Tech and Politics
France’s quest as the next unicorn super power
At a time where China and the US hold the most unicorns worldwide, an ambitious France has taken government led measures to solidify their place in the global arena.
The unicorn. Majestic and rare, hidden and powerful, with a horn made of a valuation of 1 billion dollars granting it ultimate boasting status among all stakeholders involved. Notably, the initial VC’s who first believed, the politicians who fought for the infrastructure allowing for growth, and the hardworking employees.
A Short History
The origin of the unicorn craze dates back to the 1990s with the first round of billion dollar startups within the tech industry such as Google’s Alphabet. The unicorns we know and love today started appearing in the early 2000s and peaked around the mid 2010s with companies such as Facebook, Airbnb, and Uber. To be more precise, Airbnb became a decacorn in 2016, and Uber a decacorn in 2018 — however the latter has since exited the unicorn list after going public in May 2019. These unicorns are celebrated for igniting the era of disruption and the giga economy. Or in less buzz-word terms, they are companies that reshaped the existing business models of mature industries, as well as creating flexible ‘employment’ opportunities where average people can monetize their existing personal capital.
However, the unicorns of today tell a different story. The ‘disruption-of-mature-industries idea’-well has run dry, and leaves unicorn chasers with a different landscape. One that is less sexy, less mobile-oriented, more software-oriented, targets a finer consumer demographic and is industry specific. Think a cloud based data sharing platform for chemists, or an all-in-one wedding planner site.
Unicorns world-wide
This evolution from apps that target mass market user needs, to specialized software is more or less reflected on an international scale. Today there are 538 unicorns world-wide, with a total valuation of $1.9 trillion. Up and coming international-sector-specific unicorns identified by CB Insights include a trucking software company in Brazil, and an Australian business operations management software company. The world leader in unicorns today is China with 206, followed by the US with 203. The US had previously held the title of countries with the most start-ups until 2019. Figure 1 shows the number of unicorns per country, as of June 2019.
Et la France?
As of December 2019, France is home to five unicorns ranging across several industries : Blablacar (2015), OVH cloud (2016), Deezer (2018), Doctolib (2019), and Meero (2019). These unicorns reflect the more traditional industry disruption model, yet are catered to the french market i.e music streaming, ride-sharing, online doctor appointment reservation.
But President Macron wants to change that. During a speech about late-stage investment in September, President Macron declared his goal of 25 French unicorns by 2025. 25 unicorns would place France in the top 3 unicorn nations worldwide. In an effort to launch France’s unicorn takeover, the French government has convinced institutional investors to invest $5.5 billion in late stage VC funds and asset managers.
There are two key take-aways from this strategy :
1. The targeting of late stage VC funds and asset managers reflects Macron’s firm belief in the trickle down effect which is seen with his other financial policies. The startup trickle : more money at late VC’s disposition, more start-up financing opportunities within the country.
And 2. By targeting late VC’s, (opposed to early) this accelerates the notion of unicorn attainment, rather than global startup growth. Quality versus quantity.
Complimentary to investment pledges, president Macron proposed administrational add-ons in order to incubate a unicorn proliferation. Within the “La French Tech” initiative, the French government will select the top performing 40 French startups and give them the label ‘Next 40’ thereby fast tracking any administrative needs and integrating startups into the core of french economic policy. Following the ‘Next 40’, the ‘French Tech 120’ will serve the same purpose but on a larger scale. For non-french people ; these administrational labels are a play on words for CAC40 (the french Fortune 500 equivalent) and SBF 120 (French stock market index).
In another push to weave startups into the french administrative fabric, all government agencies (customs, la Banque de France etc), will have a french tech correspondent. The goal is to have a network of 120 governmental employees working for the interest of startups. The combination of these efforts will serve to lay the legislative and administrative groundwork for a 25 unicorn France.
Questions for the Future
As France strengthens its initiatives to achieve unicorn stardom, a few interesting questions arise. What will be the shape of the next generation of unicorns? Will France’s top unicorn candidates reflect the older industry-disruption model, as the French unicorns do today? Or will they follow the US’s industry select software trajectory?
And furthermore, the level of investment both financially and administratively for startups within the french government is internationally unprecedented. For mid-size countries looking to capitalize on economic transformation, will France’s model be the gold standard?
