Forum
In Davos recently the world’s elites had one question: is globalization dying? The answer is no, but the future of economic globalization should be thought about so as to remediate for unwanted consequences - rising inequalities, climate change, etc. So let’s start thinking so as to make economic globalization, more likely than not here to stay, a strength. And the private markets have a key role to play here. We learn more in the whitepaper attached.
The Zendesk take private in June is the latest transaction in a rising wave of tech takeovers as Private Equity investors seek to take advantage of falling valuations in the sector. Indeed, an increasing number of private equity firms are taking companies private, as lower corporate valuations make it easier to lure businesses away from the stock market at bargain prices. Per Dealogic data, Private equity firms spent a record $226.5 billion on such transactions around the world in the first half of 2022, up 39% from the same time period last year. We explore the phenomenon here.
D’Ornano+Co. H1 2022 Press release
We are very proud to have partnered with our clients over 45 deals in the course of H1 2022, and to help unlock investments in winning Tech and Tech-enabled companies across all asset classes. We will continue to serve in the best way over H2 and are looking forward to finding and assessing emerging Tech winners!
Oktogone Group
We are pleased to have supported Oktogone Group, a leading education and training digital player, in its session to AD Education, a leading European platform for higher education in Ardian’s portfolio.
Audensiel
We are proud to have provided our expertise to our historical partner Sagard in the Leverage Buy-Out of Audensiel, a leading IT, business, and financial services company.
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