French venture capital firms are consistently failing to adequately assess a startup’s understanding of its target market, focusing instead on product development and technical feasibility, according to a growing chorus of concern within the French tech ecosystem. The critique centers on a perceived imbalance in due diligence, where the crucial element of market understanding is often overlooked in favor of evaluating technological innovation and business model logic.
The issue isn’t simply a lack of post-investment support, though that is also cited as a weakness. Critics argue the fundamental flaw lies in the pre-investment phase, where a key question – does this startup truly understand its market, or merely its product? – is rarely asked with sufficient rigor. This contrasts with venture capital approaches in the United States and the United Kingdom, where some funds have built their operations around head-to-market (GTM) strategies, with limited partners (LPs) including experienced marketing and sales executives from companies like Salesforce, Snowflake, and DocuSign. Some US and UK funds even employ joint finance and GTM teams for deal evaluation.
Although some French firms are attempting to replicate these models, the prevailing pattern remains assisting startups with sales *after* an investment has been made – a form of after-sales service rather than preventative strategic analysis. The core problem, according to those raising concerns, is a lack of focus on foundational marketing questions. It’s not about whether a startup has a Chief Marketing Officer (CMO), or whether their paid advertising is well-managed, but rather whether the founder is addressing a genuine customer pain point, or projecting their own assumptions. Are they offering a unique solution, or simply a feature masquerading as a vision? And crucially, does the market currently possess the capacity to support this venture, or is its existence contingent on securing further funding rounds?
This strategic marketing assessment, often unspoken, is largely absent from the structured due diligence processes employed by French venture capital firms. The current emphasis on “tech fit,” product-market fit (PMF), and business model logic, while key, neglects a critical component: strategic market fit – a demonstrable understanding of the market beyond what is presented in a pitch deck. The current measurement of PMF, critics contend, is merely a binary indicator – are people buying the product, yes or no? – and reveals nothing about the underlying strength or sustainability of the venture.
Data from CB Insights indicates that a lack of market understanding is the primary reason 75% of US venture capital-backed startups fail to return capital to investors. While equivalent French statistics are unavailable, there is little evidence to suggest the situation is significantly better. The absence of this market-centric perspective within investment committees – beyond simply having a CMO present – represents a significant gap in the French venture capital landscape. The distinction between a startup that has a product and hopes to find a market, and one that has understood its market and built a product to serve it, is crucial. The former burns cash; the latter builds an asset. And We see marketing, fundamentally, that illuminates this difference.
The question remains how many deals will be missed before this becomes a standard practice in France.
