6 months ago, as I was working with Scoop.it in San Francisco, I decided my long Entrepreneur adventure had reached an end: I was to become a VC. I joined Elaia Partners, a leading early stage tech VC firm based in Paris.
It was not an easy decision: kissing goodbye to my beloved Scoop.it team, joining what some friends call the dark side of the force, and leaving awesome SF behind. But so exciting : I was enthusiastic about Elaia’s values and performances; about the VC mission itself of course; and about the French startup ecosystem, which - or so I expected - had reached an interesting level of maturity.
6 months in Paris, came August and its no-business period: herds of selfie sticks invade Paris while VCs, startupers and their clients disappear to exotic places where the “I’m-so-happy-that-you-should-be-jealous” FB pictures contest takes place. Time to tidy up the desk, collect ideas and assess how the French reality measures up against my expectations.
Bottom line: The French startup ecosystem is indeed amazingly potent; big things are happening here. France is ready to play a new, significant role in the digital economy. Taking off!
And because good vibes ought to be shared, here are three reasons why you should love France’s startup ecosystem too.
[disclaimer: I can only talk about the startups of the digital economy, the only space I know a bit about; great things also happen in other spaces such as biotech or energy]
1. Startups everywhere
Not so long ago, the percentage of French students who contemplated an entrepreneurs life would be a one figure metric; now it’s close to 30%. Not so long ago, French political leaders had no clue what a little blue bird could possibly stand for; now startupers are decorated and the government steadily invests in the digital economy (with BPIFrance being the most active European VC).
Incubators, accelerators and co-working spaces are overflown with adventurers torturing technologies to fight their way into the bandwagon. And this is not only a Paris thing. I don’t know every regional startup ecosystem in France yet (I’ll complete my homework soon), but the ones I know are rocking it: Lille and their awesome Euratechnologies; Toulouse and its visionary IoT Valley; Nantes and its vibrant Web2Day; Montpellier and its necessary BigUp 4 Startups. Cannot wait to see how Station F, the world largest startups accelerator (no less!) in Paris and The Refiners, the US proxy for French adventurers, will fill up.
It’s a nation-wide (r)evolution!
Are startups a trend? Certainly. Can many accelerators be too many? Probably. Sure enough, this is only a beginning: the digital stake is not really understood by our elite. Many would-be entrepreneurs will discover there is more to lifting a startup off the ground than eating pizza over a keyboard with two friends in love with a cool app. There will be casualties, there will be drop outs.
But attend any meet-up at The Family or at Numa, or any startup competition at universities such as PSL, HEC, Telecom or Polytechnique to name a few and face it: there is a genuine, massive engagement; a profound evolution on how (many) people in France are now willing to tackle entrepreneurship, are accepting risk and innovation; are ready to fight; how they understand it’s both necessary and exciting to define the future.
Bold changes have happened within 5 years. Startups, this is now.
2- High-level innovations, Math inside
We at Elaia receive a deal flow of around 1500 ventures per year, in our specific area of focus that is digital, early stage (seed / series A), high-tech (the higher the better), and with an international ambition; and with a preference towards B2B models, although this is not a strict dogma. This is the prism, admittedly restrictive but not that niche, I perused to check, first hand, the quality of the startup scene in France.
And there is no disappointment.
What is the next web all about? About math: pervasive connectivity generates big data; math makes big data useful. From Descartes to Villani, via the Laplace and Galois of the revolution to Napoleon and l’Ecole Polytechnique and l’Ecole Normale Supérieure, math has been the foundation of the education system in France (France, for example, is leading the Fields medal tally on a per inhabitant basis — second only to the USA in absolute number). Oh, I don’t know if this is good or bad from an anthropologic standpoint (I wish foreign languages, or music, for example, be better taught in France)… But this is definitively the best way to produce what the digital world most crave today: people who can make data talk!
And this we see. Every week we meet engineers and PhDs jumping into the startup scene, ready to disrupt a traditional business. We see math, Artificial Intelligence, machine learning, predictive analysis, smart data being applied to insurance, finance, transport, HR, chat bots, health, energy, marketing… with very, very strong intellectual property and very, very potent technologies. Salesforce.com, Microsoft, Cisco, Facebook, Google all increase their R&D stakes in France; I guess this is a pretty decent signal about the local talent pool.
I believe France will leverage these formidable assets and turn some of these precious skills into large scale successes. France’s traditional skillset has never been so aligned with the world’s demand. As a tech investor, this is an opportunity. As a nation, this is a blessing.
The third major positive point about the French ecosystem, is that it starts delivering results at scale. Success stories, in terms of fund raising, jobs created and exits, are casting a clear and powerful message.
Year on year, funds invested in French startups have doubled between 2014 and 2015 (source: EY)— Hey, that’s a 100% growth, who beats that? The first semester of 2016, with €1.2B of investor money allocated to startups, is even 20% more generous than the first semester of 2015! And France was number 1 in Europe in Q1 2016 in number of deals (source: Tech.eu). That’s momentum, or what?
Although the average round size in France is still small (the number of deals increases faster than the total amount invested), we see more and more solid rounds of funding; sizes that were nearly non-existant 5 years ago. We see brilliant exits too (two recent Nasdaq IPOs and some notable acquisitions); and we see global successes on the international scene.
For those who have not been following the French startup scene lately, fasten your seat belt, relax, and check out this digest (in alphabetic order; beware, unicorns are hiding in this list):
Blablacar, CaptainTrain, Criteo, Dashlane, Deezer, Devialet, Docker, Doctolib, Drivy, Evaneos, Fotolia, Gameloft, LaFourchette, Menlook, Neolane, Netatmo, OVH, Parrot, PeopleDoc, Sarenza, Scality, Showroomprive, Sigfox, Talend, TalentSoft, Teads, Ubisoft, Vestiaire Collective, Withings or Younited Credit for example (and a new wave, not yet in this weight category but getting excitingly close, such as Algolia, Alkemics, Delair Tech, FrontApp, Giroptic, iAdvize, Lendix, Lengow, Mirakl, Prestashop, Rythm, Sublim Skinz, Shift Technology, Tinyclues, and so many more). Yes that’s many names and yes I forgot many — sorry.
[disc: Elaia invested in Criteo, Sigfox, Teads, Mirakl, Tinyclues, Shift Technology]
What’s critically positive is that this wave of successes now fuels a virtuous circle: successful entrepreneurs play again; they give back to the ecosystem. They bring money, expertise, network and mentorship ; and much much more: they bring an unprecedented level of ambition, they take the baton from early champions (such as Free’s Niel or VentePrivees.com’s Granjon and other “fathers”) to lead the charge and tell all of us: “Think big, it’s possible!”. This is really the first time it happens at scale to the French startup scene and it will have a strong accelerating impact: think of it as the compound effect of a subscription-based model where returning players drive scalability; aka, the recipe for success.
I’ve been 6 months back in Paris. I left San Francisco — and do I love SF — because I thought it was a great time to be a VC in France. After 6 months, I confirm: The French startup scene is sparkling, packed with energy, talent and ambition. And it delivers. It now possesses what’s required for larger successes and a global impact.
Now… want to call me naïve?
The strengths of the French startup scene, as depicted above, are all very real — most countries in the world would love to boast them! I’m just an objective optimist.
But of course this French startup ecosystem also suffers its shares of weaknesses. Strengths do not equate perfection; we need to keep pushing harder and further. For good measure I’ll share what I see as the main shortcomings of the French startup ecosystem in my next papers: so if there are a few subjective pessimists amongst you (hey, I know you’re here), please don’t be sad: you’ll be served.
Until then, rejoice. Be proud. Have fun. And just do it!