2024 was a slow year for French tech. For the first time since 2021, French startups were overtaken by their German neighbours: Sifted data shows that startups in Germany raised over €9.5bn last year (in both debt and equity deals), while VC investments in France amounted to €9bn.
The second half of the year was particularly quiet, with funding for French startups halving compared to the first six months of 2024, in part due to ongoing political uncertainty in the country. But VCs say that they’ve felt the slowdown since the start of 2024. France, it seems, is still recovering from the downturn that hit tech investments in 2022.
There’s reason to be more optimistic about the next 12 months. French tech still saw some headline-grabbing fundraises last year, particularly in AI — from buzzy AI scaleup Mistral’s €600m Series B, to a record $220m seed round raised by H company (which saw the departure of three out of five cofounders just three months later).
This is what experts think is in store for French tech in 2025.
Koussée Vaneecke, chair of startup incubator Euratechnologies
Putting French startups to the test: French startups are being put to the test and rushing to commercialise as fundraising dries up. As soon as they find success in their first business use cases, they will be seeking potential abroad, in neighbouring countries as well as the US and Canada — and in a new development, in the Middle East, where there is a lot of capital.
Pierre-Eric Leibovici, cofounder and partner at early-stage VC Daphni
Deeptech boom: The deeptech sector will be in high-demand, promoting the fundamental research that is developed in French centres of excellence. There is more appetite for entrepreneurship within labs and research centres, with a new generation of leaders within these labs that are more familiar with startups. There are also more investors looking for opportunities in the field — who will play a key role in funding the transition from fundamental research to applied research, and then to the development of breakthrough offerings.
More consolidation: It’s likely that we will witness more consolidation between startups. Companies within the same sector with growth levels that are too low to justify their valuation will merge, developing operational synergies and creating economies of scale.
Roxanne Varza, director of startup incubator Station F
Cleaner AI: Obviously AI will continue to heat up — and as a result, climate will also be front and centre in the discussion (no pun intended!). The demand and investments will continue to rise for clean energy, clean data centres, frugal models and more.
AI Action Summit: France will host the AI Action Summit in February 2025, which will further boost the local AI ecosystem. The country will also attract more international investors and talent, partially as a result of geopolitical and policy changes in some of the more traditional ecosystems.
Maria Tahri, investment manager at early-stage VC Alven
AI for deeptech: While recent AI breakthroughs have focused on improving productivity, the true power of the technology lies in transforming entire industries. The fusion of AI with hardware and biology (like AI-driven drug discovery and generative semiconductor design) will enable solutions to some of the world’s toughest challenges — and they are topics we are increasingly seeing in our dealflow in France. The momentum will be amplified by two factors: global challenges that require radical innovation (climate, healthcare, security), and a new generation of purpose-driven innovators.
Enterprises increase AI adoption: Enterprise adoption of AI in France still lags the US, but will continue to rise as advanced tools become more accessible. Government support through initiatives like France 2030 will also increase businesses’ confidence when it comes to integrating AI into operations.
Julien-David Nitlech, managing director, early-stage and growth VC Iris
Series A and growth funding for AI SaaS tools: Corporates are increasingly adopting AI solutions for productivity tools, healthtech and fintech. At the same time, businesses are prioritising data sovereignty and secure AI operations, creating demand for tailored solutions. A new wave of Series A and growth funding is therefore likely to emerge as investors recognise the value of AI SaaS and platform companies as drivers of productivity and profitability gains.
Alice Albizzati, founding partner of growth VC Revaia
AI goes vertical: In 2025, French tech will move beyond general-purpose AI and lead in the development of AI-powered SaaS tools applied to specific verticals like healthcare, finance and supply chain management. There will be a particular focus on AI tools for cybersecurity to combat increasingly sophisticated cyber threats in a complex geopolitical landscape.
Ongoing political instability: French tech will face increasing uncertainty in 2025 due to political instability and growing criticism of the government. This may lead some entrepreneurs to consider alternative locations for launching or relocating their ventures.
Growth funding: Despite these challenges, France is poised for a rebound in late-stage growth rounds (Series C+), driven by companies seeking funding to support M&A activity or to achieve profitability.
Thibaud Elzière, business angel and founder of startup studio Hexa
More solo GPs: A new trend is emerging in early-stage investment: solo GPs are taking the lead alongside business angels, while traditional VC funds are focusing on larger seed rounds and Series A investments.
Unicorn shakeout: There will be a significant shakeout among French unicorns and large startups. Some will succeed in adapting to the AI revolution and recover their 2021 valuations within a year or two, while others will fade away.
Pushing for a stronger Europe: Europe will increasingly have to rely on itself as the US pulls further ahead. In 2025, Europe will need to accelerate its efforts toward greater harmonisation, potentially through the creation of a unified European corporate structure.
Read the orginal article: https://sifted.eu/articles/14-predictions-french-tech-2025/
