President Emmanuel Macron announced last week that investors have pledged €5 billion to develop France’s fledgling, homegrown tech startups into larger companies.
The government has already provided tax cuts and subsidies to assist startups, as well as a fast-track visa to attract foreign workers. But while Silicon Valley startups often see investment from venture capital firms that allow them to grow before going public, French companies frequently turn to a foreign buyer or move to the US in order to expand, according to the Wall Street Journal.
The new funding could provide that growth capital for many startups. And as the UK faces uncertainly over Brexit, it could give France a chance to supplant the UK as the leading European tech hub.
The funding will come from asset managers and insurers including Axa, Aviva, Allianz, and Natixis, and the government is also working to draw international investors. A third of the investors are public institutions such as the utility company EDF and the pension reserve fund Caisse des Dépôts.
France’s minister for the digital economy, Cédric O, told the Financial Times:
“Our desire is to make France the leading ecosystem in Europe,” with a focus on cultivating more “unicorns,” a term for startups worth over €1bn.
“Today there are seven and we are targeting 25 unicorns by 2025 and companies that are worth €5, €10, €15 billion.”
French startups have already been raising more money in recent years, bringing in €3.6 billion last year, compared to €1.8 billion In 2015. This year, they’re on track to raise €5 billion. This puts France ahead of Germany, though still behind the UK.
But much of the funding from French venture capital firms has been focused on providing seed money to get startups off the ground, in Series A or Series B funding, leaving companies to look to international investors for late-stage funding when it’s time to develop further.
At a speech Tuesday at the Elysée Palace, Macron said €2 billion will be invested in venture capital firms that focus on late-stage investments, while €3 billion will go toward global tech funds, managed by asset managers based in France, that invest in publicly listed companies.
Macron said in his speech:
“When I talk about startup funding, I talk about the ability to help those startups succeed. I’m talking about the jobs of tomorrow. And I’m saying that for many French citizens who think that those are only financial numbers.”
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