France has been identified as the second-largest start-up “ecosystem” on the continent.
The claim was made in an article on the site Maddyness, which also posited that Paris was set to become a ‘boomtown’ for investment in artificial intelligence (AI). Hugo Borensztein, co-founder and CEO of AI platform Omi, who was interviewed for the piece, said the ecosystem for that type of industry in France was “very mature” in comparison to where it was a few years back.
“Just two to three years ago, French start-ups saw much smaller funding rounds,” he explained. “But it is not just the growth in funding – what is most interesting is the development in the types of projects and the increasingly large number of big companies with big team sizes. Now you are seeing really bold projects in fintech, AI and the health space, and a move away from small ‘nice-to-have’ companies towards really big, industry-changing projects.”
The article highlighted recent investments within French AI, led by businessman Xavier Niel, who has said he plans to direct €200m towards related projects. The sector has also reportedly seen investment of €7bn since 2016, coming from the French public sector investment bank. In addition, the €34bn ‘France 2030’ program is investing enormous sums into deep tech start-ups.
Sector ‘on fire’
This is not the first time that France has been singled out for its startup ecosystem. In March, Alexandra Piedrahita, principal of fintech specialist QED Investors wrote, the sector was ‘on fire’ – presumably in a good way.
“Whereas the tech markets around the world retreated in 2022, French start-ups raised over $11.5bn – a 6% year-on-year increase. This now makes France the second-largest tech ecosystem in Europe, behind the UK, and having overtaken Germany for the first time. Furthermore, fintech as a percentage of total capital raised grew from 17% in 2021 to 19% in 2022 – although this still lags the leading European fintech market of the UK, where over 30% of capital raised goes to fintechs. The country has produced 27 unicorns, 11 of which are fintechs.”
Writing on Substack, meanwhile, Alexandre Dewez, a vice-president at Eurazeo, expressed optimism for the French tech ecosystem, despite what he called “a global meltdown” in the start-up space. “I remain enthusiastic about the coming years for the French tech ecosystem,” he argued at the start of the year. “(i) the upcoming cohort of French entrepreneurs will be the strongest we will have ever seen; (ii) a paradigm rewarding capital efficiency over growth at all cost is sounder for the ecosystem in the long run; and (iii) fund deployment cycles may be slower but top-performing start-ups will always have access to capital.”