In 2017, when newly elected French President Emmanuel Macron said, “I want France to be a start-up nation,” his critics used his words to mock him.
On the contrary, France was struggling to attract venture capital – with the annual number of investments in startups falling in 2016, lagging behind the UK and Germany, according to Pitchbook data.
Today, emerging French companies are raking in investors’ funds. On a record day in September, two French tech startups – Sorare and Mirakl – together raised more than $ 1 billion.
In recent weeks, fintech firm Swile has raised $ 200 million in a round of funding led by SoftBank, and the same amount has been raised by computer technology firm 360learning. The number of tech unicorns – companies valued at over $ 1 billion – already stands at 20, on track to surpass Macron’s target for 25 of these companies by 2025.
“The goal will be reached by the end of the year,” billionaire Xavier Niel, a passionate investor in the sector, said in an interview. Each year, it finances around a hundred startups at the seed stage through its investment vehicle Kima Ventures. “I think we should talk about decacorns now,” he added, referring to companies whose valuation exceeds $ 10 billion.
After decades of effort and failure to leverage its engineering and technology skills, a new generation of business builders in France may finally find Silicon Valley-style momentum.
In the first six months of this year, tech startups have set a record, raising almost as much as last year – 5.14 billion euros ($ 6 billion) so far, up from 5.39 billion euros in 2020, according to EY’s first half company. barometer of the capital.
In 2020, French tech companies raised the same amount of funding as their German counterparts for the first time. But they still follow those in the United Kingdom, where startups raised nearly three times as much in the first half of the year – a fact that CÃ©dric O, French Minister of Digital, ignores.
If the French dynamic continues, “London will have reason to worry in the long term,” he said in an interview. The minister attributes France’s recent success to lobbying by the Macron government, such as inviting investors each year to the Elysee Palace and organizing âChoose Franceâ technology summits at Versailles. Evidence of this is a series of steps taken to address their concerns, he said.
“We have had a series of reforms to meet international standards – on taxation, on the labor market, on visas,” O said.
To maintain momentum as Macron prepares for re-election next year, he recently unveiled his âFrance 2030â plan to invest â¬ 30 billion over a decade in areas like AI, quantum, semiconductors, nuclear, hydrogen and space, with half the money going to small businesses.
During his first mandate, measures such as the 30% flat-rate tax on capital gains and the exemption of investments in companies from wealth tax made it possible to bring in funds. The âFrench tech visaâ has made it easy for international engineers and developers to settle in France.
“There is a recruitment war, and the French tech visa has changed our lives when it comes to attracting talent from the United States or Japan,” said Thibaud Hug de Larauze, CEO of Back Market Inc ., a used and recent unicorn smartphone marketplace. .
Companies like SoftBank or General Atlantic are now investing $ 100 million in France, which they were reluctant to do before. Half of financing over 15 million euros in France now includes an American fund, according to Romain Lavault, general partner of Partech Ventures in Paris.
“American funds were afraid of France for mythical reasons: taxes, strikes, a lot of fantasies,” he said. “They were courted, and it worked.”
The first funding for startups often came from state coffers, making the government the largest business angel through BPIFrance, the public investment bank created in 2012.
âThere was a need to create a lot of startups, so we had a volume strategy,â said Paul-FranÃ§ois Fournier, the bank’s innovation manager, in an interview. âWe funded 300 startups in 2013; it is 1,200 this year.
BPIFrance has continued to increase its funding to 300 million euros per year over the past two years. It plans to invest 2 billion euros over the next three years in the financing of funds dedicated to deep tech.
France also now has a breed of serial entrepreneurs, said Partech’s Romain Lavault. âWe are now seeing mafias – in a good way – of people who have left the first successful startups and are now starting new ones, just because they know how to do it,â he said, noting that most of them also become business angels. “This is what has structured Silicon Valley, as much as the money, and it takes time.”
However, despite the enthusiasm, the French tech scene has yet to see a handful of major releases to cement its success. Investors in well-known startups like rideshare app BlaBlaCar and music streaming company Deezer have long been waiting for a public listing.
For the French tech startup scene to really take off, it needs to offer successful outings for investors, said Roxanne Varza, the manager of Station F, which opened in 2017 in a former train station east of Paris and has been dubbed the world’s largest startup. incubator.
“We find new funds moving to Paris every week,” she said in an interview. “But for these investors to stay, we now need to see more repurchases or IPOs on Euronext.”
Cloud provider OVHcloud recently started trading on Euronext, with more success than music distributor Believe, also a recent IPO. And while it may be some time before a French startup grows to the size of Spotify, the Swedish music streaming service, the pieces are starting to fall into place, Niel said.
âIf you just walk around the city, Paris is a more vibrant city right now than post-COVID San ââFrancisco,â he said.
In a time of both disinformation and too much information, quality journalism is more crucial than ever.
By subscribing you can help us tell the story well.