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Focus on the FCPR

Updated: Oct 15, 2023

A professional scans financial data with determination, ready to make informed decisions.

Dear Visitor,

Capital Conseils², always keen to unearth investment opportunities for you, is today interested in a type of asset that is little known to the general public.

The FCPR (Fonds Commun de Placement à Risques) is an investment vehicle designed to invest in the securities of unlisted companies. It is a private equity product that carries a risk of capital loss. This risk must be assumed before subscribing.

Today we're going to take a look at the FCPR Entrepreneurs Sélection Secondaire.

This is a fund specifically dedicated to investing in unlisted companies through securities or funds subscribed on a secondary basis.

What is the secondary market?

The strategy of a secondary fund is to acquire fund units or portfolios that have already been built up. In general, these are invested at a minimum of 50%, with a target of 70%. This makes it possible to enter after the J-curve.

Private equity fund valuation curve in relation to investment rate, targeting a 50% entry point.

The graph opposite shows that the investment phase mechanically leads to a decline in the fund in the first few months of its creation.

What are the advantages, you may ask?

The advantages are numerous, but the main ones to remember are :

  1. The "J" curve is generally reduced, as the investment is "almost mature".

  2. Better visibility, as the background's anteriority means more elements can be audited.

  3. Buying at a discount is not uncommon for the secondary market, like the second-hand market, to buy at a discount. It remains to be seen why.

  4. A quicker exit, where the Primary fund will last 7 years, the Secondary fund will allow you to recover your funds more quickly.

  5. An essential diversification tool, just like a PEA.

As you can see, the main drawback is the liquidity risk, but we have chosen Entrepreneur Invest for its 23 years of expertise.

We look forward to hearing from you!

The first installment of our #FCPR series laid the groundwork by outlining the nature of FCPRs, providing a fundamental introduction to these venture mutual funds. For a more in-depth perspective, we encourage you to explore our next article dedicated to the #RisksAndReturns of FCPRs. You'll discover essential information about how these funds work and their impact on innovation financing in France. Keep up to date with our series dedicated to #FCPRs, as exciting revelations are yet to come.

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