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The Exchange
Emmanuel Macron has once again sparked controversy in France by emphasizing the importance of French tech startups. In his latest speech at Viveche, he called for a "herd of centaurs" — a term humorously referencing unicorns but suggesting that French tech startups should aim to achieve sustainable growth, defined as having both strong revenue and profitability.
A Unicorn is Not Always a Unicorn
Macron’s recent remarks have drawn criticism from various quarters. While he acknowledged the success of some tech companies like Klarna, Instacart, and Bouygues Telecom, critics argue that his focus on valuations could be misplaced. In the VC firm Battery‘s latest report, the concept of "Rule of 40" — which combines revenue growth and profitability for valuation purposes — has come under scrutiny.
According to venture capitalists like Mary D’Onofrio and Adam Fisher from Bessemer Venture Partners, unicorns (tech companies valued at $1 billion or more) often have inflated valuations that don’t reflect their actual performance. Instead, they should focus on metrics like annual recurring revenue (ARR), which provides a clearer picture of a company’s health.
The Age of the Centaur
In response to the criticism, Macron has clarified his stance: "A Unicorn is not always a unicorn." This statement underscores his intention to shift the conversation from mere valuations to tangible growth metrics. The concept of a centaur ($100 million ARR) has emerged as the new benchmark for success in tech startups.
What’s Next?
While most people are still unclear on what exactly constitutes a "centaur" in startup speak, Macron’s speech has reignited interest in the long-term viability of French tech startups. With inflation fueling doubts about the future of valuations, it won’t be long before similar calls for centaurs will dominate the conversation.
Key Takeaways
- Emmanuel Macron: Calls for a focus on sustainable growth over valuations.
- Bessemer Venture Partners (BVP): Critiques inflated unicorn valuations and advocates for ARR as a better indicator of success.
- The Concept of a Centaur: Now serves as the new metric to measure the health of tech startups.
As always, the Startup Valley newsletter brings you the most interesting stories from across Europe. Stay tuned for more updates on this and other hot topics in the startup world!
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