7 ms·

Macron Secures €5B Investment to Boost French Tech Startups

33 points by pinouchon 7y ago

buboard 7y ago
Startups need a fertile market to thrive
- jacquesm 7y ago
  Europe is plenty fertile.
- onion2k 7y ago
  Plenty of startups coast along on VC money for a really long time before admitting they're not actually thriving and shut down.
dogma1138 7y ago
Not sure how smart it is for insurance and pensions companies to invest their endowment and policy funds in startups.
- jacquesm 7y ago
  Depends on the mix of other investments they have.
- osrec 7y ago
  It's actually pretty smart, especially if, for example, an insurance industry incumbent invests in a promising insure-tech business to further bolster their own future position in the industry.
  - dogma1138 7y ago
    They can use their own money to invest in those and they do, not policy funds.
rapsey 7y ago
Getting funding in EU right now typically involves miles of red tape and/or friends in the right places. Hopefully they address these issues. Would not hold my breath though.
- jacquesm 7y ago
  That's nonsense. Lots of start-ups are getting funded in the EU without' miles of red tape and/or friends in the right places'. I see lots of them (50+) every year.
  - littlestymaar 7y ago
    Early funds are easy here in Europe. But exit over 100M are scarce and often involve an American big corp.
    - jacquesm 7y ago
      Yes, that's because those big American corporations have found it rather hard to roll out effectively in Europe due to multi-lingual, multi-currency and multi-cultural issues.
      - littlestymaar 7y ago
        You're answering why American invest in those European start-up, but my point was the lack of exits not involving American companies. The number of IPOs of European startups is really low compared to the US.
        jacquesm 7y ago
        That's because usually long before an IPO opportunity rolls around there have been a lot of feelers from US based companies looking to buy market share. This is one of the reasons why I am worried that GitLab will end up selling to a US based company. Time will tell if they hold strong, if they do I'll be sure to buy stock in their eventual IPO just as a reward for showing that a US exit is not the only avenue available.
jacquesm 7y ago
People taking money from French state related funds should be very careful with the small print and study the case of DailyMotion with great attention to detail. Lest you too end up being deprived of a well deserved exit.
- simias 7y ago
  I never understood why DailyMotion was hailed by politicians and news outlets as a "pearl of french tech". Am I missing something or was it just empty hype by people who didn't know any better? From my point of view it was just a crappier Youtube clone that managed to remain mildly successful because it tolerated NSFW and pirated content. I saw nothing particularly innovative about it.
  - jacquesm 7y ago
    It was a name that was recognized outside of France. Most French start-ups are only known locally.
- srbby 7y ago
  Links about "the case of DailyMotion", please?
  - jacquesm 7y ago
    https://www.reuters.com/article/yahoo-dailymotion/yahoo-scraps-dailymotion-bid-after-french-govt-concerns-reports-idUSL2N0DI00J20130501 https://www.reuters.com/article/yahoo-dailymotion/yahoo-scra...
    - mrpopo 7y ago
      DailyMotion was finally acquired 2 years later by Vivendi : https://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances-dailymotion-valuing-the-youtube-rival-at-295m/ https://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances...
baybal2 7y ago
I have hard time seeing why state needs involve itself in private market financing. > “We need to create our champions,” Mr. Macron said, adding that his goal was to have at least 25 French tech unicorns by 2025, referring to companies with valuations exceeding €1 billion. I see this as a rather futile endeavour, and a little bit of a personal insecurity manifestation. Just like as when Xi Jinping vent to California, been dined with all those "smart startupers," and then it hit him "Americans have startups, lets make some too!" Second to it, why such fixation on the most egregious forms of "tech craze?" France has strong position in materials, chemicals, which strike not less hard economically, and are not less "tech" than cat video websites valued at $1B+ It is a foregone conclusion to me that $1B+ webdev weekend projects have no true economic backing behind them, and they are just artefacts of speculative expectations runaway.
- hos234 7y ago
  Agree. I have seen Airbus trying this 'lets do what the Americans startups do' model for a few years now and it went no where. It's not their strength.
pnako 7y ago
This is just a gimmick. France is not America. That does not mean it doesn't work; it's just a different model. The focus should be on improving the current system rather than trying to import a model that is too culturally incompatible. The current system is essentially a technocracy, with the government and a few large companies working together (but in a different and much better way than they "work together" in America). So far, it has remained mostly meritocratic, with a few exceptions, naturally. This has produced amazing stuff; the Minitel (first nationwide computer network in the world, as far as I can tell), focus on nuclear power, high-speed trains, Airbus, an entirely indigenous launcher and defense program and so on. And a generous welfare system that used to work. Him mentioning "unicorns" is just silly in a country where almost no one cares about the stock market. It would be more sensible to focus on SMEs and catch up with Germany and Italy, that have a more robust network of middle-sized industrial companies.
- tyingq 7y ago
  They do seem to be dominating the no-frills end of server hosting with OVH and Online.net/Scaleway. Perhaps an exception, but it's interesting that they have little US competition in that niche.
  - pnako 7y ago
    Well, the French and American approaches to customer service are different, to say the least. So if you can't compete on customer service, you compete on no customer service :D Meaning costs and technical aspects.
arnaudsm 7y ago
I worked in both French and US startups, and the french startup ecosystem felt like cargo cult. Our business school culture is so prevalent, techies are always ignored. Engineers are poorly paid, if not at all. And the rare VCs have zero tech knowledge too, resulting in poor investment choices. It's a cultural problem, and throwing money at it won't solve it.
- yaantc 7y ago
  I also worked for a US start-up, now in a French one. There's no business school guy in sight, upper management has engineering background. Maybe because the area is very technical? It could be different in the e-business field. In any case, the culture of a start-up is defined in great part by the founders. If you want more techies driven start-ups, you need more techies to found them and not join business school founded ones. For poorly paid engineers, it's true that French engineers salaries are far from the Silicon Valley standard --- which is true for a great part of the US too. Here too grumbling won't help much. To get salaries to increase we need more local demand for techies, and not from inflexible big corporations that will prefer to stall rather than change their salary tables. Well for the VCs, you're the tech expert not them. And if they invest in duds, not your problem right? The issue would be if a good tech idea couldn't find funding, and in the current context I don't think it's the main issue anywhere ;) As for the cultural problem: yes! Having been in SV and in France, I agree that France issue is primarily cultural. Too many people looking for safety first before opportunity. Lots of grumbling but much less moving. And not even getting safety in the end, as big corps are not very nice for old engineer and not the best environment to learn IMHO. There is a lack of luck there: close to the end of the first Internet bubble a lot of engineers, after a delay, had left heir big corps to joint start-ups. Just in time for the big Internet crash... A bad experience that made some very cautious during the next wave. Hopefully this memory will fade. Having a sustainable start-up ecosystem lasting over time, with motivating successes, will help. This requires funding over time.
- Toine 7y ago
  Agreed.
- tasubotadas 7y ago
goatinaboat 7y ago
The French model of innovation is very much that it is a thing that happens in a lab buried deep in the bowels of a giant state-backed enterprise, by salaried workers with absolute job security but no equity participation. The entrepreneurial French all leave for London or Berlin.
- jacquesm 7y ago
  Or Amsterdam, or Barcelona. If they stay in Europe. But the vast majority leave for Silicon Valley if they are skilled enough to get hired by any one of the larger players.
  - yaantc 7y ago
    Can you call them entrepreneurs if they want to be hired by a large player? That entrepreneur leave France is almost a meme, and I know it happens and have some friends among them, but not everyone leave either. I have the chance to regularly meet French entrepreneurs staying in France. It's certainly harder than in the US but definitely possible. The thing is, most are not in areas that can massively scale. It can be very high tech, with international exposure, but it will never become a Google or Amazon. It tends to be specialized tech that can sustain a small to mid company, but not a massive one. And as a result, it tend to stay under the radar when discussing start-ups and everyone having the GAFA in mind.
    - jacquesm 7y ago
      I know quite a few founders in France and elsewhere. First off - and I hate doing this - there is the definition game at play here. I sincerely loathe how the start-up community has decided to redefine the word start-up to mean 'business with very large scaling potential' or something to that effect. This removes a lot of the companies that one would normally consider to be start-ups from the equation and also from many discussions. Of course if your start-up does not have the potential to become a billion dollar company that does not help. So for the moment let's assume those are all still 'in'. Then, of those companies that you refer to: high tech with international exposure that can sustain a mid-to small company is precisely the sweet spot, SME (small-to-medium sized enterprises), it is the backbone of the economy in many places. But hardly any of those will be names that people recognize. In Europe we had several of those, and Dailymotion was one of them. There are quite a few EU based brands that have global recognition: Nokia, Airbus, TomTom, TeamViewer, Skype, HelloFresh, N26, WeTransfer, Revolut, Deliveroo and so on all - maybe except for the first two - at some point in time could claim 'startup' status according to the HN/YC definition of the term. But for every one of those there are 1000's that do just fine in their local eco-system. The important point is that France is quite underrepresented in that segment, and that is something worrying. More capital isn't necessarily going to solve it, for France to thrive in this sense it would have to change a lot more than just to hold out a bag of money.
new_here 7y ago
SeedTable sent out a newsletter last Friday about this but with additional insights on the French tech scene. Also worth a read: https://us8.campaign-archive.com/?u=32b602d9ab9d238ceb45e3f05&id=3522e9805f https://us8.campaign-archive.com/?u=32b602d9ab9d238ceb45e3f0...
zoobab 7y ago
No money for small companies, only for scale-ups.
- yaantc 7y ago
  There is money for small companies already, with seed funds, business angels and regional funds. It's after that it's getting harder, so it makes sense to me to focus on the scaling part.

33 points by pinouchon 7y ago

buboard 7y ago

Startups need a fertile market to thrive

jacquesm 7y ago
Europe is plenty fertile.
onion2k 7y ago
Plenty of startups coast along on VC money for a really long time before admitting they're not actually thriving and shut down.

dogma1138 7y ago

Not sure how smart it is for insurance and pensions companies to invest their endowment and policy funds in startups.

jacquesm 7y ago
Depends on the mix of other investments they have.
osrec 7y ago
It's actually pretty smart, especially if, for example, an insurance industry incumbent invests in a promising insure-tech business to further bolster their own future position in the industry.
- dogma1138 7y ago
  They can use their own money to invest in those and they do, not policy funds.

rapsey 7y ago

Getting funding in EU right now typically involves miles of red tape and/or friends in the right places. Hopefully they address these issues. Would not hold my breath though.

jacquesm 7y ago
That's nonsense. Lots of start-ups are getting funded in the EU without' miles of red tape and/or friends in the right places'. I see lots of them (50+) every year.
- littlestymaar 7y ago
  Early funds are easy here in Europe. But exit over 100M are scarce and often involve an American big corp.
  - jacquesm 7y ago
    Yes, that's because those big American corporations have found it rather hard to roll out effectively in Europe due to multi-lingual, multi-currency and multi-cultural issues.
    - littlestymaar 7y ago
      You're answering why American invest in those European start-up, but my point was the lack of exits not involving American companies. The number of IPOs of European startups is really low compared to the US.
      - jacquesm 7y ago
        That's because usually long before an IPO opportunity rolls around there have been a lot of feelers from US based companies looking to buy market share. This is one of the reasons why I am worried that GitLab will end up selling to a US based company. Time will tell if they hold strong, if they do I'll be sure to buy stock in their eventual IPO just as a reward for showing that a US exit is not the only avenue available.

jacquesm 7y ago

People taking money from French state related funds should be very careful with the small print and study the case of DailyMotion with great attention to detail. Lest you too end up being deprived of a well deserved exit.

simias 7y ago
I never understood why DailyMotion was hailed by politicians and news outlets as a "pearl of french tech". Am I missing something or was it just empty hype by people who didn't know any better? From my point of view it was just a crappier Youtube clone that managed to remain mildly successful because it tolerated NSFW and pirated content. I saw nothing particularly innovative about it.
- jacquesm 7y ago
  It was a name that was recognized outside of France. Most French start-ups are only known locally.
srbby 7y ago
Links about "the case of DailyMotion", please?
- jacquesm 7y ago
  https://www.reuters.com/article/yahoo-dailymotion/yahoo-scraps-dailymotion-bid-after-french-govt-concerns-reports-idUSL2N0DI00J20130501 https://www.reuters.com/article/yahoo-dailymotion/yahoo-scra...
  - mrpopo 7y ago
    DailyMotion was finally acquired 2 years later by Vivendi : https://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances-dailymotion-valuing-the-youtube-rival-at-295m/ https://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances...

baybal2 7y ago

I have hard time seeing why state needs involve itself in private market financing. > “We need to create our champions,” Mr. Macron said, adding that his goal was to have at least 25 French tech unicorns by 2025, referring to companies with valuations exceeding €1 billion. I see this as a rather futile endeavour, and a little bit of a personal insecurity manifestation. Just like as when Xi Jinping vent to California, been dined with all those "smart startupers," and then it hit him "Americans have startups, lets make some too!" Second to it, why such fixation on the most egregious forms of "tech craze?" France has strong position in materials, chemicals, which strike not less hard economically, and are not less "tech" than cat video websites valued at $1B+ It is a foregone conclusion to me that $1B+ webdev weekend projects have no true economic backing behind them, and they are just artefacts of speculative expectations runaway.

hos234 7y ago
Agree. I have seen Airbus trying this 'lets do what the Americans startups do' model for a few years now and it went no where. It's not their strength.

pnako 7y ago

This is just a gimmick. France is not America. That does not mean it doesn't work; it's just a different model. The focus should be on improving the current system rather than trying to import a model that is too culturally incompatible. The current system is essentially a technocracy, with the government and a few large companies working together (but in a different and much better way than they "work together" in America). So far, it has remained mostly meritocratic, with a few exceptions, naturally. This has produced amazing stuff; the Minitel (first nationwide computer network in the world, as far as I can tell), focus on nuclear power, high-speed trains, Airbus, an entirely indigenous launcher and defense program and so on. And a generous welfare system that used to work. Him mentioning "unicorns" is just silly in a country where almost no one cares about the stock market. It would be more sensible to focus on SMEs and catch up with Germany and Italy, that have a more robust network of middle-sized industrial companies.

tyingq 7y ago
They do seem to be dominating the no-frills end of server hosting with OVH and Online.net/Scaleway. Perhaps an exception, but it's interesting that they have little US competition in that niche.
- pnako 7y ago
  Well, the French and American approaches to customer service are different, to say the least. So if you can't compete on customer service, you compete on no customer service :D Meaning costs and technical aspects.

arnaudsm 7y ago

I worked in both French and US startups, and the french startup ecosystem felt like cargo cult. Our business school culture is so prevalent, techies are always ignored. Engineers are poorly paid, if not at all. And the rare VCs have zero tech knowledge too, resulting in poor investment choices. It's a cultural problem, and throwing money at it won't solve it.

yaantc 7y ago
I also worked for a US start-up, now in a French one. There's no business school guy in sight, upper management has engineering background. Maybe because the area is very technical? It could be different in the e-business field. In any case, the culture of a start-up is defined in great part by the founders. If you want more techies driven start-ups, you need more techies to found them and not join business school founded ones. For poorly paid engineers, it's true that French engineers salaries are far from the Silicon Valley standard --- which is true for a great part of the US too. Here too grumbling won't help much. To get salaries to increase we need more local demand for techies, and not from inflexible big corporations that will prefer to stall rather than change their salary tables. Well for the VCs, you're the tech expert not them. And if they invest in duds, not your problem right? The issue would be if a good tech idea couldn't find funding, and in the current context I don't think it's the main issue anywhere ;) As for the cultural problem: yes! Having been in SV and in France, I agree that France issue is primarily cultural. Too many people looking for safety first before opportunity. Lots of grumbling but much less moving. And not even getting safety in the end, as big corps are not very nice for old engineer and not the best environment to learn IMHO. There is a lack of luck there: close to the end of the first Internet bubble a lot of engineers, after a delay, had left heir big corps to joint start-ups. Just in time for the big Internet crash... A bad experience that made some very cautious during the next wave. Hopefully this memory will fade. Having a sustainable start-up ecosystem lasting over time, with motivating successes, will help. This requires funding over time.
Toine 7y ago
Agreed.
tasubotadas 7y ago

goatinaboat 7y ago

The French model of innovation is very much that it is a thing that happens in a lab buried deep in the bowels of a giant state-backed enterprise, by salaried workers with absolute job security but no equity participation. The entrepreneurial French all leave for London or Berlin.

jacquesm 7y ago
Or Amsterdam, or Barcelona. If they stay in Europe. But the vast majority leave for Silicon Valley if they are skilled enough to get hired by any one of the larger players.
- yaantc 7y ago
  Can you call them entrepreneurs if they want to be hired by a large player? That entrepreneur leave France is almost a meme, and I know it happens and have some friends among them, but not everyone leave either. I have the chance to regularly meet French entrepreneurs staying in France. It's certainly harder than in the US but definitely possible. The thing is, most are not in areas that can massively scale. It can be very high tech, with international exposure, but it will never become a Google or Amazon. It tends to be specialized tech that can sustain a small to mid company, but not a massive one. And as a result, it tend to stay under the radar when discussing start-ups and everyone having the GAFA in mind.
  - jacquesm 7y ago
    I know quite a few founders in France and elsewhere. First off - and I hate doing this - there is the definition game at play here. I sincerely loathe how the start-up community has decided to redefine the word start-up to mean 'business with very large scaling potential' or something to that effect. This removes a lot of the companies that one would normally consider to be start-ups from the equation and also from many discussions. Of course if your start-up does not have the potential to become a billion dollar company that does not help. So for the moment let's assume those are all still 'in'. Then, of those companies that you refer to: high tech with international exposure that can sustain a mid-to small company is precisely the sweet spot, SME (small-to-medium sized enterprises), it is the backbone of the economy in many places. But hardly any of those will be names that people recognize. In Europe we had several of those, and Dailymotion was one of them. There are quite a few EU based brands that have global recognition: Nokia, Airbus, TomTom, TeamViewer, Skype, HelloFresh, N26, WeTransfer, Revolut, Deliveroo and so on all - maybe except for the first two - at some point in time could claim 'startup' status according to the HN/YC definition of the term. But for every one of those there are 1000's that do just fine in their local eco-system. The important point is that France is quite underrepresented in that segment, and that is something worrying. More capital isn't necessarily going to solve it, for France to thrive in this sense it would have to change a lot more than just to hold out a bag of money.

new_here 7y ago

SeedTable sent out a newsletter last Friday about this but with additional insights on the French tech scene. Also worth a read: https://us8.campaign-archive.com/?u=32b602d9ab9d238ceb45e3f05&id=3522e9805f https://us8.campaign-archive.com/?u=32b602d9ab9d238ceb45e3f0...

zoobab 7y ago

No money for small companies, only for scale-ups.

yaantc 7y ago
There is money for small companies already, with seed funds, business angels and regional funds. It's after that it's getting harder, so it makes sense to me to focus on the scaling part.