Investment in French artificial intelligence companies almost doubled last year but still lags behind the UK and Germany for the amount of venture capital raised overall, according to the latest edition of influential French investor Alexandre Dewez’s ‘State of the French Tech Ecosystem’.
Dewez recently joined prominent investor Harry Stebbings’ firm 20VC in London after five years at French VC Eurazeo.
Under President Emmanuel Macron, France has positioned itself as a key hub for EU innovation, attracting investment from big tech companies like Amazon and Microsoft, while promising to champion homegrown startups like Mistral.
Recovering from the downturn
According to the report, French AI companies saw investment jump 82% in the past year, from €1bn in 2023 to €1.9bn in 2024. This helped Paris retain its position as second-best European city for startup investment, with only London ahead.
However, with €7.1bn raised overall, France remained in third place in Europe. By comparison, startups in Germany raised €9.4bn, while UK startups secured €16.4bn. Total startup funding in France grew 3% from 2023, says the report, suggesting its ecosystem had “recovered from the 2023 correction”.
AI was the main driver of investments in French tech, accounting for 27% of total funding raised by local startups.
“Paris has become a global AI hub for six key reasons,” the report said, citing top engineering schools, government-backed tax breaks and the local presence of big tech companies like Google and Meta.
“The best AI founders tend to combine multiple of these criteria: a top engineering school, research background, serial entrepreneur [or have] spent time at a top tech company.”
However, analysts and VCs previously told Sifted that France had seen a slowdown in investment through the second half of the year, citing political uncertainty over the summer. Sifted data suggests funding levels dropped 50% between the first and the second halves of 2024.
Founder factories and foreign investors
A growing number of startup “mafias” – made up of nearly 2,000 veterans of French unicorns such as digital advertising platform Criteo,online retailer Veepee and healthtech Doctolib – have seen unicorn alumni quitting to start their own companies, launching a new generation of tech startups.
“French startup mafias create a compounding flywheel for the ecosystem with 1.9k alumni from French unicorns becoming entrepreneurs,” the report said.
Competition to invest in French startups is high, with leading venture firms such as Accel, Index and Balderton all participating in one or two fundraising rounds annually.
However the report suggested few billion-dollar startups in France were ready to go public, describing the local IPO market as “broken for tech companies”.
“European-focused players like Qonto and Doctolib will stay private as long as they can, while more international players like Contentsquare and Dataiku will probably go public in the US if they choose to go public.”
Read the orginal article: https://sifted.eu/articles/france-ai-investment-startups-uk-germany/
