France’s top impact seed fund looks to Western Europe: 'A lot to gain in this situation'

One of France's leading impact firms is looking to start building out across Western Europe, leveraging the benefits of its management structure.

Sitting in their Paris office, Audrey Soussan and Charles Fourault tell Impact Loop the story of the first five years of AFI Ventures – a seed and pre-seed impact fund – and the ups and downs they saw in the impact landscape in that time.

“[AFI was] born in 2020, and from 2021 until early 2022 it was a peak of the valuations, fundraising, number of operations, and then we saw the huge decrease of activity in late 2022,” says Audrey Soussan, general partner at Ventech, one of Europe’s biggest early-stage VC firms, which manages AFI.

Ventech have been investing for a quarter century in the tech sector, particularly around France, Germany and the Nordics, with a string of successful early investments. One of the more recent examples is Believe Digital, which saw Ventech notch a 36X exit.

The generalist firm also had some wins in the impact scene, for instance being one of the very first investors in the French circular economy success story Vestiaire Collective, now worth well over a billion dollars.

A gap in the market

Soussan, who has been with Ventech 15 years, tells Impact Loop that as the years went on they saw interest in impact growing among funders and consumers. They also noticed that despite many founders looking towards impact, many of them already successful entrepreneurs, there was not a flexible enough investor landscape in Europe to work with them – seed funding for impact still seen then as a risky proposition. Seeing an equity gap, Ventech launched AFI Ventures in 2020, in partnership with insurer Aviva France (now Abeille Assurances) and the La Ruche incubator.

Cut to the present, and AFI has over 40 companies in its portfolio, with a general ticket size of up to €500k ($570k). The companies cover a wide range of impact, from climate tech to circular economy, water management and care services. Standouts include leather alternative producer Faircraft, animal-free protein startup Verley, the ambitious forest restoration project Morfo, and a recent investment in solar innovators Moonwatt.

Charles Fourault, partner with AFI Ventures and himself a veteran investor, says he’s happy with what they’ve achieved in five years: “We have companies achieving some very interesting goals, and KPIs to prove that you can have a model willing to create systemic impact, as well as a resilient economic business model.”

For instance, Fourault revealed to Impact Loop that one of their stand-out portfolio companies, the climate-tech startup Nova Carbon, just received a injection of fresh capital from existing investors, and AFI itself.

The challenges ahead

Looking back to the current moment, and Soussan says many of the lessons they’ve learned in the five years of AFI Ventures suggest optimism for the European impact scene.

For one, she says, amid that slump from 2022 onwards, the slackening in activity they saw in Ventech’s other funds was not matched in AFI’s impact-focussed holdings: "We didn't experience the same decrease in the number of investment propositions and deals in the market. It stayed very active, up until now."

Soussan says this could be down to a number of things, but notes that the ethos of AFI – which has an all-round impact focus but looks for founders with strong intentionality – keeps their portfolio diversified.

Fourault adds that some of the ‘toolkit’ they developed when starting out – working with specialist impact companies in emergent frameworks – has made them more able to anticipate and adapt to challenges in funding and regulatory landscapes.

"Europe has a lot to gain in this situation," says Soussan. "It’s 10 years we're investing in the climate space, and as of today, we have one of the cleanest energies in the world. That brings a lot to the table when it comes to [for instance] where to put data centers to make AI best performing. Investments that were made in the past are today positioning Europe as the continent which has the most cards to play in these areas."

No matter what the US does, says Fourault, "the global demand for green solution is still there. It's a great opportunity for us to take the leadership on that and attract talent coming from the US or any other country, and to be the place to push hard on this topic."

Pressing ahead on impact

AFI typically looks to invest in one or two new startups per month. Fourault says the firm is remaining active in the energy and climate tech sector and are also making investments in health tech and ed-tech.

They also want to expand further out of France – currently their main site for investments – and leverage Ventech’s networks around Western Europe. Water tech is also a key focus, with a recent investment in vorteX-io which does flood risk analysis.

These new investments, says Soussan, will help keep AFI’s impact portfolio diversified and the firm resilient for the myriad challenges to come.

Fourault agrees: "You know, we are here for the long term."