Since its inception, the foundation has lent $3.4 million to 74 entrepreneurs. All entrepreneurs who receive funding from the foundation must lend their expertise in assessing future start-up proposals and offering advice to other founders Nord Entreprendre supports. The foundation never fully bankrolls start-ups. Its grants average around $50,000, and none exceed $70,000. They are meant to goad the entrepreneur and to confer legitimacy in the eyes of dubious outsiders, such as banks and other investors. Among the 74 companies that Nord Entreprendre has helped fund since 1986, 18 have repaid fully or in part. Sixteen have failed. The rest fall somewhere in between.
The foundation now receives about 300 inquiries a year and ends up funding about 20 companies. It has heard from three other families in France that want to set up similar foundations. Once every six weeks the Mulliez family meets to decide on the latest proposals. One night at 7:30 p.m., a dozen people sit around two rectangular tables pushed into the center of a large, open room. Saint Olive and assistant director Bruno Motte present the three proposals the committee will consider. (It has already met four or five times with each candidate.) A discussion ensues before each candidate is called into the meeting to defend his idea before the committee. The questions are direct, the ideas not revolutionary. One entrepreneur wants to make underground storage tanks for small factories. Two men have a software company that writes CAD/CAM programs for the garment industry. A third offers document storage for offices choking on paper and exorbitant rents in the Paris area. By the time the third applicant leaves the room, it is almost 10:30. The committee adjourns to an adjacent table to decide -- over dinner. The first course is a cold plate of smoked salmon, caviar, and pÂtÉ. Communal loaves of bread and a bowl of salad make the rounds. Cheese and fruit follow, along with bottles of wine and mineral water.
As the gastronomic event unfolds so, too, does the decision-making process. Each committee member must vote, explaining his decision in two sentences or less. If one person says no and 11 say yes, the lone dissenter must follow the project until his doubts have been resolved. Two no votes kill a proposal. Tonight the committee decides to award the applicant with the underground tanks $30,000, and the man with the storage boxes $60,000. That is how the foundation shells out about $750,000 a year. The bias is toward action. People have been willing to play a hunch.
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While the economy in France has slowed of late, investors like Alpha AssociÉs' Dominique Peninon continue to invest in growing French companies. And yet Peninon worries. He notes that with France's sharply progressive tax, less than 10% of the population pays income taxes of any consequence, while 60% benefits meaningfully from government largess. For France to be more competitive after 1992, taxes and government spending will have to come down -- in the face of a recession. And yet a clear majority has a vested interest in the status quo. What will happen? John Begg of Advent International acknowledges a related quandary he has had concerning investing in France. "Sometimes things go a little slower than we would like," he says. "In the States I could come into a company and say, 'OK, guys, let's tighten our belts. Let's cut the deadwood.' I can't easily do that in France. The safety net is so strong." When push comes to shove, how committed will the French be in favoring the free market over the welfare state?
Perhaps the answers to such riddles lie in unlikely places such as Brittany, one of the most rural and traditional provinces in France. Agriculture remains the mainstay there, where just a generation ago, only half the houses had electricity and plumbing. Today, though, with its stable and industrious work force, Brittany has become home to 1,500 different food and agriculture-related-products companies. Canon has a research-and-production facility there, and Mitsubishi has set up production near a major science park, employing nearly 5,000 people.
Brittany is home to a small, resourceful company, Phytomer, run by Antoine GÉdouin, 33, and his father. Phytomer sells health-care and cosmetic products developed from seaweed, a resource in ample supply around the seaside town of Saint-Malo, where the company is based. GÉdouin, like many entrepreneurs in France, rails against "The French Mentality." He sees the French opting for comfort over risk. He tells a story about placing an ad in a national newspaper for a salesperson, someone who would travel, make his or her own hours, potentially make a lot of money. "We got two or three responses." Phytomer later placed an ad for an accountant, someone who would come in at 8:30 and leave at 6. "We got 100 responses," he says.
The GÉdouins have had numerous offers to sell the company, which has no debt and an after-tax profit of 10% -- very high by French standards. The company is not for sale. Phytomer, with sales of $8 million, has a neat little franchise in France. But in GÉdouin, trim and alert behind his big desk, there is a man who wants to take on the world. On the wall behind him hangs a map of Japan. On his desktop under plate glass lies a map of the United States. Phytomer exports to both countries. It has joint ventures in both. It has bought minority stakes in its foreign partners. GÉdouin exudes a fascination with the American market; he relishes the surprises that come from doing business in different cultures. Where exactly is his American venture partner located? Phytomer, a French cosmetics company with cachet, has doubtless established a beachhead in one of the capitals of fashion, New York City or Los Angeles. "Here," says GÉdouin, pointing to a spot on the map before him. "Salt Lake City."
