Investing in startups

In brief

• Investing in startups aims for high returns : French private equity has shown an average net return of approximately 12.4% per year over 10 years (France Invest/EY, end of 2024), compared to 8.9% for the CAC 40, and its top quartile of funds reaches nearly 25% per year, but this outperformance remains concentrated in a minority of funds.
• The downside is risk and illiquidity : nearly half of French startups fail before their sixth year, and capital remains locked for 5 to 10 years.
• Four main methods : equity crowdfunding, business angel networks, funds (FCPI, FIP, FPCI), and direct investment, to be chosen according to your profile.
• Fundora, via a pooled FPCI, makes leading startups accessible, usually reserved for institutional investors, with management provided under mandate by Kyoseil AM, an AMF-approved firm.

Investing in startups is appealing: high returns, innovation, the idea of spotting the next French unicorn before anyone else, from Doctolib to Mistral AI. But the reality is more nuanced: the majority of young companies fail, and capital remains locked up for several years. This guide reviews the advantages, risks, methods, and taxation, then shows how to access, through Fundora, promising opportunities long reserved for institutional investors.

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Why invest in startups

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High return potential

Over 10 years, French private equity has shown an average net return of 12.4% per year (France Invest/EY, data as of 31/12/2024), compared to 8.9% for the CAC 40. The dispersion is significant: the top quartile of funds achieved nearly 25.4% net IRR per year, while the bottom quartile came in at -6.2% per year, a difference of over 31 percentage points. At the right time, multiples reach x5, x10 or more, but a handful of gems concentrate most of the gains, while many investments are lost.

Significant tax advantages

Tax incentives act as an accelerator. For direct subscription to the capital of eligible SMEs, the IR-PME scheme offers an 18% income tax reduction. The framework for funds has been significantly modified by the 2025 and 2026 finance laws: the 25% reduction only remains for FCPIs invested in young innovative companies (JEI), and Corsican and Overseas FIPs are eligible for 30%, in exchange for a minimum holding period (often 5 years).

Diversify your assets

Beyond financial returns, investing in startups funds innovation (AI, energy transition, medtech, cybersecurity) and the real economy rather than purely speculative assets. More and more investors are adding an impact requirement by targeting startups with a strong ESG dimension.

Unlisted assets with low correlation to the stock market, startups allow you to diversify your portfolio without relying solely on stock market cycles. A dynamic, riskier portion complements more secure financial investments. To learn more, see how to build a diversified portfolio of listed and unlisted assets.

Supporting innovation and the real economy

Beyond financial returns, investing in startups funds innovation (AI, energy transition, medtech, cybersecurity) and the real economy rather than purely speculative assets. More and more investors are adding an impact requirement by targeting startups with a strong ESG dimension.

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Risks and drawbacks to know before investing

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High risk of capital loss

This is the major drawback. According to INSEE, only 69% of businesses created in 2018 were still active five years later (meaning about 31% ceased operations); and nearly half of French startups disappear before their sixth year. Total loss of capital is a real scenario, not a hypothetical one.T

Capital locked up for several years

Without a structured secondary market, funds are tied up for several years, often 5 to 10 years, until an exit (buyout or IPO). It's best to be able to do without these sums in the long term.

Lack of transparency and absence of recurring revenue

A young unlisted company publishes little financial information and pays no recurring income: the only return comes from reselling shares during an exit, with uncertain timing and amount.

Expertise needed for evaluation

Evaluating a business model, a team, and a market requires specific skills, and a compelling pitch can mask a fragile project. Hence, for many, the appeal of a delegated approach through professionally managed funds.

The risk of dilution through funding rounds

With each new fundraising round, the startup issues new shares: your ownership percentage automatically decreases if you don't reinvest. This dilution can reduce the relative value of your stake, even as the company grows. This is a risk often underestimated by individual investors, yet it's very real across successive funding rounds.

Methods for investing in startups in 2026

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here are several ways to invest, each suited to a different profile and level of involvement.There are several ways to invest, each suited to a different profile and level of involvement.

Equity crowdfunding

Equity crowdfunding is the most accessible method. Through online platforms, you can acquire equity in French startups starting from approximately €1,000 per project. The advantage: educational information, webinars, and sometimes tax simulators. The drawback: it's up to the investor to make the selection and bear the risk project by project.

Business angel networks

Joining a business angel club or network allows you to invest alongside experienced investors, with access to training, events, and pitch sessions. Entry tickets generally start around €1,000, and the added value primarily comes from peer learning and the quality of the deal flow.J

Investment funds: FCPI, FIP, and FPCI

This is the option of delegated management. Instead of choosing yourself, you entrust your money to an investment fund that selects and diversifies for you. FCPIs invested in JEI (Young Innovative Companies) and FIPs (Local Investment Funds) for Corsica and Overseas territories still qualify for tax benefits, unlike classic FCPIs and FIPs since the 2025-2026 reforms. The FPCI (Professional Private Equity Fund) provides access to strategies usually reserved for institutional investors. This approach reduces risk through diversification and is aimed at those who want exposure to unlisted assets without managing the selection themselves. This is the logic behind choosing to invest in venture capital or, more broadly, to invest in private equity.

Direct investment

irect investment involves identifying a startup yourself, conducting your own due diligence, and acquiring equity. The potential for gains is maximized, but so are the involvement and risk. This method is reserved for experienced individuals capable of actively supporting the company. Venture capital is, in fact, just one entry point into private equity: for more mature companies, one shifts to other strategies like growth equity, or even leveraged buyout for already established and profitable companies.

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Objective not guaranteed, past performance does not guarantee future results, risk of capital loss.Objective not guaranteed, past performance does not guarantee future results, risk of capital loss.Objective not guaranteed, past performance is not indicative of future results, risk of capital loss.Objective not guaranteed, past performance is not indicative of future results, risk of capital loss.

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