Deezer, Showroomprivé, and France’s disappointing IPO week

With two major IPOs scheduled for two big-name French startups, this was poised to be a big week for the country’s tech ecosystem.

Instead, as the weekend approaches, boosters are left to speculate about what went wrong.

To put some context around how important this week could have been, it’s worth noting that, according to Renaissance Capital, there have been just three IPOs in France this year, that collectively raised about $3 billion.

So, two in the same week? Seismic.

First out of the gate was supposed to be Deezer, the streaming music service that announced its IPO plans last month. Though the company was still losing money, music streaming is taking off and the public offering would likely give it the money it needed to compete.

Instead, earlier this week, Deezer announced it was canceling its IPO plans, citing “market conditions.” The narrative around the company suddenly shifted to speculation about whether investors were too nervous about competition from Apple Music, and whether Deezer will have the muscle to compete against streaming leader Spotify.

The second IPO planned was by Showroomprivé, an ecommerce startup that is big in France and other parts of Europe. The company originally hoped to raise as much as $424 million and be valued at $958 million.

Instead, the company ended up pricing the IPO last night at the low end of its proposed 19.50 euro to 26.30 euro range. As a result, it raised $260 million for a valuation of $726 million.

In fact, most of the money being raised is going to insiders, including executives and venture capital firms that invested. The company itself is only keeping $55 million of that $260 million.

Still, Harry Nelis, a partner at Accel — one of Showroomprivé’s backers — offered his congratulations in a statement:

“Since investing five years ago, it’s been fantastic to be a part of Showroomprivé’s rapid and profitable growth,” Nelis said. He noted the company has been profitable from the start and praised the founders.

“Their expertise and the team’s solid execution have paved the way for the company to become a leader in the market and the IPO today,” he added.

Yet, adding to the sting of the lowered IPO: Stock immediately dropped almost 10 percent after trading started today.

Showroomprive en Bourse : D Day pic.twitter.com/USrXFiWjVE

— ITespresso France (@itespressofr) October 30, 2015

The weak showing has also raised echoes of the worries that have often haunted the French tech system.

Can it achieve robust exists? Can its startups compete on the international stage?

The answer may eventually be “Yes.” The groundswell of entrepreneurship, new startups, and general excitement across the country is unmistakable.

Even so, this was not a week that delivered the kind of IPOs that could have muted skeptics.

Tough spot for #Deezer after failed IPO. M&A exit on the way?…Meanwhile showroomprive down 10% on the first hour of trading…

— Alexandre Kaykac (@Alexkaykac) October 30, 2015