5 Interesting facts entrepreneurs should know about France
In order to have a successful entrepreneurship experience in France, one needs to understand more than just the basics of marketing and economics. France is complicated. It's people are complicated. In order to start a business in France, big or small, one must first understand its soul.
1. France Is Now Cool With Entrepreneurs
The French tech rocket-ship is ready for take-off: early stage funding is at an all time high, there is a large, motivated and skilled talent pool (hi!), and institutions are (finally) turning into accelerators for the ecosystem as a whole.
In fact, 2017 witnessed a record number of deals to French tech companies, growing by almost 45% from 2016 and amounting to 743 deals at year end. As per CBinsight, 2017 saw investment grow by more than 49% year-on-year, totaling over $3B dollars. All this success is visible when one visits the world’s largest incubator, Station F, where I write every Sunday.
This is in part because the sclerotic business environment of the past is no longer: forthcoming small business legislation will allow people to start a company with a single registration form, rather than seven as was once the case. It’s also easier to easier to hire and fire in France, making labor costs far more understandable and predictable, and tax credits have been put in place for various types of research. France is still far from a “country of unicorns”, but getting closer thanks to the sheer number of new companies taking off weekly and the great efforts institutions are putting in week in, week out.
Efforts, however, are only one part of the equation. Timing is the other…
2. One Man’s Trash…
Last year, Mr Macron announced the creation of a special visa that offers a fast-track for international tech founders, employees and investors to obtain a four-year work and residence permit (a rarity in France). More than 1,000 applications have been received, and most have been granted. This initiative might not have been nearly as successful had the US and UK not been in the midst of the spectacularly stupid process of dissuading immigrants from joining their workforce, and/or had Silicon Valley not gotten so expensive, courtesy of the NIMBY housing paralysis. Timing is everything.
Hence, people who a few years ago might have left France are staying put and international talent is coming in. Banking on this is both opportunist and vital for France’s future, and new measures are thus being set up to welcome our new techie neighbors (and, from experience, their mind-altering houseplants). These measures will include a new international school for the children of expatriate workers, a simplified tax code, and the capping at 30% of the tax on the carried interest of investment funds relocating to France.
If I was a millionaire-CEO with kids, I’m sure I’d care about all this. The lesson here is that the French are pretty socialist, yes, but not communists as sometimes is envisioned on the other side of the Atlantic, and very willing to welcome outside talent (and their money).
You’d like it here. I hear the food’s pretty good.
3. New Tech IS The Government’s Business
President Macron has some interesting thoughts on the role of government in innovation. He argues that tech is too important not to be regulated one way or another, and understands that what’s at stake is more than business: mishandled data and AI, for example, can jeopardize democracy and “totally dismantle our national cohesion and the way we live together.” He believes the government should “guarantee there is no bias in terms of gender, age, or other individual characteristics” within algorithms, an idea so alien to the U.S I’m sure I’ve just caused at least 8 strokes.
This idea has led the French government to create a plan to become a force to recon with in the A.I field, with a $1.8 billion investment attached to create a French A.I ecosystem, with its own research and companies. The government is also reforming policies regarding data in order to make the transition into a tech economy smoother.
Macron’s A.I plan is a first step in encouraging a culture of innovation in France, though there are still too few examples of synergies between businesses, R&D and academic institutions to call it a bona fide revolution. Macron has nevertheless vowed to invest significant resources between 2018 and 2022 to train young workers and partly resolve this issue. Though encouraging, some worry that this money will be used to train talents who will leave unless France finds a way to keep talent: given what American firms are willing to offer, it’s a no-brainer for engineers.
The plan is however slowly working: Facebook Google and IBM have all recently doubled their recruitment effort, and invested in some pretty awesome infrastructure. It is proof that a framework where crossing mathematics, social sciences, technology, and philosophy is possible in business. This is a fairly unique way of looking at things in the tech sector.
4. Multiculturalism Matters (a little)
A few weeks ago, France won the World Cup, as was predicted in this very newsletter 8 months ago (cheers). This led some to some rather tasteless jokes, as, much like France, the French national team is very ethnically diverse. Immigration in France has its challenges (which are many) and its triumphs (which are more), and understanding why these “jokes” angered the French is key to understanding that nation’s relation to entrepreneurship.
Put simply, the heart of France is a freedom from differences. The U.S, on the other hand allows people the freedom to be different, a small, yet significant difference. Being French is derived from a voluntary commitment to common political ideals and a common fate (courtesy of the French Revolution), transcending ethnic and religious differences. It also means that standing out is not at the core of the French identity, which partly explains France’s long-known reluctance towards entrepreneurship, as the eccentrics and the filthy rich are often dubbed to be of dubious character.
It however also means that many French ideas strive to be universal, something that is surprisingly rare in the entrepreneurial world, despite flashy quotes and websites. That’s why one hopes that future French startups will be able to work for the whole world, finally solving the scaling issues which have plagued the ecosystem for decades. As long as it is understood that to compete against the world around you means to compete with the world around you everything will be fine. Some of our Americans friends could stand to revisit that idea.
5. Don’t Let The Hopeless Optimists Trick You
Though this article may sound like a love letter, it is far from it.
Yes, a lot of investment is coming in, but it is dwarfed by the amounts raised in the West and in the East, regardless of political preoccupations. Yes, France has great engineers, but their ambitions are European and/or global, not merely French, and they will continue to leave if higher salaries and a better standard of living aren’t offered. Yes, more companies are being birthed, but they still face challenges scaling up and a lot of seed funding comes from the French government itself; when companies want to raise more than €30 million, they still have to leave France.
As for A.I efforts, $1.8 billion sounds grand until you remember Beijing’s plan to create a $150bn A.I industry by 2030. It’s impossible to replicate that kind of cash when R&D is still a measly 2.4% of GDP in France.
In order for startups to thrive in France, they need not be French. They need to be European. That means making regulations possible to allow companies to open in countries across Europe without the practical necessity of setting up a new legal entity in each.
Only then will we start to see unicorns with teeth. And cool armor. And guns.
But no, not guns. we don’t like those here.