From Lille in the north to Toulouse down south and Grenoble in the east, several non-Parisian tech hubs have emerged in the past few years across France.
“[International] investors still come to Paris first,” says Paul-François Fournier, executive director of innovation at French public bank Bpifrance, “But now they are starting to know names like ‘Grr-no-ball [Grenoble]’,” he adds, mimicking an English accent.
Startup and VC lobby group France Digitale registers 7,500 startups based outside of Paris — about half of all French startups.
The trend, however, is not matched by funding numbers. France Digitale’s data shows that in 2023 startups based in and around Paris secured 62% of the total €8.3bn raised in the country. The second most-represented region, southeastern Auvergne Rhône-Alpes, received 21% of the funding (€1.7bn) — largely because Grenoble-HQed gigafactory scaleup Verkor closed an €850m megaround last year.
Looking at 2022, Paris-based startups represented three-quarters (€10bn) of total funds raised in France.
Fournier says that this is “a natural phenomenon”. “There is a mechanical concentration [around the capital], in tech like in other sectors,” he says.
He points to other countries like the UK — where London-based startups collected 65% ($13.5bn) of total funds raised in 2023, according to Dealroom.
But the concentration of resources in the capital remains a challenge. Looking at France’s 30 unicorns, only three are based outside of Paris: robotics company Exotec, which is HQed in the northern town of Croix; second-hand fashion platform Vestiaire Collective, from the southwestern city of Bordeaux; and HR tech Swile, which is based in Montpellier in the south.
Of France’s 50 fastest-growing startups, only 16 are outside of Paris, according to a recent Sifted ranking.
“While cities like Lyon, Bordeaux and Nantes have promising tech ecosystems, they often lack the same level of resources, talent and funding that Paris enjoys,” Jérémy Uzan, cofounder of Paris-based VC Singular, tells Sifted.
“We need to nurture and support tech ecosystems outside of Paris to create a more balanced, nationwide tech environment.”
France’s tech hubs
The concentration of funding in Paris doesn’t mean that startups aren’t growing outside of the capital, says Fournier. “[Bpifrance] has been working to enable this to happen,” he says, “And deeptechs have been a formidable way to re-balance the ecosystem.”
In 2019, the French public bank launched the ‘Deeptech Plan’, a €3bn programme intended to increase the number of startups created off the back of scientific research. Fournier says that a side effect of this has been to enable deeptech startups to spin off from universities and research labs across the whole of France.
Bpifrance says that 1,300 new deeptechs have launched since 2019. And another encouraging trend has emerged: among those deeptechs are a large number of industrial startups — projects much better suited to places outside of the capital.
Earlier this year, Bpifrance mapped 380 industrial deeptech startups dedicated to decarbonation; three-quarters of the funds raised by these startups were received by companies located outside of Paris, according to the public bank.
This was the case for companies like Toulouse-based Ascendance Flight Technologies, which raised a €21m Series B in 2023, and battery recycling startup Mecaware, based in the Rhône region in eastern France, which raised a €40m Series A last year.
Different parts of France are also becoming hubs for specific verticals. “There are historical specialisations in some regions,” says Koussée Vaneecke, the chair of Lille-based startup incubator Euratechnologies. “This means that it is in some startups’ interest to grow in these territories, where they can align with the economical interests of the region.”
Some of the country’s biggest retailers, such as supermarket chain Auchan and home improvement retailer Leroy-Merlin, have HQs in the north of France; this, says Vaneecks, has made the region a hub for retail tech.
Similarly, Toulouse is home to the headquarters of Airbus, as well as major facilities of the French and European space agencies — and has become a growing spot for spacetech. Strasbourg is known for medtech, while Rennes in the west is home to many cybersecurity startups.
“In a generalist world, if you’re only looking at fundraises, everything is happening in Paris,” says Vaneecke. “But in reality, when looking at specialised verticals, [the regions] are doing rather well.”
All roads lead to Paris
Although tech hubs are growing outside of the capital city, Paris is still largely where they all converge.
Eric Burdier, the founder of Axeleo Capital, a VC firm based in Lyon, says he spends two days a week in Paris — “not so that I can be at the heart of the ecosystem, but rather at the heart of all [of France’s] ecosystems,” he tells Sifted.
The reason for this concentration is largely funding. Paris is where the lion’s share of the capital lies, with international investors, in particular, rarely making it past the city ring road. “You can easily run into all the international VCs in Paris,” says Burdier. “Seeing them anywhere else in France is really hard.”
As a result, founders from across the country commute to the capital city to pitch to VCs.
It is difficult to measure how much harder it is for startups in the regions to fundraise as a result. Michael Bruniaux, cofounder of Lille-based agritech Sencrop, says that with Paris being just an hour-long train away the impact so far has been limited.
“I’m currently raising a Series C, I go to Paris two or three times a week,” he says. “I’m going this afternoon for a meeting and then coming back tonight.”
Similarly, Rennes, Lyon and Strasbourg are less than a two-hour train ride from the capital; the commute to Grenoble is under three hours long.
Some, like Bpifrance’s Fournier, think those connections make Paris’ prominence less of a problem. “With this infrastructure, we can reach an interesting balance where we value regional ecosystems while accepting that Paris will remain a central knot.”
Many hubs with good transport infrastructure face little funding challenges; but Axeleo’s Burdier says this does risk creating a “two-tier” sector, with less-connected spots eventually losing out.
Bertin Nahum, the founder of medical robots startup Quantum Surgical — which is HQed in Montpellier, 750kms away from Paris in the south of France — says that being so far from the capital city can effectively be a barrier to funding.
Nahum eventually chose to focus on international investors based outside of the country anyways, but he says that he does feel like an outsider to the French funding ecosystem.
“When you’re looking for funding, it’s important to be at the heart of the ecosystem every day, and the heart of the ecosystem in France is in Paris,” says Nahum. “We’re outside of this. So, it’s not impossible, but it’s not as easy.”
A changing dynamic
Euratechnologies’ Vaneecks says there remains a divide between Paris and the regions.
“Regional hubs have been mobilised and they are vibrant,” she says, “but there is still a Paris ecosystem and in parallel, the regions’ ecosystem.”
In the past few years, several initiatives have been launched to bridge that divide, with a focus on decentralising access to funding.
In 2021, the government’s startup agency La French Tech Mission started a programme called Rise, in which 20 startups from outside of Paris are selected to attend a pitch event in the capital attended by VCs and Bpifrance.
Since 2017, France Digitale has also organised day-long events throughout the year, called the ‘FDTour’, in which investors are brought to cities across the country to meet local startups.
A more recent trend has the potential to significantly change the status quo.
The past few years, says Axeleo’s Burdier, have seen a growing number of Paris-based founders taking interest in the higher quality of life that can be found outside of the capital city — which has only accelerated after the Covid pandemic normalised remote working policies.
“We’re seeing lots of founders in their early 30s, who have just started a family, and who are moving to cities like Lyon, Nantes or Lille, where they can set up an R&D or operations team while keeping their sales team in Paris,” says Burdier. “It’s a trend that’s really accelerating.”
In Montpellier, Nahum is observing a similar dynamic in recruitment. “We are seeing a generation of workers who are after a certain quality of life,” he says. “In this context, a competitive advantage we have is the environment we are able to offer to our employees.”
It’s only one example of the opportunities that exist for founders in the regions, says Nahum.
“It’s not a disadvantage [to be outside of Paris], contrary to what people may think,” he says. “There’s a life outside of Paris.”
Read the orginal article: https://sifted.eu/articles/french-tech-paris-starrtup-hub/
