Can Macron create the next Silicon Valley?

If you want to be successful in the tech sector, you have to go to the USA – this rule has been in place since the creation of Silicon Valley in the 1950s. On the other side of the Atlantic, there is everything that young founders are looking for: risk-taking investors, well-trained employees and lax labor laws that allow you to hire and fire staff at will.

In Europe, on the other hand, young founders are faced with rules and regulations, coupled with a fair amount of scepticism about technology. At least, that is how many tech entrepreneurs justify their decision to leave the continent. But there are other options. This is shown by the example of France – a country that is considered particularly rigorous when it comes to labor law and bureaucracy.

In recent years, it seemed as if French President Emmanuel Macron wanted to single-handedly create a European Silicon Valley in his country. “A ‘startup nation’ is a nation in which everyone can say that they are capable of founding a startup,” he said in 2017. “I want France to be such a nation.”

“France is back,” Macron emphasizes at important economic summits such as the WEF in Davos, “Choose France,” he calls out to investors every year at the event of the same name in the Palace of Versailles, where France attracts more projects from foreign investors every year. Companies such as Microsoft and Amazon are investing billions and building new data centers and research facilities in France.

Startups have a good reputation

The domestic tech sector is also growing: At the beginning of 2022, France achieved Macron’s goal of having 25 unicorns by 2025 – startups valued at over a billion – three years earlier than planned. Macron has made technology and innovation a top priority; in no other country is the tech sector so closely linked to a single person.

“France does a lot for young companies,” says Martin Hügli. He is the European manager at Back Market, one of the French unicorns. The startup operates a refurbishing platform that sells used and repaired smartphones and tablets. “Startups have a good reputation in the country, which is different from Germany, for example,” says Hügli. “Macron has managed to make the French proud of young companies.”

 

Hügli lists everything that France has to offer: a stable legal situation, good infrastructure, easy access to talent. The “French Tech” label, under which corresponding state funding programs run, is very present and supports companies. “Through French Tech, you can quickly access a good network. The funding program also helps startups to expand into other countries.”

The money flows

Financial incentives are also making France attractive for tech companies. The state investment bank Bpifrance pumped 1.6 billion euros into French tech startups in 2022. In 2023, France invested 107 euros per capita in startups, while in Germany it was only 85 euros in the same year. By 2030, an additional 54 billion euros are to flow into universities and research institutions for research in the field of decarbonization and the tech sector.

But the French state is not the only active sponsor. Private investors are also driving France’s technological development. The best known of them is the tech entrepreneur Xavier Niel, who owns the Swiss telecom group Salt, among others. Niel is considered a prime example of a private startup sponsor. In 2017, he founded Station F in Paris, which is now the largest startup campus in the world.

 

But investors from other industries are also active in tech promotion, such as luxury magnate Bernard Arnault. Arnault is CEO of LVMH, the group behind brands such as Moët Hennessy and Louis Vuitton. “The strength of the French ecosystem is also based on the fact that private entrepreneurs have understood how important it is to put money back into the system,” says Florian Douetteau. He is CEO of the startup Dataiku, one of France’s big flagships in the AI ​​sector. “Entrepreneurs like Arnault know that they too benefit from technological progress in the country.”

Special visas for tech workers

Florian Douetteau also raves about the “business-friendly” environment in France. It is also easy to find talent: “Especially in the AI ​​field, there are very well-trained staff in France. The majority of European AI research takes place in London and Paris.”

 

And if no local staff can be found, it is easy to recruit from abroad. With the French Tech Visa, the government has created a special visa category that allows tech workers a simplified process to settle in France.

Not everyone is drawn to the capital Paris; new tech centers are springing up all over the country. The reason for this is the good infrastructure: thanks to fast train connections and home office options, cities like Marseille, Lyon and Bordeaux have almost become part of the Paris agglomeration.

Bureaucracy and labor law can be hurdles

But the challenges faced by European founders are also being felt in France. Back Market Manager Martin Hügli complains about the extensive bureaucracy and regulations on issues such as data protection and compliance, which could be a challenge for small companies in particular. The strict French labor law can also be a hurdle. “A performance culture is important for startups,” says Hügli. “The corporate culture is often very American.”

In addition, despite all of Macron’s efforts, access to funds is still easier in the USA: “As soon as you want large amounts of capital, you have to leave Europe,” says Hügli. “The European funds are too small for companies above a certain size.”

France is also at risk of young companies moving to the USA. Mistral, the most successful French AI start-up, caused a stir a few months ago with a new cooperation with Microsoft. Dataiku, Florian Douetteau’s AI company, is now also headquartered in New York – for the simple reason that a large part of the money comes from there.

Will the political agenda remain intact?

Nevertheless, the majority of product development still takes place in France, and Dataiku has the most employees in Paris. If Florian Douetteau has his way, it will stay that way. “It is above all the combination of three factors that make France attractive: a good level of research and training, committed and financially strong entrepreneurs and a clear political agenda.”

The latter, however, is in jeopardy due to the parliamentary elections this summer. Will a new, possibly more left-leaning government continue Macron’s ambitious program?

“What happens next depends largely on Macron – and his ability to influence the government,” says Martin Hügli. For him, Macron and France’s ability to innovate are closely linked. He is hopeful that the tech sector is already quite well developed and established – and therefore less susceptible to political influences than it was a few years ago.

Florian Douetteau agrees: “It might be a little more difficult for newer startups, but I don’t see any danger for established companies. When you start a company, you shouldn’t make yourself too dependent on politics anyway.” The most important thing for entrepreneurs like Douetteau is that France remains attractive to well-educated talent. He is confident in this regard. There is only one thing he thinks the French could do better: “They need to learn English better.”