Battling its reputation as a nation of luddites who hated innovation, the government of France launched a program in 2013 called “La French Tech” in an effort to change that perception.
The program is a mix of marketing, financial support, regulatory reforms, and community building that has been fighting to deliver a shot of adrenaline to the nation’s startup economy and to convince international investors to give it a fresh look. With the nation battling double-digital unemployment, including around 20 percent for people under the age of 25, the hope in part was to create more jobs by encouraging large companies to modernize while making it easier for entrepreneurs to create fast-growing companies.
Started by then digital minister Fleur Pellerin, the program was still in its infancy when she was replaced a few months after its launch by Axelle Lemaire. Lemaire is traveling to Las Vegas this week for the global gadgetfest otherwise known as the Consumer Electronics Show.
CES has become a big focus for the French Tech program’s marketing efforts. This year, Lemaire will appear with France’s finance minister Michael Sapin and a delegation of 260 French technology companies, including a wide range of fledgling companies that will again represent the largest international contingent in CES’s startup-focused Eureka Park. It’s part of deep relationship France has built with the show’s sponsor, the Consumer Technology Association, that includes a one-day version of the event each October in Paris.
That CES invasion is just one sign of how France’s startup economy has exploded in recent years. Economists will likely one day debate how much credit the government or does not deserve for this. And because it’s still so young, it’s too soon to tell whether this is a temporary frenzy, or a surge that will endure and transform the entire French economy.
But at this moment, the numbers tell a clear story.
According to a report from CB Insights, funding to tech companies in France topped $1.5 billion in the first nine months of 2016, a new high with three months still to go. That means it doesn’t include the $160 million raised by Sigfox or the $100 million raised by Devialet in November. In the third quarter, French companies raised more money than German startups, and were closing the gap with the U.K.
If there is a big caveat here, it’s that the leading VC investor in the country remains BPI France, the government-controlled national bank that was created through a financial reorganization in 2013. But there are some hopeful signs here as well: In the last few months Paris has seen the launch of two new venture firms: Daphni and Oneragtime. And several other established French funds have recently closed new funds.
And French entrepreneurs still find themselves weighing the decision to move their headquarters abroad to London, New York or San Francisco, where fundraising and expansion can be easier. Across the continent, Europe remains a fractured digital market in terms of financial rules and labor laws that still pose a challenge to an entrepreneur from any country across the continent.
Still, France’s stubborn unemployment rate has started to tick down the last three months, including a 2.3 percent drop in young adult unemployment. And that has offered some welcome good news to the current government whose term ends in May 2017. With CES in full swing, and just a few months before national elections, this seemed to like a good time to get a progress report from Lemaire, who responded to VentureBeat’s questions via email.
The following is a lightly edited version of the questions and response:
Q: Why is it important to continue bringing so many French companies to Las Vegas each year?
A: It is the fourth time my government is present at CES and the second time for me. I do hope we will keep coming as I believe being here with a massive delegation is really strategic.
France has developed an impressive know-how in the tech sector but we still need to increase awareness of our leadership in this sector – of course we are well-known as leaders in, wine, culture and the arts. So this is what this administration has been doing for several years now – focusing on the tech ecosystem. As a result, investment in La French Tech have been booming and we can see that the French Tech label and its red origami Rooster are bearing fruit.
Our presence at CES and major international tech events such as Mobile World Congress, Web Summit etc., gives us the opportunity to demonstrate the strength and growth of our domestic innovation ecosystem, as well as the vitality and strength of our entrepreneurs (which is, as you know, a French word).
Numbers speak for themselves, and the number of French tech startups at the CES is growing each year: 66 in 2015, 128 in 2016 and 178 this year. In 2017, 32 percent of startups attending the CES will be French, the second delegation in the Eureka Park, just after the US, but far ahead of other startup nations like Israël, South Korea or China.
Q: ‘La French Tech’ program is three years old. Can you evaluate its progress so far? What has worked well, and what has not worked as the government had hoped?
A: In three years, we have gained a lot of ground in structuring our ecosystems in France and abroad. There are 13 ecosystems already operating in French regions and are already famous for their size and maturity. You may already know Bordeaux, Marseille and Lille for their historic heritage or their gastronomy. But now the world is discovering these cities for their entrepreneurial vitality and the dynamism of their digital ecosystems! In the meanwhile, we have encouraged the creation of a 22 tech hubs network with communities of French entrepreneurs who live abroad, from San Francisco to Shanghai, and Abidjan to Moscow.
Two years ago the French Tech initiative had only begun, and we weren’t yet on the global map of tech ecosystems. Today, we have gained visibility and our model is an example for the world. The key factor for success was that “La French Tech” initiative is driven by entrepreneurs and backed by the Government, not the other way around! The French Tech is not operated in the offices of the Ministry of the Economy in Paris: it belongs to the entrepreneurs themselves. This new pragmatic and collaborative approach to public policies has proven much more effective at problem solving than…