French Cloudscape: 300+ French SaaS companies mapped and analyzed
Two years ago we produced the first version of our French Cloudscape mapping and analyzing more than 200 startups of the French ecosystem. We have since received many requests to update the map, and it’s what we finally decided to do for SaaStr Europa which was held in Paris in June 2018. You’ll find below the updated map with now more than 300 logos. I’m also sharing five important trends that, I believe, shaped the French ecosystem in the past two years.
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If you are interested in more data points, I recommend the post of my colleague Louis Coppey:
Developments of the French SaaS ecosystem and Winning Strategies adopted by French SaaS companiesmedium.com
1- Fundraising: the amounts raised have exploded the past two years.
The first thing which struck me when I updated the map is how much the top twenty (by total amount raised) has changed:
In 2016 you needed to have raised a minimum of $14M to be part of the top twenty. This amount has almost tripled in 2018 to reach $37M. When you look at the startups in the top ten, you’ll notice that only three startups in 2016 are still there in 2018. A new generation of champions has emerged (Algolia, Front, Klaxoon, ContentSquare, Doctolib), and many promising companies have raised significant amounts the past two years: the median total amount raised by the startups on our map rose from $2.5M in 2016 to $7M in 2018.
I believe that this explosion is due to several factors:
- France is a land of SaaS: compared to the other European ecosystems France is one of the most dynamic when it comes to SaaS. This model is very popular amongst its entrepreneurs.
- French SaaS entrepreneurs are talented: there are many very talented and ambitious SaaS entrepreneurs leading the charge.
- The playbooks are now proven: french SaaS entrepreneurs are not afraid to think big from day one anymore and many are going to YC or Techstars, which accelerates their internationalization. Many bridges between France and the US were built.
- An abundance of capital: there’s an abundance of capital available, whether it comes from French VCs or from international ones who don’t hesitate to invest significant amounts in French startups (Accel, Sequoia, Index…).
2- Self-financing: an increasing number of bootstrapped SaaS.
Even if I work on the “dark side” of the force, fundraising is not the only way to finance a SaaS company. Self-financing, mainly through revenue generated by customers, is an increasingly popular path amongst French entrepreneurs.
I believe that this surge of bootstrapped startups is due to:
- A mature market: the go-to-market in many software categories is clear and the paths to monetization are much shorter.
- More informed entrepreneurs: I’m meeting an increasing number of entrepreneurs for whom fundraising means more constraints than benefits. They prefer to keep total control of their company and do not target the “hypergrowth” that many investors are looking for.
3- Exits: it’s lagging behind, but there’s a promising future.
If there’s one aspect which is lagging behind it’s probably the exit one. The amounts raised might have exploded the past two years, but apart from Talend’s IPO, there were too few acquisitions and none was significant enough to really impact the ecosystem.
I believe that this is due to:
- A weak local ecosystem for M&A: there are no big french corporations, similar to Google or SalesForce, which regularly acquire B2B companies. M&A is not in the DNA of the major French corporations.
- An “exit window” which will arrive later: when I look at the top twenty I mentioned above, there is no doubt in my mind that in the next five years we’ll see several IPOs and big acquisitions happening. I also bet that the majority of them will occur outside of France.
4- Ecosystems: the local ecosystems kept growing, but Paris is still number #1.
One of the interesting characteristics of the French market is the presence of many dynamic local SaaS ecosystems such as Nantes, Montpellier, Lyon, Lille or Toulouse. The past two years these local ecosystems kept growing: sprouting more and more interesting companies and attracting more capital. That being said Paris is still the most important one, and I don’t see the status-quo changing in the future:
- The local ecosystem will continue to grow: more companies will be launched outside of Paris, and more local sources of capital will be available.
- But Paris will still dominate: Paris has reached a critical mass of talents of investors which makes it the best location to launch a SaaS.
5- Business model: the rise of SaaS Enabled Marketplaces.
When I updated the landscape, I was surprised to see so many requests coming from SaaS Enabled Marketplaces. If two years ago we had to explain the concept, it seems that many founders are now very comfortable with this model, and definitely consider themselves as part of this larger “SaaS ecosystem” (which is great).
I believe that we’ll continue to see more and more SaaS Enabled Marketplaces because:
- It’s a great model for many verticals: now that most horizontal categories are crowded, it makes sense for entrepreneurs to target specific industries and verticals which are still waiting for great products. And in many cases coupling a marketplace with a SaaS tool is an excellent way to differentiate in these verticals.
- The “as a service” model is becoming ubiquitous: the subscription business model is not only popular in B2B but also increasingly in B2C (Spotify, Netflix…) where marketplaces are widespread.