4 Facts that Illustrate the French Startup Ecosystem You May Not Have Known
When you hear about an “entrepreneurial ecosystem,” what do you imagine?
Silicon Valley would most likely come up first — the global hub of innovative minds and pitches, as well as hundreds, if not thousands, of new gadgets, software, and services.
Such hubs exist globally in every metropolitan city. Of course, the scale varies. Some consist of a handful of investors and entrepreneurs while others are home to countless pitching events, hackathons, and research institutions.
Within its galaxy, little is known that the one in France has grown rapidly in the past ten years. Did you know, it has also become the second biggest startup investment hub in Europe, following London?
Here are four facts that show the current status of the French startup ecosystem.
$10 Billion Investment — National Strategy
France has the ambition to be Europe’s top startup biosphere. In fact, it trumpeted that its goal is to turn France into a “startup nation” and a “digital republic.”
To illustrate its eagerness, France has been making hefty investments in startups. Its beginning was marked by the rollout of the famous La French Tech Initiative in 2013 that encompasses several programs, including French Tech certifications, French Tech pass, and startup communities.
In 2017, France invested more than €10 billion to create an innovation fund to keep nurturing French startups and fostering tech innovation. It has even pumped in an additional €57 billion until 2022 to expand the fund, which has spawned tech accelerators and initiatives, such as NETVA (New Technology Venture Accelerator) and YEi (Young Entrepreneurs Initiative).
The national strategy is bearing fruits. As of 2022, there are 10,000 startups in France, which has grown by 30% in the last four years. The “combined enterprise value of French startups founded since 2000” reached €179 billion ($193 billion), up 18 times since 2010.
2. Country of Unicorns
France has 26 unicorns as of 2022. (Japan has eight) The data of French unicorns alone show how fast the French entrepreneurial ecosystem has been burgeoning.
Unicorn refers to a “privately held startup company with a value of over $1 billion” and often is an indicator of the attractiveness of an entrepreneurial ecosystem.
As an example, the total number of homegrown unicorns has reached 31 and has surpassed that in Sweden and the Netherlands, which were known to be the mammoth breeders of unicorns. The rate of emerging unicorns is faster than most European countries, scoring 7.5x of growth since 2016.
What’s more, France has 90+ future unicorns, which is the third-largest number in Europe, following the United Kingdom and Germany.
Emanuel Macron, president of France, even sees decacorns, startups worth $10 billion, as the next standard. Out of 44 decacorns in the world, none is founded in France, yet. However, given the recent moment of French Tech, it might be soon to see the birth of a French decacorn.
If you are curious, here are some examples of French unicorns. Alan is a platform that makes health insurance more convenient and affordable. Ynsect offers innovative agro-food and environmental technology products. Meero provides AI-based photography enhancement solutions.
3. Strengths in Fintech and AI
France is particularly taking the lead in 2 fields: Fintech and AI. Here, we will introduce each field, one by one.
Fintech
Let’s start with fintech. In 2021, French fintech startups collectively raised €2.72 million, which has increased by 74% since 2020. It is also the third-largest in Europe, followed by €3.5 million in Germany (The UK is taking the throne with €8 million).
Out of 13 unicorns that were born in 2021, five were fintech startups (Ledger, Lydia, Swile, Alan, and Swift Technology)
It is not a surprise that France is hosting Europe’s biggest FinTech event, The Paris Fintech Forum.
Artificial Intelligence
On the other hand, France has emerged as a European leader in artificial intelligence, thanks to Macron’s strategic focus on and investment in “digital, AI, cybersecurity, and quantum.” There are 520 AI startups in the nation, and AI starts have raised €1.6 billion in 2021.
There’s more. The French government is aspiring to nourish its AI startups. In November of 2021, the Minister of Higher Education, Research and Innovation and the Secretary of State for Digital Transition and Electronic Communications issued the France 2030 plan in which they described one of their priorities is to fortify France’s position in the AI market.
In fact, the French government is planning to invest €2 billion a year to accelerate AI. Similar to fintech, given the total fundraised capital by AI startups has increased from €708 million to €1.6 billion in just a single year, the plan is sound — there is no doubt that more AI unicorns will emerge.
Among the prodigious growth of the French entrepreneurial scene, fintech and AI are prime examples of areas that have seen prominent maturation and potential.
4. Global Expansion and Promotion
We have shared the status of the entrepreneurial ecosystem within France. However, it is worth mentioning that France also invests to expand its startup ecosystem abroad and to lure investors from overseas.
La Fench Tech is an example, which is a bridge between the French government and startups. It has 108 communities worldwide (including France) where each serves as the hub of French entrepreneurs in the local area who try to launch a startup locally or to expand their services from France.
At La French Tech Tokyo, we are excited about supporting French entrepreneurs launching in Japan. We recently held interviews with one of the French unicorns, Back Market, and Synapse Medicine on their expansion in Japan. We look forward to supporting more French entrepreneurs in Japan.
While offering ample support for French entrepreneurs abroad, the government also utilizes La French Tech as a vehicle to promote the French startup scenes. The worldwide promotion is crucial to attracting international investors who have, in fact, been strong backers of recent French startups (as of 2021, 60% of investment came from foreign investors).
To give some examples, Japanese telecom giant, SoftBank, invested €580M into a budding unicorn, Sorare. Silver Lake, the American technology investment firm invested €473M into Mirakl.
France has a wide web to support French entrepreneurs abroad and also to promote its startups and ecosystem. Not only does the increase of foreign investors indicate the success of both aims, but it also shows the values of French startup scenes have indeed been on the sharp rise.
Conclusion
In short, France is evolving fast. It is on its way to becoming the “startup nation” that it once dreamed of.
The number of startups, the value of the ecosystem, rate of budding unicorns, etc — French startups’ mammoth growth is conspicuous that more global investors are paying close attention to spot the next whale, and more ambitious minds join the hub to engineer solutions.
France will keep evolving and will one day become the representation of innovation and entrepreneurship, as its American counterpart, Silicon Valley, has made its way.
As the article addresses, La French Tech Tokyo is here to support French entrepreneurs who are launching their business in Japan or expanding their startup to the Japanese market. We also support Japanese startups expanding their business to France and Japanese investors interested in French startups. Please contact us anytime with questions!
