CES 2023: “A start-up that only does business in France is putting itself in danger”

CES 2023 A start up that only does business in France

How long ago the time when French Tech timidly took over the CES in Las Vegas, the annual high mass of tech, with around twenty start-ups. In ten years, the tricolor nuggets have beefed up their exports. They now generate more than 30% of their turnover abroad and 67% of them have an internationally oriented activity from the first year. The time is therefore no longer for discretion: at the 2023 edition of the CES (from January 5 to 8), no less than 170 French start-ups had made the trip, making France the largest foreign pavilion of this edition. Interview with Didier Boulogne, Deputy Managing Director for Export of Business France and Eric Morand, B2B Event Department Director of this agency responsible for the international development of French companies.

L’Express: How has French Tech evolved in ten years?

Didier Boulogne and Eric Morand: The ecosystem has passed a milestone. France was also for the first time ranked by the CES in the top 10 of the most innovative countries. Previously, we were in 23rd position in this ranking. The reforms that France has carried out have made the environment for doing business much more attractive. Emmanuel Macron also made himself the first “VRP” of French Tech. This has become structured and has greatly increased in power. Result: today, countries like Germany, which are often given as an example, actually envy us our ecosystem of start-ups. In ten years, the world has also changed a lot. The United Kingdom has chosen Brexit, which is very expensive. Donald Trump’s mandate had also changed the balance. In this chaotic international context, France has become an increasingly attractive option.

In which areas and on which markets does French Tech export best?

North America is one of our main markets. The United States is however a complex country to conquer. There are many candidates but few elected. French start-ups are also very interested in major European countries, especially Germany, the United Kingdom, Spain and Italy. Despite its geographic proximity, the European market also presents challenges. Germany, for example, is not a market forearly adopters as can be the case in the United States, it is necessary to make customers more aware of the interest of an innovation.

What should French start-ups dreaming of launching in the United States have in mind?

It takes at least two years and a million dollars to establish itself in the United States. Just finding a good salesperson costs $150,000 to $200,000 a year. There are also many subtleties of American law that French start-ups must take into account before launching there. For example, civil liability does not work in the same way as in France. Lawsuits in this area are much more common and can bring a company down if it is not prepared and insured. Recruiting is also complex. In France, it is easy to find versatile profiles. In the United States, they are much more specialised, which forces them to build larger teams further upstream. This gives a solid foundation to develop but it requires a budget.

How to prevent French nuggets from going under the American flag?

The scenario where an American venture capital fund asks a French start-up to become American is fortunately happening less and less often, for several reasons. The European and French ecosystem has become mature. Major US funds now have offices there. In France, our population of engineers is finally an asset, because the prices of these profiles in the United States have become prohibitive: they cost two to three more than in France and are harder to retain. Staying in France is therefore a logical choice.

The period is delicate for the tech sector and financing is harder to find. Don’t start-ups have an interest in temporarily lowering their international ambitions?

In times of crisis, of course, you have to prioritize. If you do not have large production capacities, for example, there is no need to try to launch yourself in the United States. We help French start-ups to identify the markets suited to their product and their capacity. Even in times of crisis, we must continue to think internationally. A start-up that only does business in France is putting itself in danger.

What difficulties do French start-ups encounter when they go international?

It depends on the sectors. Standards may differ from country to country. For example, in the fintech field, despite the beginning of harmonization, there are still specificities that complicate the task of French players who wish to deploy in other EU countries. The number of start-ups that think of themselves as international from the start – with documentation in English, international profiles in the team, etc. – is still insufficient, even if it is progressing. However, the main constraint for start-ups remains that of human and financial resources, even if 2022 saw a record number of fundraisings. And we know that 2023 will be more difficult.

Do French startups have an interest in further exploring the huge Chinese market?

It’s a delicate market. Its size makes it appealing, especially as it is a very innovative region in retail. But there are also real issues of sovereignty. France’s line is non-naive diplomacy. For certain types of start-ups, particularly those developing technologies related to luxury or the art of living, this is a very relevant area. But if it’s very sensitive technologies, like quantum, we don’t go there. As China has closed down with the Covid, it also attracts less and less. Many groups switch their bridgehead on the Asian region to other countries like Japan which is experiencing a second youth. The renunciation of the zero Covid policy in China could be a game-changer at the end of 2023.

French Tech is doing well. When will there be a European Tech with European champions?

This is what the French government is strongly campaigning for. We must position Europe as the third way as an ever-widening gap is growing between the United States and China. It is an important but complex project. We need to make European start-ups work harder, get them to meet, discuss, and forge technological partnerships. The rise in the number of unicorns is pleasing. But there is no European tech company valued over 50 billion euros. This is what now needs to be developed.

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