Entrepreneur Stories: Why would a foreign entrepreneur set up their business in France?
By Armelle de Tinguy, Saish Rane with help from Marc Rougier
At first look, France doesn’t seem like the birthplace of entrepreneurship despite having invented the word. France is all about lifestyle, culture, excellent food & Vine, and long lasting holidays … the French way of living does not seem quite compatible with the values of hard work, agility, velocity that are so dear to the tech industry.
But the French ecosystem has been fighting against this reputation for a few years already. Since 2017, France has officially been on a mission to become a “Startup Nation”. The ambition is clear: not only build its own ecosystem and serve its own entrepreneurs, but also become a global hub when it comes to technology and innovation, that can potentially attract talents, startups and businesses from all over the world.
The question to be asked remains: Can it?
France is indisputably one of the top hubs for innovation in Europe
It is a fact that France has numerous assets when it comes to creating a friendly ecosystem for entrepreneurs to build great businesses.
1/ Talents
France offers a large and highly qualified pool of talents and expertise, especially well-suited for the tech industry, and supported by top schools and universities that constantly rank among the best in the world. Its 13th Fields Medal in 2022, which made France the 2nd most awarded nation in Mathematics, was a strong reminder of the quality of French education — in a nutshell: a great pool of qualified engineers.
2/ Central location in Europe & access to the EU market
Business-wise, France gives access to the European market and to EU partners, through the EU passport. Although that can be said from other EU countries, when combined with great networks and infrastructures, and a unique central geographic location in Western Europe, it definitely helps France position itself as an unmissable tech hub.
3/ Public policies
France have very supportive public policies towards entrepreneurship and innovation: From large government-driven plans such as the Plan Deep Tech (€2.5bn in 5 years); to unique fiscal policies and grants that are now legion: our well-renowned CIR (Crédit d’Impôt Recherche) is truly a goldmine for startups, and probably the first source of financing for startup in France ; talking about the numerous administrative shortcuts for startups — check the French Tech Central initiatives — including procedures that were specifically designed for international talent (French Tech Visa). Truth is: creating public policies is definitely one of our strongest talents, and it has strongly benefited wannabe entrepreneurs. As compared to other countries, it is super easy to build a company and get first non-dilutive financing prior to equity financing.
4/ A thriving ecosystem
Overall, France have created a high quality breeding ground on which a qualitative tech ecosystem has thrived with:
- Highly visible networks with global reach to support startups such as Station F, global players now operating in France (Entrepreneur First, Techstars, global VCs such as Sequoia, a16z, etc.)
- An early-stage financing network that is now very developed and mature: the French VC scene is now self-sufficient for early-stage ventures.
- The snowball effect with enough accumulated experience to create a secondary ecosystem of repeat entrepreneurs and BAs that is now very mature and qualitative as well.
- And let’s also not forget European & global tech events like Vivatech and Hello Tomorrow bringing eyeballs from across the world to the French Tech scene.
All in all, it is also about the mindset: Public-driven initiatives gave a significant push to an ecosystem that was waiting to thrive, and favored an ambitious mindset to place France as the place to be for startups.
This is all great for the French ecosystem and French entrepreneurs but is it enough to attract international talents, startups and businesses, or in short, truly become a global hub ?
What attracts an entrepreneur into an ecosystem that is not naturally theirs?
It can be one or several of the following reasons:
- Global reach and reputation — e.g. San Francisco, the undisputable Mecca for tech
- Dense, deeply intricated ecosystem, where innovation is well interconnected with other economic silos with dense and frequent interactions (large corps, finance, research, universities, talents, public authorities) — e.g. Israel, small in size but very solid and powerful tech ecosystem
- Unmatchable competitive advantage — e.g. London for Fintechs: it gives access to the best experts, talents, funding in its specific space
- Unique geographical reach, that gives access to a specific market or geographical zone — e.g. Singapore, hub of choice to cover South East Asia
- Or a mix of all the above, and overall enough assets to make it worth it
Does France have all of this?
If we ask some of our non-French portfolio entrepreneurs, it seems that top reasons for them to choose France to build their company are definitely a mix of the reasons stated above: a friendly tax environment and supportive public policies, an ideal geographic position and a strong talent base, especially for tech profiles.
Todor Jeliaskov, CEO of InHeart, states it this way: “There is a huge support from the regions and the French government for local startup companies. Compensation in the form of tax credits and grants is available for a large portion of R&D costs and R&D is more efficient than in the US. In addition, France also offers a strong engineering talent, especially in software, AI, physics. As a comparison, AI software development is much more expensive in the US.”
This supportive public & academic environment is stressed out by all our entrepreneurs, as Jean-Marc Holder, COO of SeqOne points out that France provides specifically “ A rich public/private academic collaboration environment, lots of support from government and private/public instances, and access to programs on the European level, and globally a large amount of non-dilutive funding.”
On a more business note, Vikas Chhariya, CEO of Indeez, adds: “The French market provides the perfect geographical platform to expand Indeez’ business into other EU markets since on several policy topics France has led the thinking within the European Union — for example on future of work and improving the work conditions of platform workers. Consequently, we aspire to build a global market winner with strong French and EU values.”
The reality is that France is attractive, and not only to the benefit of French entrepreneurs and startups.
Recent moves such as Brexit definitely tip the scales in our favor, as institutions from the City and tech entrepreneurs alike have been shifting towards France as the UK becomes less attractive for investment & tech startups looking to capture a rapidly growing EU market.
But the truth is that it also has a unique set of assets of its own on a regional level, and interesting charms as well on a global scale that is now attractive enough for international talents, startups and businesses.
Although it is hard to make it tangible, we can take Station F as a relevant sample and an interesting proxy to catch this trend. Approximately 30% of their 3,000+ entrepreneurs in-house are non-French: it reflects the natively global DNA of the campus. Although the ambition has always been international, the Station F team has seen a noticeable shift since opening in 2017. Today, we see more and more international-minded corporate programs, and the mindset of both French and international entrepreneurs gathered on campus is truly global, as well as the VC community that keeps a close eye on them. The team also notices that when it comes to attracting international startups, they felt little hindrance for them to come to France: the global reach of the campus is very well recognized, as well as the expertise, network and visibility it can bring. And they are particularly attentive to smooth them out with initiatives such as co-living offers, administrative shortcuts for international entrepreneurs to settle more easily and a vibrant expat community.
Finally, one compelling insight was related to the specific attractivity of some French Corporate-related programs for international startups, that attracts non-French startups looking for specific expertise and network in areas such as luxury or gaming, in which the French reputation precedes itself and goes way beyond the tech ecosystem: it’s interesting to note how France’s overall attractivity and the French Tech scene are intricately linked when it comes to France’s most renowned areas of expertise.
Still some heavy lifting to be done
So, the French tech ecosystem has come a long way in the last decade and a half. But there is still some heavy lifting to be done. Although unmissable on a regional level for sure, La French Tech is not a global hub per se: We’re not there yet and we still need to tick a few boxes.
First, it may seem incidental, but France still lacks a very basic — yet vital — skill: full English proficiency. Although it’s less and less of an issue nowadays, it is still a barrier for foreign entrepreneurs who wish to establish a company in France. Todor highlights it by saying “English is the engineering, science, and business language of the world. English proficiency will make France even more competitive in the future”. More generally speaking, although the ecosystem has thrived in recent years, alongside entrepreneurs’ vision and ambition, some cultural barriers remain: “Many entrepreneurs struggle with a global vision and harbour attitudes that slow international expansion.” says Jean-Marc. And although increasingly intricated, some bridges still need to be built among various silos of the French economy, notably between traditional industries and their innovative little brothers from the startups scene.
Overall, it seems to me that France still needs to level up to gain impact, but that the answer is not necessarily France-centered.
To be fair, the answer probably needs to be European. And ambitious. The EU opening the doors to truly pan European businesses, with no — or limited — barriers / friction from one European country to another; A major stock market providing world-class IPO opportunities and liquidity to European companies; An M&A exit market that is self-sufficient on European level, removing part or our dependency to global — and notably US — large corps fire power; This is probably the only way to get truly competitive when facing geographical giants such as the US, India, China, Brasil… And we believe this is where the tech scene can play its part, by being at the forefront of this change.
And in the course of doing so, if France can become the #1 spot for doing business in the EU, well that would be the cherry on the cake.
#GoFrance
