Level5, a company committed to improving the reliability and performance of business applications
Level5 is a software company founded in 2010, specializing in application architecture and performance, with a particular focus on Application Performance Management (APM). The company has developed the Nudge APM solution, which improves the reliability and performance of business applications. Nudge APM enables development and production teams to monitor, diagnose and optimize the performance of their Java, Dotnet and PHP applications, in real time and with an in-house view, quickly and efficiently, and at lower cost.
Just as IT infrastructures are systematically monitored, Level5 is betting that all applications will be monitored in the years to come. Its ambition is therefore to cover 100% of the applications in its customers’ production and revenue environments.
The company reported sales of €500k in 2013, and in January 2014 employed 11 people, including 8 dedicated to R&D and support. Expected sales for 2014 are €1 million.
Ambitions and valuation of your company to establish a strategy in the search for financing
In June 2013, Level5 launched a fund-raising initiative to strengthen its commercial development, but also to support its Research and Development department. According to Mr. Matthieu Walckenaer, one of Level5’s founders, in charge of this mission for the company, before starting the concrete search for a financier, it was necessary to establish a real strategic reflection and a solid business plan for the next 5 years.
In this process, Level5’s first difficulty was to assess the desired amount, which would condition the whole approach and the type of players to be contacted. Level5’s initial goal was to raise between 1 and 1.5 million Euros. In view of the current economic situation, Level5’s directors revised their ambitions downwards, opting for a two-stage approach: 300 k€ in the first round, followed 18 months later by a 2nd round to raise between 1.5 and 2 million Euros. Given the amounts involved, it was not appropriate to approach funds specializing in Venture Capital, but rather private, individual players such as Business Angels.
Mr. Walckenaer emphasizes the difficulty of assessing the value of a company, beyond the subjective or even sentimental dimension of the founders, which requires a study/benchmark of market transactions. According to Mr. Walckenaer, the success of this approach depends on the founders’ ability to convince investors of their ability to develop the company according to the business plan presented and the strategy put in place.
A powerful network of private investors and BAs in the digital sector
Following these preliminary reflections, in order to obtain meetings, Mr. Walckenaer mobilized his networks and contacted specialized small cap funds and Business Angels, often organized along thematic lines, more reassuring for investors. Mr. Walckenaer underlines the fact that BAs/investors, when examining a dossier, are particularly careful to deepen the relationship with the entrepreneurs and establish the future operating mode, to identify the risks attached to the project (financial, technological, market access, etc.) and to negotiate the valuation of the company and the conditions for acquiring a stake in it.
During one of these “elevator pitches”, Level5 managed to attract the attention of an investor, Mr. Guy Gourevitch, who is very involved in business angel networks specializing in software. Through his contacts, Level5 was able to meet other private investors, who also showed an interest in the project. As a result, Level5 raised €400k from Victoria Partners and business angels from Investessor, France’s leading business angel network. (100% of intentions were converted within a fortnight).
The whole process represented a major investment in terms of time, with many appointments to be made, estimated at around 1/2 of P.T.E. by Mr Walckenaer, over a period of 5 months, between its launch in June and its closure at the end of October.
Interesting schemes, support but too little money
Mr. Walckenaer applauds the range of tax incentives available to individuals for investing in SMEs, and supports the development of such schemes.
According to Mr. Walckenaer, these investors provide more than just financing. Post-investment follow-up represents a genuine accompaniment of the entrepreneur, an active partnership that enables them to obtain advice, notably through consultative participation in governance, but also the provision of their own, often well-established, networks.
Overall, however, he deplores the reluctance of French investors and the low amounts raised compared to practices in the US in particular. As a result, French companies do not benefit from sufficient leverage, and often have to settle for the position of outsider.
In March, Syntec Numérique signed a partnership agreement with the French investment fund Alven Capital, one of the main players in the financing of growth companies in France, guaranteeing its members privileged access to the fund. A dedicated e-mail address and contact:contact-syntec@alvencapital.com- Raffi Kamber, 01 55 34 38 33
