Finally, the club doors opened. With its policy in favor of start-ups and its AI talents, Paris was beginning to find a place at the table of those who matter in global tech. For two years, the tricolor nuggets have raised more funds than their German neighbors. And brains who left for the United States are starting to return home. “Paris has become one of the world capitals of AI. France finally has what it takes to carve out a very good place for itself in tech. And this magnificent potential risks being wasted. It’s as sad as it gets worrying”, observes Maya Noël, CEO of the France Digitale start-up association.
The post-legislative scenarios are indeed enough to scare tech entrepreneurs, in particular that of a National Rally in power. Barely in the big leagues, will Paris also be sent back to the second division?
Jordan Bardella may play the AI geek, under the encouragement of essayist Laurent Alexandre, the knowledge of the president of the RN is in reality quite meager. And the orientations of his party, not at all favorable to this sector. “The RN hardly talks about innovation,” points out Ben Marrel, CEO and co-founder of Breega, a French venture capital fund. Certainly, the National Rally no longer persists in advocating the craziest scenarios, such as a Frexit or an exit from the euro – undoubtedly noting that the French are generally reluctant to do so. But the party remains fundamentally hostile to Europe. However, this is where the key to success in this sector lies.
Because digital technology allows unprecedented economies of scale: once the virtual product has been designed, it generally does not cost much more to offer it to a large number of customers than to a small one. Which opens up the possibility of growing at full speed, “scaler” in the jargon. It is no coincidence that the United States, with a domestic market of 335 million inhabitants and China, 1.4 billion, are so powerful in this area.
“The entire digital economy is based on the size of the market. Individually, European countries are too small. Only the scale of the EU makes it possible to compete with the United States and China,” insists the CEO of the Breega fund. United, the Europeans with their 448 million inhabitants can even reproach Uncle Sam. While Washington and Beijing are investing massively in tech, the strategic nature of which they have well understood, the moment could not be worse chosen to put the brakes on European cooperation.
Start-ups fear protectionism with RN sauce
The urgency, as highlighted by the recent report by Enrico Letta, is on the contrary to strengthen it so that the EU’s tech champions encounter as little friction as possible when they expand into this courtyard. “A single capital market in the EU can also give European tech a lot of power. But it is not the RN which will work towards this,” laments Olivier Martret, investment director at the venture capital company Serena Capital.
“The RN has an unhealthy distrust of foreigners” observes Philippe Corrot, co-founder and CEO of the unicorn Mirakl, who speaks in a personal capacity. And for tech, that’s a dangerous potion to swallow. “The RN will hinder the ability of French start-ups to attract the best foreign talent,” underlines Olivier Martret. A major problem in this type of business where the presence of a specialist sometimes makes all the difference compared to the competition.
Some supporters of “digital sovereignty” are watching the RN with growing interestespecially since the party recently announced measures concerning tech notably a French sovereign fund “oriented towards strategic sectors, industry and innovation” and tax exemptions for companies created by people under 30. Some startupers are careful not to take a public position. Behind the scenes or publicly, however, many judge the nationalist withdrawal of Jordan Bardella’s party to be beside the point. “Protectionism makes no sense. We make 80% of our turnover abroad. A Frenchman like Mistral has the capacity to become a world leader. But if we put up barriers, others will too. What protects companies is not protectionism, it is being the best in a market,” says Philippe Corrot.
Olivier Martret of Serena Capital confirms: “In a more or less direct way, the RN risks complicating the task of French start-ups wishing to export their products abroad or even to be able to develop internationally.” The National Rally’s lack of regard for the green transition does not reassure either. Because with digital technology, climate is the second leg on which the economy of the future will develop. “France 2030 is a program that finances strategic sectors for the future of France. With the RN, would they still be? Nothing is less certain,” worries Olivier Martret. Several entrepreneurs in the sector fear seeing Jordan Bardella’s party redirect the funds which have enabled innovative French companies to be born and develop in recent years towards its old favorites.
“Their vision of the company has not evolved since Germinal”
On the other hand, the program of the New Popular Front (NFP) does not excite them much more. “The left highlights certain interesting points such as access for all and digital education,” points out entrepreneur and co-president of the National Digital Council Gilles Babinet. But the NFP does not give priority to innovation either. “The left has lost its compass of progress. Positions on the subject are extremely heterogeneous, particularly on nuclear power where we find both supporters and fervent opponents,” continues this specialist in the French digital ecosystem.
The skepticism that certain currents of the NFP display towards Europe is not designed to reassure them. No more than their tax policy. “Their vision of the company has not evolved since Germinal. The Popular Front was in the 1930s. The world has changed since then,” grumbles a well-established digital entrepreneur. Another worries: “They obviously know nothing about the specificities of start-ups. If they don’t take them into account, we could find ourselves selling shares in our companies to pay the ISF.”
For the economic research firm Asterès, an increase in taxation could well “slow down tech, which depends on business angels and venture capital funds”. On both sides, deplores Sylvain Bersinger, the firm’s chief economist, “tech is not a subject that is close to their hearts. The RN is focused on immigrants. The NFP on the rich. Both have fairly crude economic programs: money for everyone and we make our respective scapegoats pay.”
There start-up nation French government will it resist if violent headwinds start to blow? Certain factors would protect the ecosystem, notes Gilles Babinet, “for example, actors like Xavier Niel, Rodolphe Saadé or Bernard Arnault, who invest significantly in it.” Europe could also act as a lightning rod: “The new Commission which is being developed is, fortunately, pro-business with a very technological agenda”, specifies this specialist in the sector. RN, NFP… Whatever the outcome of the legislative elections, “let’s hope that these parties will have the pragmatism not to break what works”, sighs the chief economist of the Asterès cabinet.
In circles close to the majority, we try to reassure ourselves: “the majority of laws on attractiveness have already been passed.” However, French tech still has a way to go. Once they have reached a certain size, French nuggets hit a wall: that of exit. Whether this exit takes the form of a stock market listing or a buyout, it continues to be significantly more difficult to carry out in Europe than across the Atlantic. “There start-up nation French has only very recently started to highlight very technical start-ups such as those in software, also regrets Tariq Krim, founder of think tank Cybernetica. In ten years, it is still not able to have a positive impact on our foreign trade deficit. On the contrary, it aggravates it with immoderate use of major American platforms.”
Don’t waste the opportunity of the century
Even though it has formidable assets in artificial intelligence, France finally has a close battle to play to position itself well there. Tripling of places in AI sectors, investments, reform of the entire education system… this race contested by all the great powers will not be won without getting wet.
And for the soufflé to rise, the State has a crucial role to play. “Investment funds were reassured to see the government support French start-ups,” underlines Gilles Babinet. As France does not have a funded pension system, “it is essential that the State helps innovative companies”, adds Ben Marrel of the Breega fund, emphasizing the vital nature of links such as Bpifrance, France 2030 or even the Tibi initiative which encourages institutional investors – insurers, etc. – to finance start-ups. “If public policies to support innovation are reduced, it will be catastrophic for the future of the country. The decisions taken today will have an impact in 10 or 20 years,” warns the CEO of the France association. Foxglove, Maya Noël.
The sector is only too aware of the setbacks that the United Kingdom incurred after its radical shift in 2016. “British tech, which had spectacular momentum, has slowed down quite a bit since Brexit,” points out Gilles Babinet . The art of shooting yourself in the foot.
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