The following is a guest post by Jeanne Dussueil, which originally appeared in French on Challenges.fr – you can follow her on twitter at @jdussueil
Will Paris soon be more attractive for startups than London? Since 2010, London has been making a song and dance about its “Tech City” in the area of the old “tea houses”, in East London. But rapidly, the ‘Grande Nation’ had to take actions to respond to the British project. A few months ago the French minister for digital, innovation and SME’s Fleur Pellerin announced the creation of a new digital neighborhood in the capital in 2014. The race has now officially begun and the rivalry between the British city and the French one continues to grow. In order to catch up with its British counterparts, Paris dares today to position itself as the place to be for young innovative companies.
To find out which of the two capitals could actually be declared as the winner of this 21st century battle, I recently took a trip to London Tech City. As a previous Londoner – and today a true Parisian – I also arranged a couple of interviews with the official spokesmen for innovation of Paris in order to have, as much as I could, well-balanced evidence from both sides.
Paris 2014 VS London Tech City: “The Battle” (and fact-checking).
The village and the City
Let’s set the facts straight from the beginning: Paris feels small faced with its big neighbor seen from abroad as if four or five suburbs of Paris would be aggregate in the same area. First of all, the demographics of the two towns are different: 7 million inhabitants in London against 2.2 million in inner Paris. To compete properly, the ‘city of Love’ would need to advance the arm of the ‘Grand Paris’ which will sooner or later include the closest suburbs. But this is not the case in the French capital yet: ‘Paris is ten times smaller than Inner London (about 100km2 against 1000km2). “The true comparison must be made between the Paris metropolis and London”, begins Jean-Louis Missika, the French counsellor of innovation for Paris. Despite being faced with this harsh truth, it is still possible to compare the two cities via social criteria for startups: where there is the most positive energy, innovation, urban solidarity (housing and transports), social diversity, etc.
Which city has more startups and jobs?
On the side of Boris Johnson, Mayor of London, authorities claim there are 1,384 startups. Along the Seine river, the city announces ‘3,000 startups, 26 incubators supported by the council and 12 private incubators’. And wants to differentiate itself with the British concurrent: ‘We have decided to play the diversity card. Our incubators are backed by scientific centers (institut de la Vision, institut Langevin) or by the ‘Grandes Ecoles’- which provided the engineers – insists the Paris spokesman. London retorts with the figure of 30 incubators. And lots of ‘coworking spaces’. Hence, in this battle of figures, the advantage goes to Paris.
Except if we take into account the estimation of think tank Centre for London who have evaluated that 3,800 companies have arrived bringing no less than 48,000 workers to East London. But let’s compare how the two cities want to seduce the whole world with their digital guides
No more private funds for startup because of UK’s recession
In 2012, the UK had 25,000 private business angels, against 8,000 in France, according to the European Centre CSES. ‘The English have more business angels but with the new owners of the web (Jacques-Antoine Granjon, Xavier Niel, – both founders of big internet french companies Vente-privee.com and telecom company Free -…) who invest in startups, we are beginning to have a generation of entrepreneurial investors. This is an important point that supports us’, concedes the innovation campaign adviser to the socialist candidate Anne Hidalgo who will fight against the UMP conservative party to keep the city at the left in the coming local election next spring 2014.
“The Tech City is a sham, they are in reality not established startups but mainly PR agencies, restaurants or artists”
So argues the young French minister Fleur Pellerin and socialist adviser Jean-Louis Missika, quoting the recent survey by the Guardian which has cracked the identify of startups in its CityMap . Thanks to their British stolidness, the leaders of the Tech City manage to control themselves from muttering ‘bullshit’… Perhaps be the rare sunshine gracing East London on that day helped? However, they simply deny to provide a list of companies registered.
Paris would therefore be crowned champion in terms of diversity of sectors represented by its innovative young-shoots. The city also knows how to use the wide range of activities by linking themselves to large companies from the ‘CAC40’ or incubator business leaders such as: JC Decaux for e-cities, Renault for mobility, or ‘Welcome City Lab’s incubators for tourism.
The town the more ‘tech’
‘We have more developers and more young people getting involved in the creation of enterprises in Paris’, confirms the French side.
An impossible claim to verify, as neither of the two cities has the figures to back it up. The British competitor adopted a same vague language: ‘it has surely brought several people over there’, assume Tech City’s supporters.
But another response to this, that of the startup Yammer (the Californian startup bought out by Microsoft in 2012), which is showed as a model to the press.
In their uber design offices, three young French people – of whom two are engineers – happily explain their arrival in London: they seized indeed ‘an extraordinary opportunity to work for an international enterprise.’
Creative brains available
On both sides of the Channel, French and British are praising the excellence of the education which surrounds startups. But the Parisians clearly disagree: ‘London is mono-activity, orientated towards finance only, with research and education centres (Oxford and Cambridge) removed from the capital, whereas the ‘Grandes Ecoles’ are central to Paris.’
On the other side, in the Tech City, London praises the fact that they are ‘no more than an hour away from two prestigious universities (UCL, Cambridge, even LSE in the heart of London)’. James, founder of the startup Open Signal, does not want to become auditor or economist and has headed straight towards the Tech City, with an Oxford diploma in his pocket.
French weapons : several french stimulus for startups
The so called ‘Crédit d’impôt recherche’ which is a diminution of taxes for companies who can prove a research activity and developments, and the JEI for Young Innovative Company are the main tools given to French startups to grow. More over, Paris wants to underline that London might not be the fiscal heaven some French entrepreneurs are dreaming of. After an entrepreneur’s riot born on the internet last October to fight a tax increase, the socialist government is showing understanding to business owners in order to avoid ships and planes of French citizens escaping to look for more favorable countries. ‘ London is not as favourable for startups as we usually think’, confirms French socialist Town Hall.
But near the Thame’s harbours, entrepreneurs are often celebrating the recent tax cut for companies decided by Cameron’s government from 28% to 20%. And if you mention to them all the fiscal stimulus settled by French government, they barely pay attention: ‘We do not want public finances anywhere. Governments are not capable to understand the true needs of our sectors’, insists a British entrepreneur. ‘This is generally fiscally very positive here’, he is willing to add.
Meeting at 10. Downing Street
On the English side, Prime Minister David Cameron’s counsellors are forming a reputation of being very ‘open’ around entrepreneurs circles. Indeed, they regularly sit round the table at 10. Downing Street in order to be welcomed properly, especially if they’ve crossed the Atlantic, from the Silicon Valley to London’s Tech City. ‘At least here, there are no mixed messages between what we want, and what is voted in the French assembly at the same time, – which is still not favourable to entrepreneurs –‘ whispers a French communicant from British lobby UKTI (UK Trade & Investment) whose mission is to attract French business on the other side of the Channel.
Google’s favorite one
In Paris, Google will open a new private incubator named ‘Glii’ at the end of 2013, which will be their second incubator partnered with French startup accelerator Silicon Sentier.
In London, the American firm is planning another project: a new branch – specifically a UK only branch to be inaugurated in 2016/2017 – its announced capacity: 5,000 employees. In comparison, there are 500 ‘Googlers’ in Paris. In London, there is also the ‘Google Campus’ (visit here, in French) which is ‘unique and special’, glows Google UK who also opened another Campus in Tel Aviv in 2012. ‘In Paris or in Berlin, we’re only partners’, declares the American group.
The bridge with the Silicon Valley
One of the main priorities for Paris is also to allow young French people to set up subsidiaries in San Francisco. Besides, a partnership has been signed in Paris with the Californian city. Indeed, the gate to the U.S is a major priority for a startup, no matter where it is born. Based in London for two months, two French people from ‘BeMyWine’ have chosen to be pragmatic: “Here we are directly associated with the English language.’
Paris of the future VS London’s extension
Paris and London want to reproduce their innovation valley in other local towns. On the borders of the Seine, the project is centralised on the East area, where a huge hub is already planned.
In London, 290 million pounds (340 million euros) has been put towards the conversion of the 2012 Olympic Games site to a new urban zone dedicated to commerce, enterprise and housing. The ‘Media Center’ used by the press during the games will be reconverted to a
new business centre which we be able to welcome certain young enterprises (principally media and digital).
Despite this, both share a common point: from one side and from the other, we admit that it is impossible to reproduce an identical model of the American Silicon Valley.
Which has the better reputation?
Paris and London both try to make a name for themself to attract investors and new enterprises. London does surely have an advantage thanks to its natural connections with the United States. Started in 2010, the British capital also has a clear vision of what it wants to build and, moreover, which image she wants to be well-known in the world.
Faced against those two rivals, Berlin is the other European capital which wants to impose itself in the world of startups. The German city has already earned a good reputation in the British pubs, where entrepreneurs of the Tech city finish their work day declaring: ‘We hear more about Berlin than Paris here’…
Truth is that the actual ‘battle’ is more a communication war that is currently offered successively by Paris, London, Berlin but also by other US and asian cities. Indeed, everyone knows that figures are not certain. But it is more about being attractive in the eyes of the best developers of the world.
For the governments, it is also a question about showing affection to this growing tribes of young entrepreneurs. With their regular and massive communication campaign on them, London and recently the New Yorker subway are in a better position than the French shyness. American entrepreneur Trista from Rude Baguette grumbled about it to me: ‘You’ve got a fantastic Chinese area in Paris, but you’d never communicate on it with pride by showing a Chinese-French entrepreneur on the walls of your subway for instance!’
More over, around startup creators, no one wants to defend their city as true ‘Parisian, Londoner or Berliner’. They just want to be free and encouraged as normal ‘Citizens of the world’ in order to grow in the market they’ve targeted.