Don’t Underestimate First-Time Founders

French Tech's Rise and the Underrated First-Time Founder

PayFit, a French payroll company, has achieved a valuation of $2.1 billion following a $289 million Series E funding round. This recent success is indicative of a broader trend, as Ankorstore, Qonto, Exotec, and Spendesk have also attained unicorn status this month within France.

A Strong Year for French Tech

Adding Back Market’s $510 million Series E round, which values the company at $5.7 billion, highlights a promising year for the French technology sector in 2022.

The rapid creation of unicorns and the associated fundraising activities have garnered significant media attention in France. However, one particular article focused on PayFit’s Firmin Zocchetto, OVHcloud’s Octave Klaba, Shift Technology’s Jeremy Jawish, and Contentsquare’s Jonathan Cherki, particularly resonated.

The Common Thread: First-Time Success

As noted by the French financial publication Les Echos, these four prominent French Tech leaders share a notable characteristic: they each established a unicorn company during their first entrepreneurial venture.

This raises a pertinent question: if achieving billion-dollar company status is attainable for a first-time founder, why isn't this accomplishment discussed more frequently?

Entrepreneurs are often highlighted for being under 30 years of age, as is the case with Zocchetto. However, even individuals in their twenties aren’t always embarking on their initial entrepreneurial journey – Oscar Pierre of Glovo serves as an example.

Beyond Age: Recognizing First-Time Founders

The core of this discussion isn’t about youthful founders. It’s about acknowledging that entrepreneurs can build substantial companies regardless of their age, particularly when it’s their first attempt.

This appears to be an undervalued aspect within the startup ecosystem. This observation brought to mind a candid remark from David Barrett, CEO of Expensify, during an interview for an in-depth analysis of his now-publicly traded company.

The Value of Long-Term Vision

While Expensify wasn’t Barrett’s first startup, he expressed a dislike for the praise surrounding the “serial founder” concept, as he aimed to “build a company that [he] wanted to work at forever.” His point is well-taken: there’s merit in long-term dedication, and there’s a flaw in simply glorifying entrepreneurs who repeatedly launch ventures.

This isn’t to diminish the value of experience, which manifests in various forms. Founding a previous company provides valuable lessons, irrespective of its success or failure. However, possessing relevant industry experience, particularly directly related to the problem being addressed, can be equally beneficial for a founder.

VC Checklists and Missed Opportunities

Unfortunately, traditional VC checklists often prioritize years of industry experience at established companies less than a C-level position at a previous startup. This is particularly evident in markets like Latin America, which are often categorized into “hot” and “not” tiers.

Hernan Haro, a Latin American VC, confirmed this perception: “The majority of Latin American VCs are focused on the same entrepreneurs – those ‘proven’ by a prior track record as founders or through leadership roles at unicorns. They are more successful in securing funding, but this is largely a self-fulfilling prophecy.”

Correlation vs. Causation

Pattern matching is a standard practice for VCs, but focusing on the incorrect indicators can be detrimental to both themselves and their investors. Haro stated, “VCs who solely focus on ‘proven’ founders are observing correlation, not causation, and are missing out on potential opportunities.”

While missed opportunities for VCs aren’t a primary concern, the potential impact on founders is. First-time entrepreneurs, operating outside the spotlight, may not receive the necessary resources.

Growing Resources for Founders

Fortunately, an increasing number of resources are becoming available to founders, extending beyond just capital to include supportive communities and trustworthy content.

Leading venture funds now offer online guidance on securing initial funding, and partners are providing pitch feedback, whereas previously these opportunities were largely confined to top accelerator programs.

The Value of Bootstrapping and Self-Belief

These quality online resources are especially valuable for first-time founders, providing knowledge and reinforcing self-confidence. Experimenting and bootstrapping are also effective learning methods, and VCs who overlook these profiles may later regret their decision.

A Shift in VC Focus

It is predicted that increased competition for promising deals will compel VCs to broaden their search and pay greater attention to first-time entrepreneurs. Hopefully, this shift will extend beyond simply targeting young founders or those with backgrounds from prestigious institutions – but rather, focus on individuals capable of generating substantial returns.