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Looking for Le French Unicorn

After getting a taste of France’s entrepreneurial ecosystem La French Tech in Paris, it is hard not to leave inspired and energized. Paris is home to over one hundred acceleration programs, dozens of VC funds and thousands of founders building innovative products. As an ecosystem, Paris thrives to create its own unique model, a French exception, leveraged by its own inner strength and rich history. It has no Silicon Valley but feels almost as vibrant and exciting.

As in every innovative region, everything is built around talent. In France, engineers and scientists are driving a new wave of innovation. Grandes Écoles and public universities have historically produced world class engineers in droves, and in the past these juggernauts flocked to companies such as Airbus, EDF, McKinsey or Goldman Sachs. Today, they are founding companies in telecommunications, biotechnology, healthcare, aerospace and the digital market in places like Numa, The Family, Microsoft Ventures or 50 Partners. One the most surprising aspects of the new generation of Parisian founders and investors is diversity. Twenty-eight nationalities from across the European Union travel, work and create freely in France. Additionally, the integration albeit slow of African and Arab immigrants is contributing as much as Asians and Hispanics have in the US. Moreover, nearly a third of Engineering and Science graduates in France are woman. And it is not rare to see women leading VCs and accelerators.

The ecosystem seems focused on solving local and global problems and strives to innovate. Don’t get me wrong, Paris has its fair share of dull startups and ecosystem tourists. But founders in France face competition from high potential cities around the region, particularly the highly hyped London, Berlin or Amsterdam. If Rocket is not copying one of their products, there are plenty of other entrepreneurs around Europe looking for ideas in France. It helps that the French are not only early adopters in fashion but also in tech. France represents the largest market for AirBnB. It is estimated that Paris has more Airbnb rentals than hotel rooms. While visiting, it felt there were more crowdfunding platforms than brasseries. The Uber service is absolutely flawless in Paris. However France is still a relatively small market. Almost every startup here has a European reach since day one. Even if the Eurozone helps, companies need to manage dozens of languages, cultures and legal environments. Founders deal with the challenges of going global very early on. When Blablacar launched in Russia, Turkey or Mexico, it had already the experience of launching in Spain, Germany or Greece.

An ecosystem needs all its components to be in sync in order to run smoothly. It requires a team effort from all parties even, if not especially, from the state. The Hollande government recently launched a comprehensive legal framework for crowdfunding, paving the way for crowdfunding platforms of all forms to fill gaps in the financing market. BPI, the French SME bank, has several programs that fund VC firms and give credit to startups. The city of Paris government, led by Anne Hidalgo, is putting a large emphasis on innovation to create the city of the future by starting Paris&Co. Paris&Co federates dozens of incubators and accelerators around the city. It also runs a program where they beta test public policies before scaling and another program that hires (and pays) startups to experiment solutions for the city. Successful entrepreneurs are leading the team such as Xavier Niel, the founder Free, a telecom giant, and Jacques-Antoine Granjon, the founder of Vente Privee, the first flash sale company in the world, giving back to the future generations. Niel recently founded 42, a technical and collaborative university that requires no admission exam, and will open the largest startup incubator in the world, 1000 Startups, in November.

For Nicolas Colin, founder of The Family, “Silicon Valley is racing ahead, forcing windows of opportunities to close in other countries”, potentially bringing the La French Tech’s hey-day to a grinding halt. I am more optimistic. It’s been only a few years since talent has driven innovation rather than the other way around, but the results are already tangible. It started with Criteo, an Artificial Intelligence giant that had an IPO in 2013 and is now valued at USD $2bn. This summer, BlablaCar raised USD $100+ M at a $1.4bn valuation, becoming France’s second unicorn. Smaller deals have also hold testimony to the healthy exit market; Twitter acquired Mesagraph, a hashtag analytics startup and Intralynks bought DocTrackr, both NUMA companies and just last month, Celine Lazorthes, the talented CEO of Leetchi announced the sale of her company to the French Bank Credit Mutuel Arkéa. Other high growth tech companies like ShowRoomPrive and Deezer are on the road for an IPO in Euronext before the end of the year.

The really exciting aspect of La French Tech is how it paves the way for others. Cities that are not ‘destined’ to be innovation hubs like Mexico City, Istanbul, Moscow, Nairobi or Jakarta. The first step seems to be to leverage a city’s history, strengths and uniqueness which all require having high-set goals and a deep belief in local talent and institutions. So if you are looking for inspiration to help foster innovation in your city, you may still have time to change your plane ticket from San Francisco to the city of lights.

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I write about my work as an investor, a lecturer, and a mentor. In general, musings about Latin American tech, VC and life.

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