Earlier this year, claims that Paris had taken London’s ‘crown’ as Europe’s leading tech ecosystem were quick to grab headlines. The assertion, based on Dealroom data showing Paris startups’ combined enterprise value rising by 5.3 times from 2017 to 2024 compared with London’s 4.2 times, remains hotly contested. Indeed, London still leads Europe with 46 startups valued above $1 billion.
But the argument won’t settle anytime soon. Paris continues to demonstrate its strengths, producing some of the world’s most recognisable AI startups today, such as Mistral and Hugging Face, as well as exemplary engineering talent. These strengths suggest efforts should focus on building Paris as a globally leading tech hub, rather than fixating on a rivalry with London.
A turnaround in progress
Understanding Paris’s ascent in tech requires recognising the strategic role played by the French government. Public investment through state-owned BPI France has injected €17.32 billion directly into French startups. Complementary financial support, notably through tax incentives like the Research Tax Credit (CIR) and the Young Innovative Company scheme, has further bolstered startup growth. Additionally, France’s capital markets have increasingly embraced risk, becoming more willing to invest in early-stage tech ventures.
Beyond government investment and support, Parisian startups benefit from France’s sizable domestic market, allowing entrepreneurs to first scale locally by solving national business challenges before venturing into new markets – an advantage compared to startups from smaller European countries.
To uphold Paris’ global standing as a tech leader, the French Government must build upon these successful initiatives. The latest advances in AI are an obvious area where Paris has made a good start, but competition is fierce. Saudi Arabia’s AI strategy, for example, includes upskilling the population with essential AI skills and deploying a $100bn initiative to scale the nation’s AI infrastructure, invest in R&D, incentivise talent and more. The French government and national AI advocates should be closely watching and responding to such global developments as opposed to holding a narrowly European focus.
The talent premium is a golden opportunity
While a strong funding culture has played a pivotal role in the success of the Paris tech ecosystem, Paris’s rise to tech prominence owes significantly to its exceptional talent pool. The shift away from graduates pursuing traditional careers in banking and civil service toward entrepreneurship has reshaped the tech landscape. France’s prestigious Grandes Écoles engineering schools continue to produce highly skilled professionals now increasingly drawn to startups.
The global AI boom has intensified talent competition, highlighted by recent Silicon Valley poaching sprees and substantial compensation packages. While matching US salaries may be unrealistic, an alternative opportunity has emerged: US federal research funding cuts of up to 50% threaten a brain drain, with a Nature survey indicating 75% of US-based scientists are contemplating moves abroad. France is perfectly positioned to capitalise on this trend by amplifying research grants and supporting university spinouts. Doing so would attract pioneering AI and machine learning researchers, reinforcing Paris’s appeal to technical founders.
Why expanding in the US doesn’t require cutting French ties
Historically, French startups faced a binary choice between remaining domestically focused or relocating entirely to the US to tap larger markets and investment pools. Recent cases like Mistral have been able to tap into the US, opening a Palo Alto office in 2024, without shifting its HQ away from Paris. In the case of Paris-founded Hugging Face, a New York HQ hasn’t stopped the machine learning platform from maintaining a major presence in Paris.
Today, Paris-based startups need not choose between French talent and US markets. A dual-presence model – leveraging Paris for engineering and development teams and establishing US-based sales operations – provides a viable strategy.
To successfully navigate this dual-market approach, founders should prioritise partnerships with global venture capitalists experienced in facilitating US expansion. Investors with a local US presence and proven track records of helping European founders relocate can significantly aid French startups by easing regulatory navigation, connecting founders to local markets and managing distributed teams effectively.
Paris’s tech ecosystem has solidly positioned itself for global leadership, particularly in AI, thanks to exceptional talent and robust government support. Moving forward, Parisian founders must adopt a global growth mindset, discarding outdated notions of needing to abandon French roots for US success. Company stories like Mistral’s show that founders don’t need to leave Paris behind to build amazing companies.
Read the orginal article: https://www.eu-startups.com/2025/08/positioning-paris-as-londons-sparring-partner-misses-the-bigger-picture/
