Why Foreign Startups Should Avoid Station F

James Temple
Jul 24 · 8 min read
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Photo credit: Teolemon at Wikimedia Commons

If you’re reading this, chances are you already know what is Station F a.k.a the world’s largest startup campus as what it usually claims. It hosts about 1,000 startups and approximately 3,000 personnel working under its iconic roof — startups sitting on one side, VCs and accelerators on the other side.

Station F was founded only in 2017 with the mission to nurture and incubate global early-stage startups. It’s largest startup program is called Founders Program, a program where startup needs to pay for each dedicated desk each month (just like in a co-working space). This program invites early-stage startups from across the world to apply for its two intakes happening in the middle and end of each year. The maximum length to be in the program is 2 years.

More than 70% of startups in this program are founded by French people while foreign startups only make a smaller percentage of it. There’s a sister program called Fighters Program which offers free access to Founders Program, which means you don’t have to pay for the desk each month (but you still need to pay for the accommodation at Flatmates).

This story aims to paint a clearer picture of what it’s like being a foreign startup inside Station F and its programs, based on numerous accounts from foreign founders participating in the Founders and Fighters Program.

The universal language is French, NOT English

Station F is uniquely located in France, a country that has an inherent pride in its language — the French language. If you’ve been to France, you’d noticed that English is not widely spoken or used, especially when France is ranked as one of the lowest English speaking countries in Europe (close with Italy and Spain). This makes English a rare communication commodity especially in running a business. The French government conducts its business purely in French, so don’t expect an English-translated website or documents. Even its foreign immigration departments and banking websites only speak French. You’d be lucky to find someone that could assist you in English.

Although Station F declares English as its main language, more than 60% of events and workshops here are conducted in the French language only. This is particularly true for events by government entities such as La French Tech Central — the arm that supposedly helps everyone (including foreigners) to establish your business in France.

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List of events in Station F’s Slack channel (#events-to-go) where most are conducted in French language

Unless French is already in your vocabulary or you are willing to spend up to a year to learn this alluring language, you might struggle to get your startup off the ground here. If you’re a native speaker of a Romance language, you could cut short the learning time considerably.

No visible foreign startups that have raised funds in Station F

Since its establishment in 2017, according to Station F themselves and other startups on the campus, there hasn’t been any news of foreign-owned startups (incorporated in France but wholly owned by foreign founders) who have raised funds from French investors while being in Station F’s programs. Most fundraising success stories are from French founders. Ironically, I did hear of a French founder based in the UK who raised a considerable amount of money from a VC in France.

According to a business financing consultant, some public financing is available such as from Réseau Entreprendre (meaning Entrepreneur Network) is a French association funded by business leaders who volunteer every year to support new business creators. They offer interest-free loans up to about €20 000 which you need to repay within four years with one-year deferral (no repayment in the first year). The catch is the application process which takes about 5 months.

The other financing is from BPI France, a public investment bank that offers grants for startups. Their matching grant covers up to 50% of estimated eligible expenditure up to a maximum of €30 000. This means you will have to forecast a €60 000 expenditure in order to get €30 000 of free money while you have to prove that you own the sufficient funds to pay for the other 50% of the expenditure. Again, it takes around 5 months to get a result for your application.

Here’s the bad news for both financing above. The entire application process will be in the French language. So, you need to appoint a French financing consultant to assist you to apply with an upfront fee of around €2 000 and a commission (a percentage) from the amount received from the financing scheme.

Paris is one of the most expensive cities to live in

If you’ve been to Paris, you’re most likely to feel the cost of living in Paris, even more so if you ever lived here. The Economist recently revealed a report of their survey on the cost of living in 2020 and Paris is ranked in fifth place, tied with Zurich, Switzerland. Most reports of most expensive cities do vary but Paris has always been among the leaders in this topic.

Operating from Paris could spell trouble to early-stage startups that Station F is targeting since virtually all young startups are bootstrapped and do not have early investors. This is particularly unsettling for foreign startups from less expensive cities.

Three strikes and you might be out

France is notorious for being known as the world’s capital for labor strikes. Most stats that you could find online do support this notion. Some locals even claim there’s an average of one strike per month, although I could not find any facts to support this.

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The recent pension reform strike was the longest ever in France in decades and more strikes are expected since the strike only reached a deadlock.

When a strike hits, expect it to be in Paris and to cause transportation disruption. Startups (local or foreign) will have to bear the pain of commuting to work and to meetings. Worst of it all, foreign startups will only be caught in this crossfire between the French people and the government.

Tax heaven for the French gov, not for you

It’s common to have VAT (value-added tax) at 20% in EU countries, but based on Deloitte 2020 Corporate Tax Guide, France boasts a corporate tax of at least 28% compared to only 17% for the UK. Estonia, an EU country, offers 21% corporate tax without any double taxation on dividends meaning you as the shareholder will not be taxed again if you received dividends from your company which already paid its corporate tax. France, however, does not offer double taxation relief, according to BNP Paribas.

If you’re incorporating a branch office in France, prepare for an extra load of 28% branch tax if you plan to repatriate your profits back to your country.

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France corporate tax from 2020. Source: Deloitte Corporate Tax Rates 2020

Controversial 5 pillars of Station F

Station F often emphasizes its 5 pillars,

  1. You’re an early-stage company
  2. You’re an active member of their community
  3. You set ambitious goals and work hard to achieve them
  4. You are a sucker for resources
  5. Station F is your mothership

Many freshmen startups will soon discover that some pillars just don’t work. According to pillar #2, startups supposed to get the most support other fellow startups mostly done via their Slack channels. There are no mentors around. This lack of mentors sometimes leads to the notion of “the blind leading the blind.” Meanwhile, the majority of Station F’s staff are young and lack experience in running a startup thus your queries would mostly lead to them referring you to someone else.

Upon entering Station F’s programs, startups will be grouped into guilds, with a guild leader represented by a startup. Guilds are required to meet at least once a month but some startups find their guild meetings unproductive and do not bring much good. According to some startups, attendance for these once-a-month sessions is dramatically low.

Being a pillar sucker (see #4), Station F’s best resource is the perks they offer. You do get good discounts and offers from service providers for cloud services (AWS, OVH, Google Cloud, Digital Ocean), job posting (Talent.io, Station F’s own job board), payments (Stripe, PayPal), banking (BNP Paribas, Qonto, Transferwise), sales (HubSpot, Zendesk) and a lot more. Beyond that, please don’t expect much.

Pillar #5 offers another consolation. Most startups find the office building a place to fall in love with. Decorated with real and expensive works of art, rumored to be owned by Station F founder himself — Xavier Niel. Some foreign founders claimed that they actually slept inside this iconic office for three months while waiting for the completion of Flatmates — the dedicated accommodation for Station F’s startups.

Young and rather inexperienced team

Station F is operated by a young team by age and startup experience. The team often expresses their zeal in running this world’s largest startup campus, and indeed it seems to be a proud place to work in but there are limits to their knowledge and endurance. Despite their willingness to assist, startups often don’t gain much from them besides the everyday matters with the office itself.

Here are a few bright sides

  • You’re offered a France residence permit if you’re selected to join their programs. Yes, it’s a PR (permanent residency) status for you to stay, work, and run your startup in France for the long term. Each permit allows you to stay legally for up to 4 years (renewable).
  • Fees from Station F are more affordable compared to others in Paris such as WeWork.
  • Your startup gets to proudly say “We’re based in Station F — the world’s largest startup campus” although I’ve not heard of anyone claiming this has helped them much in their business.
  • 40+ VC offices are located across the building, literally! But does it mean you have a better chance of striking your elusive funds while being in Station F — this is left to be answered. But the most common feedback early-stage startups get from investors and Station F is “show good traction and/or revenue.”

The Startup

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