360 views on tech #53: France plans to use the startup downturn to come out on top in Europe.

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360 Capital

5 min readFeb 10, 2023

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France plans to use the startup downturn to come out on top in Europe.

by Chris O’Brien — Sifted

The French government is demonstrating a strong commitment to the development of its startup ecosystem and is taking bold steps to ensure its continued growth. Over the past few months, the government and its startup agency, La French Tech Mission, have launched programs aimed at promoting agritech, healthtech, and climate tech startups. Additionally, the state bank, Bpifrance, is investing €500M in deeptech startups, while the government is exploring financial reforms to boost entrepreneurship and investment. The government has set a goal to see 10 unicorns go public by 2025 on the Paris Stock Exchange and is implementing a 1 billion euro plan to create 37,000 cybersecurity jobs and three security unicorns.

This initiative is part of the France 2030 program, a €54Bn plan designed to accelerate the development of technologies that aid in environmental transitions and support emerging technologies such as hydrogen power and spacetech. Indeed, the French government views innovation and entrepreneurship as the cornerstone of its future economy and job creation and is unmatched in its level of activity compared to other European startup ecosystems. French Digital Minister, Jean-Noël Barrot, believes in the strength of the French startup ecosystem, citing the resilience of its entrepreneurs in previous crises and their ability to quickly iterate and adapt.

La Boom Town

The French government has been among the most proactive in Europe in terms of investing in startups and promoting innovation through its La French Tech initiative. The result has been a significant increase in the number of startups and a raise in funding in France, making it one of the leading startup ecosystems in Europe. In 2022, French startups raised $14.6 billion, making it the only major European ecosystem to see an increase.

Despite the slowdown in the global economy, there are reasons to believe that French startups will be resilient, as early-stage investments remain competitive and French VC firms still have plenty of dry powder to invest. Additionally, there has been limited layoffs among prominent French startups, and investments connected to the Parisian startup campus Station F nearly doubled in 2022. All in all, the outlook for the French startup ecosystem remains optimistic for the mid-term.

Bpifrance cushions the blow

The French government has been one of the most supportive in Europe in terms of supporting startups, with the state bank Bpifrance playing a significant role. Bpifrance oversees assets of €44.5Bn and invests in startups through its own funds as well as investing in venture capital firms through a €13.5Bn fund of funds. The organization directly participated in 107 funding rounds in France, representing about 25% of all money raised in 2022. However, Bpifrance’s share of direct and indirect funding for French startups has been declining as international investors increase their presence.

Lately, Bpifrance has shifted its focus to deep-tech startups through its €2 billion initiative and recently announced another €500 million in funding with a goal of creating 500 deep-tech startups each year. This effort is aimed at fostering a more tech-focused startup ecosystem and is critical for research-based startups to grow and become financially sustainable.

Big future bets on French Tech

The French government is striving to establish a leading position in emerging tech markets and close the startup fundraising gap between France and the UK. The French Tech DeepNum20 program provides support to 20 selected deeptech startups in areas such as AI, robotics, security, semiconductors, and spacetech. This program is part of the France 2030 framework, which also supports initiatives like French Tech Green20, French Tech AGRI20, and French Tech Health20.

The director of La French Tech, Clara Chappaz, highlights that this flurry of activity is part of a long-term strategy rather than a reaction to the funding slowdown. She is working closely with entrepreneurs to understand how the situation is evolving and supporting them in learning from each other.

French President Emmanuel Macron is committed to turning France into a ‘Startup Nation’ and recently appointed Paul Midy, an entrepreneur, to identify reforms that could boost startup funding in France. Midy is currently interviewing founders, investors, and experts to identify roadblocks and generate ideas, including a public online consultation and studying strategies adopted by other governments. Midy believes that supporting young, innovative companies is the most effective way to create real jobs, and the plans will be presented in time for the next budget, which is typically submitted in September.

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💸 Money matters

🔴🟠🟡 Portfolio company Exotrail raised €54M in a Series B round from Bpifrance, SPI, FID, Eurazeo & CELAD to scale-up and pursue its ambitions for space mobility, worldwide. Kudos! 🟡🟠🔴
Omie & Cie, the regenerative food brand, raised €15M in a Series A round co-led by XAnge & 2050, with the participation of Founders Future, Crédit Agricole, Cookpad & 50 Partners Impact.
GarantMe, French rent guarantor, raised €15M from Bpifrance, Bonsaï, 115K, New Alpha & Axeleo.
Riot, the all-in-one platform that drives better cyberprotection, raised €11M from Base10, Y Combinator, Funders Club & Founders Future.

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