The acquisition of Lyon-based Cosmo Tech by Insight Partners late last year followed the playbook for what has become the most common type of large French tech exits: A global PE firm snaps up an established player with a long track record, solid tech, and strong fundamentals.
This latest deal highlighted both the opportunities and the ongoing hurdles faced by European startups seeking to scale globally. French companies continue to demonstrate they can build world-class innovations. However, attracting the capital needed to scale those products beyond the early stages to conquer global markets remains tough.
In this case, Cosmo Tech's decision to sell (for an undisclosed price) will give the company access to the resources needed to achieve its global ambitions. It also means the company's HQ will effectively move to the U.S. where operations are being rapidly expanded.
The deal comes with new leadership. Incoming CEO Philip Hazen said the company had done extraordinarily well given its resources. But with AI deployment and adoption accelerating, the company urgently needed more capital to compete.
"Cosmo Tech, from my perspective, has the best tech in this space," he said. "But it has not had the investment horsepower it needed to go to market on a global scale."
Technology at the Core
Cosmo Tech's technology enables enterprises to create detailed digital twins that help organizations make more intelligent, automated decisions by simulating various scenarios across their operations. The platform uses advanced AI and machine learning capabilities to run thousands or even millions of simulations analyzing complex trade-offs between different processes within value chains, helping companies optimize their operations in areas like supply chain management and financial planning.
"What everybody is looking for right now is practical uses of AI," Hazen said. "This is a very practical way to leverage AI through a ChatGPT-like front end and using machine learning and large language models embedded in Cosmo Tech to run thousands of simulations on supply chain networks, financial planning, or whatever to create the right path to value that's going to optimize the enterprise."
Hugues De Bantel and Michel Morvan founded Cosmo Tech in 2010. Over 14 years, they raised about $32.8 million in venture capital. The team landed customers such as Dell despite a fairly small sales team.
Meeting of Minds
The acquisition was the culmination of long-standing relationships.
Hazen's connection to Cosmo Tech dates back to his time at Accenture, where he worked for almost 30 years before retiring 18 months ago. One of his last initiatives at Accenture was overseeing a complete digitalization of how companies engage with customers and deliver services, including the use of digital twins.
"Customers need the ability to do simulation and optimization around people, process, and technology that make up value chains to understand the trade-offs and the implications of making decisions and changes," Hazen said. "That real-time capability is something that I became very interested in because I think our customers in the future are going to need continuous transformation capabilities. There are no upgrade cycles anymore. There's a continuous transformation that they're going to need to do and it's going to come in faster and faster clips. They need to become much more agile, intelligent enterprises that can adapt to this change."
The strategy he created for Accenture included a partnership with Cosmo Tech, which eventually led to a minority investment in 2023.
Several months after retiring, Hazen got a call from a mutual friend saying Cosmo Tech would be interested in retaining him to offer strategic advice. The company was looking to raise capital.
However, Cosmo Tech had a hard time finding a European investor who could provide the capital for its next stage. Despite significant improvements in the French startup ecosystem over recent years, including government initiatives to support tech companies, scaling beyond European markets remains a significant hurdle for many companies.
Ultimately, the Insight offer made the most sense, Hazen said, because it provides both the capital and strategic support needed to accelerate international expansion, particularly in the North American market.
"I'm not sure that it was inevitable," he said. "But what we found was Insight felt like the best fit because they could help from a strategic perspective with international expansion."
The acquisition comes at a pivotal moment in the evolution of enterprise AI adoption. According to Hazen, the market for decision intelligence and continuous transformation capabilities is approaching an inflection point.
"About three years ago, I predicted that in the next five to six years, this level of AI-backed decision intelligence and continuous transformation capability would become really important for customers," he says.
The investment, which includes participation from Hazen and another former Accenture exec Gerry Coulter, marks a new chapter for the 14-year-old company. Hazen and Coulter took on the roles of CEO and CFO respectively, while co-founders Hugues De Bantel and Michel Morvan will transition to new roles focused on regional leadership and innovation.
As part of the growth strategy, Cosmo Tech is establishing a new office in Reston, Virginia, which will serve as its North American headquarters. The company plans to build out a comprehensive management team and support structure in North America while maintaining Lyon as its innovation and product development hub.
"Insight is helping us to invest in creating the right go-to-market structure, the right customer success teams, the right ecosystem, and partnerships that are going to be necessary to bring this to market at scale," Hazen said. "We're going to build up a management team in North America that's able to go after the North American market at scale. And then our intention also is to create another node somewhere so that we get our costs in the right place to compete because the cost point is going to be important as more competitors get into the space."
The cultural dynamics of such transitions can be delicate, particularly for European technology companies being acquired by American investment firms. However, said there has been strong buy-in from Cosmo Tech's founders and employees.
"One of the things that I found very refreshing is that [the founders] have been wonderful and very energized about getting a partner like Insight to come in and give us the backing to be able to achieve our market objectives," Hazen said. "When I visited Lyon, I think that people had good questions about the future. But I also sensed a lot of enthusiasm that what they've built is now being recognized, and it's now going to go bigger and bolder."
