Happy Bastille Day! On July 14, 1789 French citizens stormed the Bastille, and there was no turning back — the French revolution was under way. Revolution is also the title of Emmanuel Macron’s book published in November of last year. The new revolution is now well underway in France. And the tech industry is leading the way.
France has a rich and diverse innovation landscape. A number of unicorn startups have been founded in France, including advertising technology company Criteo, which went public in 2013, and Blablacar, one the world’s leading rideshare services. French Tech has produced many $100-plus million exits including Neolane, Zenly, Teads, Enablon and Withings. More and more French startups across all sectors and stages are attracting American VC investors.
J’AIME LES MATHS
Driving this tech revolution is the quality of French engineers. France’s higher education system is rich in both long-established institutions (Polytechnique - 1794) and modern, pioneering institutions (such as the tuition-free coding university, Ecole 42, established in Paris - 2013 and Fremont - 2016). The French love mathematics, and math is at the core of French education curriculum. This love filters into all aspects of French life. In Paris, more than 100 streets, avenues, and squares are named after mathematicians, and thirteen of the fifty-six Fields Medals have been awarded to French mathematicians, ranking the country of Descartes and Pascal first with the United States. Today, France is a key place for the development of artificial intelligence, and it is no mystery why Facebook chose to open its first AI research center outside of the United States in Paris.
Two clear, positive trends have developed in French tech in recent years. First, French Millennials have a thirst for entrepreneurship. This is a social evolution with more transformative power than any public policy. Second, France has benefited from a continuous increase of venture capital, with a record level of €2.2 billion (+22%) and 574 deals (+16%) in 2016 (source: Baromètre EY du capital risque en France 2016). 2017 looks even better, with 205 VC rounds in Q1, which ranks France first in Europe ahead of the UK with 141 rounds (source: dealroom.co).
This is a good breeding ground for startups. Now, newly-elected President Emmanuel Macron is launching reforms to make France more business-friendly to the tech industry.
ENTREPRENEUR IS THE NEW FRANCE
Investors need clarity on government regulations. France already offers the most generous R&D tax policy in Europe. Emmanuel Macron’s new government is committed to cutting the corporate tax from 33% today to the EU average of 25% by 2022. The new administration will also exclude investment holdings from France’s wealth tax and introduce a 30% flat tax on dividends and other investment earnings.
The new government has already started to overhaul and loosen France’s labor laws. Those who still think France is the land of the 35-hour workweek should look at Eurostat figures: on average, workers in France already work longer hours and are more productive than workers in Germany or the United Kingdom: 44.1 hours vs. 42.5 and 43.3 hours, respectively, for managers; and 34.2 hours vs. 32.9 and 32.7, respectively, for non-managers. France is ranked seventh in the world for hourly labor productivity (source: The Conference Board 2016), and tech salaries in France are lower than those in Silicon Valley.
AN INTERNATIONAL HUB OF GLOBAL TALENT
France is fast becoming an international startup scene. Walking through Silicon Sentier, you already hear more and more English. With the recent opening of Station F, Paris now hosts the world’s largest startup campus in the world. Companies like Microsoft and Facebook have chosen this hub to develop their products as well as host and mentor startup founders in business incubator programs. Companies looking to develop their R&D in France will now also benefit from the French Tech Visa, a simplified, fast-track procedure allowing tech talents (founders, employees, and investors) and their families to obtain a renewable four-year residence permit. Making Paris an even more desirable destination is its increasing number of international schools where children from around the world can pursue their education in English.
A STARTUP NATION
Emmanuel Macron has decided to dedicate a €10 billion fund to innovation. As he said at Vivatech on June 15, “I want France to be a startup nation, meaning both a nation that works with and for startups, but also a nation that thinks and moves like a startup.” His pro-business initiatives and the continuing increase of private and public funding are laying the groundwork for the transformation of the second largest economy of the Eurozone.
A revolution is under way, and those who share our vision of the economy and the world are welcome to take part in it.