French early-stage VC Elaia and asset manager Lazard — one of the world’s largest private investment banks that manages $247bn worth of assets — are joining forces to raise a growth fund that will back European deeptech startups and scaleups.
If approved by the France’s Financial Markets Authority (Autorité des marchés financiers, or AMF), the partnership would see the creation of a new entity based in Paris, Lazard Elaia Capital, 75% owned by Lazard and 25% by Elaia.
“[The target] can still vary but I think we will be aiming for large hundreds of millions,” says Elaia managing partner Xavier Lazarus. “If we have the possibility to put forward a €1bn objective, we will do it.”
This would mean that the fund would rank among France’s largest venture investment vehicles for growth. Lazarus says that the goal is to be able to write tickets ranging between €30-40m.
Elaia will continue to invest its historical early-stage funds, which target startups from pre-seed to Series B.
A win-win partnership
While Lazard has run a venture banking arm for some time, the new partnership marks the firm’s first step into doing VC investing of its own.
“There was demand from our clients that Lazard support them in their unlisted investments,” says Sophie de Nadaillac, development and strategy director at Lazard Frères Gestion, the asset management company of Lazard in France.
“What’s at stake for our clients is to diversify.”
Lazard’s clients, which include corporations, high-net-worth individuals and family offices, will therefore be able to back the new fund. The asset manager will in turn benefit from Elaia’s VC expertise.
The growth fund will be managed by a newly-hired team of 10, led by Elaia’s Lazarus.
Taking ownership of Elaia
As part of the partnership Lazard has acquired a minority stake in Elaia, with provisions for the asset manager to purchase up to 100% of the VC over time.
Lazarus says that the first close of the fund is likely to see an initial increase in Lazard’s ownership of his firm.
“Increasing ownership to 100% will be very progressive,” adds de Nadaillac. “One of the criteria for the deal is to keep [Elaia’s] team fully engaged in the project, so it is important that the increase happens in several phases.”
Although it’s dependent on the success of the partnership, Lazarus says that total integration is the objective — and it will give Elaia the means to develop more strategies.
“Health and decarbonisation are themes that we already focus on and that deserve ad-hoc strategies,” he says. “We will need a key partner, and the means to finance that through this partnership.”
With many VCs still finding it challenging to secure funding, Lazarus says that more partnerships of this kind are to be expected in the future.
“[Elaia] is profitable and doing well, we could have continued indefinitely,” he says. “But it’s a huge opportunity. And generally, when these kinds of things happen in the market, it’s better to be the first one to get on with it.”
