Canadian Innovation Economy In The Doldrums
France Offers An Example Of How To Fix It.
Founded in 2016, the company has already raised $63.4 million in venture capital, including a $45 million round last summer. It has almost 600 employees after the 400 it hired in just the past six months, with a target of 1,200 by the end of this year. And Meero was one of the few startups to stand out at the recent Viva Technology conference in Paris, an event largely organized around the digital transformation efforts of France’s largest corporations.
Meero’s velocity and trajectory is the stuff that makes the hearts of French Tech boosters beat a little faster. Speaking on stage at VivaTech, cofounder and CEO Thomas Rebaud said he always dreamed about turning Meero into an international company and urged his employees to be ambitious.
“If you want to go fast, the first thing you have to do is put a ‘think big’ mindset in the team,” he said. “You need to make people understand that 10 is a small target, so let’s go for 100.”
Five years ago, Meero’s story would have been a rarity in a country whose most promising entrepreneurs often decamped for greener pastures. But now Meero finds itself just one of many such success stories. Fundraising in France has increased, including a flurry this year of the larger, later-stage funding rounds that have long been missing. The country is heavily promoting its strength in artificial intelligence while also embracing emerging technologies like blockchain. Investors have taken notice of France, which is now typically ranked number two for venture capital fundraising in Europe, behind the U.K.
But while the country can be rightfully proud of this transformation, it is now facing even more intense competition on the international stage, thanks to a booming Chinese ecosystem. Meanwhile, startups in Silicon Valley can still raise massive rounds that allow them to scale much more rapidly. And while France has instituted a number of reforms to make starting a company and attracting international talent easier, it is still seen as an administrative nightmare compared to many other regions.
Yet that hasn’t dampened enthusiasm. If anything, there seems to be a growing confidence that the country is ready to tackle the challenges ahead. At VivaTech, President Emmanuel Macron, who doubles as the country’s Head Startup Cheerleader enthused about the potential of France’s entrepreneurial class.
“Four years ago, we were already the best in Western Europe in creating startups, but we had trouble scaling,” Macron proclaimed during his appearance on the first day of VivaTech. “Today, the tickets are getting bigger and bigger, there is an acceleration of the ecosystem.”
VC funding surges
For the past five years, France has been working to catalyze its startup ecosystem. While the French like to debate how much credit the government can claim, the resulting investment numbers speak for themselves. Since 2014, French startups have raised $12.84 billion across 2,734 deals, according to CB Insights.
This includes $1.16 billion raised during the first quarter of 2019, putting the country on pace to top last year’s total of $3.4 billion by a resounding $1 billion. That’s also enough to put France in second place for fundraising among European countries, just ahead of Germany, though still far behind the U.K.
But those numbers come with some important asterisks. State bank Bpifrance remains the biggest source of startup funding in the country. And the number of actual deals dipped just slightly.
Overall, those funding rounds tend to reflect the notion that France is sprinkling a lot of small rounds over a wide range of startups still in the embryonic phase. Almost 62% of the funds went to companies in the seed or series A round, while another 24% fell into an Other category that includes “business plan competitions, corporate minority deals, and grants.”
That leaves about 14% of startup funding going to series B rounds or later, about the same percentage it’s been for a while. To address this, last year the French government announced a series of programs to boost “scale-ups,” identifying more than 100 companies it believes have potential and pushing to help them find funding.
The French government’s goal is to have 20 unicorns by 2025, compared to the four that exist today. For context, the U.K. has 16, China has 90, and the U.S. has 165. But there are signs France is finally breaking into the club with a series of surprisingly large funding rounds so far this year:
- Online doctor booking site Doctolib raised a $170 million round
- Wynd raised $82 million
- Mirakl raised $70 million
- Shift Technology raised $60 million
- ContentSquare raised $60 million
- Ynsect raised $122 million
Such large rounds were incredibly rare in France just a few years ago. And buzz at VivaTech suggested other startups are close to making big funding announcements.
Meanwhile, the government has adopted a wide-ranging reform called PACTE (“Plan d’Action pour la Croissance et la Transformation des Entreprises” or “Action Plan for Business Growth and Transformation.”) This includes measures to simplify setting up a business online, tax reform, easing the hiring process, and the ability to access funding through new methods, like ICOs.
The government also continues to push hard on initiatives like promoting the use of blockchain. And it’s trying to find other ways to boost homegrown startups. For instance, French digital minister Cedric O revealed that the government would begin using the Paris-based privacy-focused Qwant search engine.
Officially launched last year, France is AI is another effort to encourage the local ecosystem while also promoting a more ethical approach to designing and using technology. As Silicon Valley has long plundered France’s AI talent pool, the program is designed to bring France greater recognization and encourage those working in AI to start their own company in the country.
Facebook chief scientist Yann LeCun, perhaps the most famous face to emerge from the French AI community, said on stage at VivaTech that he’s optimistic about the role the country can play. “France in particular, and Europe in general, have very good educational systems and so they have some very good talent,” he said. “And that’s the most difficult thing to build if you don’t have it.”
At VivaTech 2017, the year Macron was elected, he vowed to turn France into a Startup Nation, and he has continued to champion entrepreneurship. Despite a rocky tenure in which the countrywide “Yellow Vest” protests have threatened his presidency, Macron remains immensely popular in the tech sector.
For the past two years, he has leveraged VivaTech to draw the tech world’s attention to France through a Tech For Good Summit that has attracted a who’s-who of tech CEOS and policy makers from the world, prompting announcements about tech policy, as well as commitments to invest in France. This year, the event made international headlines by producing the “Christchurch Call,” framework to help companies and governments fight online terrorism.
New Zealand Prime Minister Jacinda Ardern joined Macron at a press conference to announce the plan, named after the New Zealand city where a mass shooting claimed the lives of 51 people. As the shooter broadcast the attack live and people repeatedly uploaded copies of the video, Facebook, Google, and Twitter seemed nearly powerless to stop its global spread.
“What happened in Christchurch was not just another terrorist attack,” Macron said. “It was someone taking the power of the internet and transforming it into this machine for spreading crazy propaganda.”
The event is also evidence of the country’s desire to be seen as a central player in technology development and policy. Here Macron walks a tricky line, because he also tries to hold the line on divisive issues like corporate taxes and work rules. As one example, France continues to advocate higher taxes that would impact U.S. tech giants like Google, Apple, Facebook, and Amazon also referred to as “GAFA.”
Appearing at VivaTech, he again explained that France isn’t looking to punish anyone, but is rather seeking fairness in taxation. And he took the opportunity to pitch France as the place for both startups and the big tech companies he seeks to tax.
“If you’re a successful entrepreneur or very promising engineer, you want to be and work where your talent can be used at its full potential,” Macron said. “You want to be challenged.”