If the French capital markets and tech ecosystem were looking for certainty from the outcome of the recent national parliamentary election, then it’s fair to say that they’re still waiting. July 7th’s hung parliament has left many questions about the direction the next French government will take on technology unanswered.
Successive French governments of recent memory have worked hard to make France a “startup nation” and these efforts are bearing fruit. Major startups at the cutting edge of AI advances – Mistral, Dust and H to name just three – are French and the world’s biggest tech companies are ploughing private investment into France. Just before the election, Microsoft pledged to invest €4 billion in national cloud and AI infrastructure and development over the next four years.
The next French government will find the national tech ecosystem in good shape. But it would be a mistake for this to be cause for complacency. Sustaining this ecosystem has always been, and will continue to be, deeply competitive. Being a nation where winning tech companies are built will be a great driver for France’s sustained economic growth but is by no means a given.
Clues in what founders want
When we consider when startup founders, French or otherwise, want to build a product that makes their company a global leader, it boils down to three things: being able to operate in a stable political system, tap into readily available capital, and access talent.
Recent French governments have done a good job tailoring policy and initiatives to cater to these factors. BPI France has injected massive amounts of capital into the French economy to back tech startups and this has also been helped along with tax incentives. The result has been a slow but steady adaption of French capital markets to the risk profile of early-stage technology companies. The French government has also placed a big emphasis on promoting and marketing the national technology ecosystem through initiatives including La French Tech.
Despite these efforts, technology as an industry remains difficult to pin down in the country. Tech talent is easy to access internationally, and entrepreneurial founders who are partial to risk-taking will pivot their operations to wherever conditions look best to run a technology company in the context of their product and customers. Some might retort that technology is now foundational to France’s economy and that unshakeable truth means its future capability to attract founders is secured. I’d argue that there’s still lots of work to be done for this assertion to be true. We need to put what should come next for French tech in the context of what came before.
The spirit of past sprints needs to be remembered and replicated
France’s journey to developing a leading national technology ecosystem has been hard fought. In the early 2000s, as the internet truly emerged as a transformative force, France lacked the entrepreneurial culture required to play a role. The state was huge, and most university leavers were taking the well-trodden path to join big businesses in traditional legacy sectors. Capital availability for early-stage technology companies was also lacking.
As covered, today the situation is different and that’s a credit to recent governments committing to French tech and making it great. If the next government wants to take the baton and continue shaping the tech ecosystem for success, then it needs to double down on this commitment and be founder-centric in its actions.
This means being steadfast in the continued support of BPI France and its role in growth capital raises that give French startups an alternative to seeking investment from global investors. It should also mean advocating for the launch of the long-stalled EU Capital Markets Union so that European tech companies, including those in France, are more incentivised to take their business to the next stage “at home”. Deeper capital markets would be a landmark shift to establish Europe as an attractive place to exit and bring cash back into the ecosystem. The French government should be championing this.
The next government should look to maintain passionate advocacy of the French technology ecosystem and support French tech entrepreneurs and their companies. It shouldn’t be resistant to risk because we’ve seen this pay off before. The significant stake that France has claimed in global AI leadership is something other governments are using as a template for their own AI ecosystems. The French government made it happen by embracing AI early on without guarantees of success. This amounted to calculated risk-taking akin to the kinds of decisions successful venture capital investors get right time and time again. There are going to be plenty of opportunities for the next government to apply similar risk-taking to emerging technologies and place France at the forefront of their development. After all, tech ecosystems are built over decades. Patience is key – in the grand scheme of things, we’re only at the very beginning of the French tech ecosystem and the next line of governments will play major roles in writing its future chapters.
No need for panic
For investors weighing up technology ecosystems today, there could easily be a tendency to view France as a country where not much is happening right now. There’s perhaps a short-term pause on investment decisions while political uncertainty remains. This is nothing to worry about. This uncertainty won’t last, and the French tech ecosystem is still in a good place.
What would be cause for concern, however, is if the next government drops the ball and doesn’t maintain the mindset of continually building and supporting the nation’s tech ecosystem – giving entrepreneurs and investors more reasons to look elsewhere. This shouldn’t be considered a political choice. Technology democratises access to data and information for consumers. It’s only going to play an increasingly pivotal role in the global economy. The next French government should look no further for a positive driver of GDP growth, aligned with French values, that’s going to set the future of the national economy on course for success.
Read the orginal article: https://www.eu-startups.com/2024/08/the-lessons-the-next-french-government-should-take-to-nurture-a-thriving-tech-ecosystem/
