The French Start-Up (R)Evolution

In the last 10 years, the level of funding across Technology Start-Ups has revolutionised the Private Sector, and changed its ecosystem, providing Investors, Founders and Employees the opportunity to build and work differently. The last few years has been fantastic, with the US demonstrating funding growth from $26 billion in 2012, to over $329 billion in 2021.

In Europe however, things were a bit slower, and the growth rate here only began rapidly developing from 2015. This was the case for France in particular, which was behind both the UK and Germany in terms of the wider Tech and Start-Up Software space.

Back in 2016, as part of France’s Presidential Campaign, French candidate Emmanuel Macron promised to make France a “start-up nation”, with an ambitious target of generating 25 “Unicorn” businesses (new, privately owned businesses valued at more than $1 billion) by the year 2025.

Despite fuelling a great creation of Start-Ups on French territory (with 50 Start-Ups being created in 2007, culminating in 350 in 2016), it was a huge challenge, as investment was low and the focus on Tech growth was limited. The big push from the French Government was to concentrate on SaaS market development, (as these businesses were deemed the most likely to become “Unicorn” in a shorter amount of time) and to attract investors globally, with tax exemptions and 0% credit being offered, supported by France’s Minister of Economy.

The bet from the French Government paid off; in the last 6 years, French funding has multiplied 6 times over, from €1.8 billion in 2015 to €11 billion in 2021, and they achieved their 25^th unicorn in January 2022 – 3 years in advance of their target date, which has been aided by:

• A stronger and more mature market, with a massive increase in investment.
• Investments over €50 million having increased in value from €1.3 billion to €2.4 billion (a rise of +88 %).
• The average 1^st round funding also escalated above 25% during same period.
• In total, French start-ups founded since the year 2000, reached €179 billion in 2021.
• The French Government and Start-Up Funds showing evidence of a confident and systematic process for French Start-Ups, that has helped to attract more investment.
• Investment and trust of the French market has been increasing, with survival rates of Start-Ups without any support holding at 60%, and for supported Start-Ups, 80%.

This latest data is also one of the main reasons why Investors work very closely with Executive Search companies, such as Zeren and Renovata. In doing so, they support the development of their departments and help to drive scale; hiring the right talent ensures they continue their growth journey.

La French Tech, created by the French Government for the purpose of increasing Start-Up creation, and to help Start-Ups raise funding, believes that France is “finally attracting the means to match its ambitions”, by appealing to foreign investors as a primary source of Start-Up funding. The data shows that 60% of French Start-Up funding comes from overseas, through America (31.2%), Europe (19%) and  Asia (3.3%).

Measures such as “The French Tech Visa” scheme, the mobilisation of €6 billion in Private funds via the “Tibi” initiative, and French Support Programme “French Tech Next40 / 120” were introduced to facilitate further progress of the French Start-Up industry.

La French Tech has already united over 21,774 Start-Ups, and has a 100-plus network of Entrepreneurial Groups globally, encouraging French businesses forward both locally and internationally. Moreover, the world’s largest Start-Up entity, the Start-Up incubator Station F, was established in France.

To sum-up, the evolution of French Start-Ups has been fascinating to witness, and it looks like the beginning of very exciting Tech-boom in France.

Will we see France raise more start-up funding than Germany in 2022?

À Suivre / To be continued …

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