France Startup Ecosystem – Is France Good for Startups

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In recent years, France startup ecosystem has flourished, solidifying its position as one of Europe’s foremost centers for new business creation. The country has the makings of a startup powerhouse thanks to a confluence of factors, including a large pool of talented young workers, a surge in venture capital investments, and a growth-friendly ecosystem that includes incubators and accelerators.

Startups in the areas of foodtech, edtech, and transportation would do well to establish themselves in France. There are currently 846 foodtech firms in France, 286 education startups, and 278 transportation startups operating in the country, making these three sectors the most represented on the French startup landscape.

La French Tech – The Startup Incubation Fest

La French Tech is a movement that aims to spread awareness of and interest in the French technology landscape. Since its foundation in 2013, La French Tech (LFT) has strived to make France one of the best destinations in the world for launching and growing global firms that are generating forward-thinking solutions and services. The LFT is a unique movement that helps companies in France and beyond connect with investors, policymakers, and community organizers.

france startup ecosystem

Investment in French tech startups reached $11.9 billion in 2021, according to data compiled by Dealroom, marking a doubling of the previous year’s total. When compared to the UK and Germany, France invests less money in technology. The UK received $37.1 billion in 2021 from investors, while German companies received $18.9 billion.

As one of the greatest cumulative supporters of tech startups, the French government has had a stake in the sector’s expansion since 2012, when state investment bank BPI France joined the fray.

The French president, who was given a positive review by Insider, had a goal of 25 unicorn firms by 2025, and in January 2022, France reached that goal. Now, he plans to have 10 companies each worth €100 billion ($113 billion) by 2030. Since the country’s first unicorn, the ride sharing company BlaBlaCar, was announced in 2015, the influx of $1 billion businesses has had a profound effect on the country’s digital environment.

In general, entrepreneurs now feel more empowered to negotiate favorable terms with equity investors and have the confidence to turn away from even large, well-established funds that come out as uninformed due to this momentum.

Attracting investors to France startup ecosystem

Thanks to France’s recent economic growth, large U.S. investors are increasingly interested in the continent of Europe as a source of profitable investment opportunities.

In 2021, numerous venture capital firms like General Atlantic, Tiger Global, Coatue, Bessemer, General Catalyst, and Dragoneer invested in the France startup ecosystem. That has made it a “sink or swim” situation for local investors, who must compete with their American counterparts who have deeper pockets for early-stage enterprises.

While some domestic investors have become deal flow conduits for their American counterparts, startups with global ambitions are better served by turning abroad for funding. One Paris-based investor for a London fund said that, in early interactions with ambitious founders, the fund’s history of assisting businesses in expanding into other countries, particularly the United States, is now emphasized.

Half of all French agreements worth more than $20 million now include American capital. This is a dramatic shift from the old attitude in the United States, which assumed that France’s high taxes and system that favored worker rights over the capital were inherent flaws in the country.

Regarding tech investment, the France startup ecosystem is quickly catching up to the UK and Germany. The startup ecosystem will thrive due to an increasing number of ambitious founders, increased investment, and easier access to talented individuals.

The France Startup Ecosystem 2030 Plan

French President Emmanuel Macron unveiled the €30 billion “France 2030” recovery plan in October 2021; it will define the French economic structure in the post-Covid era.

Nearly €15 billion will be allocated to the France startup ecosystem as part of this plan to help entrepreneurs drive innovation and reindustrialization in France. It is expected that €5 billion would be allocated to DeepTech businesses and €1 billion will be used to fund digital job training programs.

While the rest of the money isn’t going to startups specifically, it will be used in ways that could positively impact the ecosystem overall. French startups may profit from government spending of €8 billion on the energy sector by 2030 (with the goal of making France “a pioneer in green hydrogen”), €6 billion on electronic autonomy by the same year, and €4 billion on clean mobility by the same year (with the goal of producing 2 million electric and hybrid vehicles in France by 2030).

If the French government and private investors back new businesses, entrepreneurs in France startup ecosystem could boost the country’s economy in vital areas like healthcare, transportation, energy, and agriculture. France’s climate change policies are among the most progressive in the world, so it seems sensible that the country would encourage businesses that care about their impact on society, the environment, and their community.

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