One major startup ecosystem in Europe has seen startups emerge more Money in 2022 than in 2021 – France. And the French government desperately wants to keep things that way.
Over the past few months, the government and its startup agency, La French Tech Mission, have launched programs to promote startups in agritech, healthtech, and climate. Bpifrance State Bank is Infusion of another 500 million euros In deeptech startups. The government is also looking into further financial reforms that would boost entrepreneurship and investment.
With dear unicorn number (range from 28 to 36 Depending on whose outcome it thinks) is at risk of slowing down, the government has set new targets backed by reforms to see it through. 10 unicorns will be made public by 2025 on the Paris Stock Exchange. Still in the process of being published One billion euros to create 37,000 cybersecurity jobs and three security companies and one by 2025. Behind all this lies a sprawling €54 billion plan It is called France 2030 To accelerate technologies that aid environmental transitions while supporting emerging technologies such as hydrogen power and spacetech.
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It is a government activity unlike any other European startup ecosystem, designed to push the country’s startup machine even higher. While other regions play defense, France is betting on innovation and entrepreneurship to be the cornerstone of its future economy and job creation rather than worrying about bailing out its current generation of start-ups.
“I am convinced of the robustness of our ecosystem,” says French Digital Minister Jean-Noel Barrot. “Our entrepreneurs have shown resilience in past crises…they have the experience to be able to quickly iterate and adapt.”
La Boom Town
Over the past decade, since the creation of La French Tech Initiative, the French government has been one of the most interventionist in Europe in terms of injecting capital into startups and developing a wide range of strategies to stimulate its innovation economy.
I paid big dividends. The amount of funding and the number of start-ups created in France skyrocketed and put the nation in the first tier of Europe’s ecosystems.
According to Dealroom, French startups raised $14.6 billion in 2022, up from $13.5 billion in 2021. That made France the only major European ecosystem to see an increase in funding last year, with the UK and Germany seeing sharp declines of more than 20 percent. %. US fundraising fell more than 30%.
President Emmanuel Macron once set the wildly ambitious goal of creating 25 rhinos in France by 2025, but the nation surpassed that figure last year — three years ahead of schedule.
However, the Big Five are somewhat muted because the numbers for 2022 have been truncated by a series of megarounds announced january 2022 – to companies like Exotec, PayFit, Ankorstore, konto, and the Back Market – most of which will likely close in 2021 before global economies begin to collapse.
In the second half of 2022, French startups raised just $4.5 billion, down from $7.1 billion during the same period in 2021. As has been the case around the world, non-traditional investors such as private equity firms have flooded startups with huge sums. Recently money dried up in stages in recent years abruptly.
However, there is plenty of reason to believe that the economic hit will not hit French startups as hard as it has suffered elsewhere.
“In the medium term, there is no reason not to be enthusiastic about the French ecosystem”
lately State of the French Technological Ecosystem Report, Orazio investor Alexandre Dewes noted that only a few high-profile French companies have announced significant layoffs in recent months. French venture capital firms raised €4.3 billion in 2022, down from the €4.4 billion they closed in 2021, meaning they still have plenty of dry powder to invest. According to Dewees, the upstream and early-stage investments remain very competitive.
“In the medium term, there is no reason not to get excited about the French ecosystem,” he wrote.
Roxane Varza, director of the Parisian startup Station Station F, echoes this optimism. Campus related companies It raised nearly €1 billion in 2022 About twice the previous year.
“Many expect the economy to return to normal in the second quarter,” says Varza. “The early stage has been well protected (terminal F numbers have been pretty consistent) throughout the year. Regardless, I think the ecosystem has been quite resilient and if H2 is strong, I think the negative impact will be very limited.”
Beverance softens the blow
Perhaps most important in this soft landing, according to Dewes, is the huge role that Bpifrance State Bank continues to play in the French start-up economy.
Bpifrance oversees €44.5 billion in investment assets that it invests directly in startups through a range of its own funds, while also investing in venture capital firms through a €13.5 billion fund of funds. According to Dewez’s research, Bpifrance has been directly involved in 107 funding rounds – around 16% of all deals in France and representing around 25% of all funds raised in 2022.
However, the percentage of direct and indirect funding for French startups that comes from Bpifrance, is steadily declining as French startups attract more international investors; One of the main goals of the organization.
As such, Bpifrance has been turning its attention to software Such as the €2 billion deeptech initiative To encourage science and research-based startups that create products based on breakthrough discoveries. The bank is also working to reform technology transfer rules while encouraging more universities to support faculty members who want to become entrepreneurs.
According to Bpifrance statistics, France produced 250 deeptech startups in 2021, up from 150 in 2019. Last October, a new program launched French Tech DeepNum20 for the first time. A select group of 20 deeptech startups will receive dedicated support from La French Tech to help them navigate French bureaucracy, attract talent and expand into international markets.
The 20 companies were selected based on their potential in areas such as spacetech, artificial intelligence, robotics, security and semiconductors. One of the awardees, quantum computing startup PASQAL, Just raised a €100m funding round which included money from Bpifrance.
“Despite the crisis, or maybe even because of the crisis, we must prepare for the future and continue to invest.”
Earlier this year, Bpifrance announced another €500m in funding with the goal of creating 500 deeptech startups annually. Such investments by the state remain essential for research-based startups that will require a longer horizon to develop products, find a market and become financially sustainable, says Paul-François Fournier, Senior Executive Vice President of Bpifrance Innovation.
“This is a long-term effort to encourage a new startup ecosystem that is more technology-centric,” he says. “Despite the crisis, or maybe even because of the crisis, we must prepare for the future and continue to invest.”
Big future bets on French technology
This desire to seize the future, rather than retreat in the face of economic headwinds, seems to be the ethos in France.
With the 2022 start-up fund-raising gap closer than ever between France and the UK — longtime European leader — the French government wants to build on its momentum to establish a leadership position in the critical emerging technology markets of tomorrow.
French Tech DeepNum20 is just one of an amazing suite of programs supported by France 2030’s generous framework. French Tech Green 20 It started in 2021. Last July came the first French Tech AGRI20 One of the emerging companies in the field of agricultural technology. In November, the nomination process for the new one began 20- French Technical Health.
two weeks ago, Barot renewed the government’s support for a five-year plan to accelerate France’s esports industry with bigger tournaments, including Olympic Esports Week in 2024.
“This is a long-term effort to encourage a new startup ecosystem that is more focused on technology.”
La French Tech director Clara Chappaz also stressed that this business spree was part of a long-term strategy and not a reaction to declining funding. She says French entrepreneurs still have plenty of money in the bank from those big funding rounds; They have enough runway to find a path to profitability.
Her team facilitates forums where entrepreneurs and investors can exchange lessons and advice and find mutual support. One of these discussions focused on how to finance factories and industrial operations, while another focused on mergers and acquisitions. Chapazz says startups with funding believe they can use this moment and lower valuations to their advantage by leveraging their market for expansion.
“We are staying very close to the entrepreneurs to understand firsthand how the situation is evolving,” she says. “How can we help them get through this situation? We support them in a way that they can learn from each other.”
However, Macron remains steadfast in his quest to turn France into an emerging nation. To that end, his prime minister recently appointed Paul Medi, a businessman who was elected to the National Assembly last year, to outline more reforms that could boost startup financing in France.
Medi says he is just beginning the process of interviewing founders, investors and other economists to identify barriers and generate ideas. This assignment will also include online public consultation as well as study of strategies adopted by other governments.
For example, Medi et al. cited the United Kingdom Seed institutional investment system (SEIS) as a model they would like to see France emulate to encourage more individuals to participate in investing in startups.
The goal is to deliver these plans in time for the next budget, which is usually submitted in September, including ways to offset any incentives that might reduce taxes. Midi says that although French start-ups have made huge strides over the past decade, more can and should be done to support a sector that remains a critical job-creating engine for the economy.
“The fundraising dynamic is in the process of changing,” says Medi. “This is all the more reason to find the tools to support investment in startups and keep the momentum going. Because the most effective way to create jobs, real jobs, is to help young, innovative companies create and develop.”
Chris O’Brien is a Sieve reporter based in France. tweet who obrien