Last year a friend of mine asked me to help him with business introductions in France because he wanted to move there. I made some introductions and heard about every trip he took, each with his increasing enthusiasm for the move. He recently announced that he had landed his dream job and was moving.
There are obvious draws for Paris, great food, spectacular wines, lots of history, good public transportation, free healthcare and a great walking city. It is also surprisingly affordable. But if you are a tech worker, there are some really interesting things happening in France these days.
As my kids are grown and on their own, my wife and I have been talking about moving and this led me to take a closer look and conclude that France is the place to be if you are a tech entrepreneur.
Paris hasn’t historically been an easy city to do business in. While working for France Telecom in 1993 I tried to help a friend from the US get a business license in Paris. I was blown away by the steps required and the average length of time for it to be approved which was then about 2 years.
The apathetic government worker who explained all of this to me didn’t help because his Parisian disdain for Americans dripped through with every snide comment. We ultimately gave up and they opened their European office in London.
But things have changed. Today this process has been streamlined and serious investment in every foundational element required to build a tech hub is being made.
After selling a company I was involved with to EchoStar, I moved back to Memphis, bought a 60,000 square foot office and started a non-profit incubator called Emerge Memphis (emergememphis.org) to help entrepreneurs get started and grow. What I’ve learned over the last 15 years of being involved in entrepreneurial economic development is that it is much like a 3-legged stool.
Just as it takes three legs to keep the stool standing, there are three pillars that are needed to support a tech boom: A supply of tech workers (either from good technology schools that produce workers for these tech jobs, or through immigration); venture capital for every level of investment (seed, series A, B, etc.) and lastly an ecosystem to support them (incubators, accelerators, mentors, etc.).
Each of these three legs now seems on solid footing in France.
1. Tech Workers
France has a new president, Emmanuel Macron. He is a young, charismatic Kennedy-esque leader who is pushing France’s move into tech domination. He is a former investment banker, whose previous political job was Minister of Economy, Industry and Digital Affairs so he totally gets the tech sector and its importance in growing a digital economy of the future.
Macron wants to scrap the wealth tax on investments and reduce capital gains tax which will fuel further investments. To help fuel the supply of talent, he has relaxed immigration with a new French Tech Visa (visa.lafrenchtech.com) for 3 groups: startup founders; employees; and investors. The key points about this new visa are not only that it is expedited, but it also has these other benefits:
- It is valid for four years
- It is extended to immediate family members
- No additional work permit is required.
For startup founders, you must first be selected into one of 38 designated incubators or accelerators (click here for a list), and meet a minimum capitalization requirement (roughly $22,000).
For investors to qualify for a Talent Passport you must be investing at least €300,000 into a growth company creating jobs with a value over €3 million.
This is a lot easier than the historical process which could take years to clear. In addition to the new influx of start-up jobs and tech workers in France, the country is doing a pretty good job of growing their own talent.
France has one of the most highly selective education systems in the world with top engineering schools like Ecole Polytechnique and CentraleSupelec, not to mention Paris Saclay University.
Paris Saclay University was established in 2014 and is now one of the largest innovation, R&D and student hubs in the world. The school has over 65,000 students, of which 25,000 are Master or Ph.D. students and 10,000 are in research positions that use the 300 labs they have established.
Over 10,000 of these students are in entrepreneurial tracks that feed the 28 incubators, accelerators and fablabs they have on campus. Last year the students launched over 100 start-ups.
The education doesn’t just stop with engineering and entrepreneurial tracks, they also have great business schools. The Financial Times ranked 4 business schools in their top 10, HEC Paris (Hautes études commerciales de Paris), INSEAD, ESSEC and ESCP. Forbes has them similarly ranked with INSEAD as their number one pick for a global MBA.
There are also major pushes with coding schools like Ecole 42 and Holberton School which are open to all students including drop-outs. I particularly like 42 which is a private, nonprofit and tuition-free computer programming school created and funded by French billionaire Xavier Niel. The nerdier of us will recall from The Hitchhiker’s Guide to the Galaxy that 42 was the answer to the question of “life, the Universe, and everything”.
Best of all, this average cost for this workforce is far below that of Silicon Valley or other major US tech centers and even lower than the UK, Germany, the Netherlands and Japan for some positions.
2. Venture Funds
The second leg of the stool is availability and access to funding at all levels. If you have great angel and seed round investors, but no depth in later stage Series A, B, C and D rounds, or the reverse, it can be as bad as not having any sources of capital at all.
According to the pan European tech site, Tech.EU, France now leads Europe in the total number of deals done in 2016. It is 3rd in deal size behind the UK and Israel, but these reflect the fact that most of these are later stage, larger deals. That said, according to Serena Capital there were 227 deals done in 2016 above the €1 million level with one deal above the €150 million mark.
The momentum is behind France as well. After Brexit, there is definitely a movement away from UK centered activity to a more European centered city and France seems to be benefiting as this chart from Tech.EU shows as well.
According to Serena Capital there are over 75 venture capital firms with offices in France. This doesn’t include European or US ventures funds that invest or co-invest in deals in France. Looking through the list they prepared it struck me how balanced it was with a dozen firms at each stage as well as regional funds in case you are not Paris based.
For a complete list check out this blog post from Marie Brayer of Serena Capital.
And all of this does not include the angel investors and investment clubs that are popping up. This is a point Emmanuel Delaveau the General Partner of Partech Ventures stressed recently, “Lots of successful entrepreneurs are now becoming Angels and sharing their experience with the community”.
I was intrigued with Partech because they have created funds for each stage and are heavily invested in ecosystem development. Partech Entrepreneur is their seed stage fund investing from €150k to €2 million. They have over €100 million for this fund and it is the largest seed fund in Europe.
Additionally, they have a Series A and B round fund with €400 million for deals from €2 – €15 million, and a growth fund of €400 million for deals from €10-€40 million. They also have a €52 million pre-seed fund that they use to leverage companies in local incubators and accelerators, which leads to the third leg of the stool, ecosystems.
The ecosystem of feeder and support groups for entrepreneurs is another area where France has made impressive strides recently. Beyond the incubators and accelerators attached to the major schools, Station F and others are impressive endeavors.
Station F, which just opened in the summer of 2017, is billed as the world’s largest startup facility. It is a 365,000 sq. ft. building which had previously been a rail freight depot. It was created by the French billionaire, Xavier Niel who has invested over $250 million in the project. Niel founded Iliad, France’s second-largest ISP, and third largest mobile operator.
It has space for 3,000 desks, which could mean, 1,000 three-person companies or 500 six-person companies if you are past what I refer to as the “three Fred’s in a shed” stage.
In addition to the startups, Station F also has some anchor corporate tenants like Facebook, Microsoft, and Naver. Facebook’s Garage will host up to 15 companies on a six-month cycle and represents the company’s first foray into supporting start-ups. They have already announced a few companies including: Chekk, a personal information management tool; Mapstr a location service app; The Fabulous, a science-based health app; and Karos, carpooling app.
Partech Ventures has created their own incubator, Partech Shaker, a nine-story building which was formerly the offices for Le Figaro. Shaker has space for over 270 people in start-ups. In addition to multiple conference and meeting rooms they have a roof deck for meet –ups with an inspiring view. They also have a number of corporate anchor tenants who use Shaker to access start-up talent to address critical issues in their businesses.
Partech Shaker has also just launched TechStars – Paris with corporate partners, Air Liquide, Renault and Total among others.
All of this activity doesn’t include the new coworking spaces popping up across Paris and the growth of tech Meet-Ups in the city.
Ok, it’s not all wine and roses. You are moving to a foreign country and they speak a different language, and language is still an issue. While most people have some level of English, I recently talked to the CEO of an up and coming tech player and if I didn’t understand some French, we would have been lost. So, I will have to brush up on my French to get it back to fluency.
Parisians can also be difficult, but I find this no different than New Yorkers. If you are used to dealing with difficult people from working-class Queens, Paris is no different. Some can also be snobby with a healthy disdain for Americans. I once had a co-worker at France Telecom tell a joke to his colleagues about Americans: “What is the difference between yogurt and Americans? The yogurt has culture.”
Of course, this was the same guy who patiently explained to me that the Internet would never work and that France’s Minitel would ultimately be the platform everyone would adopt. To be fair this was 1993. France had universal ISDN, which for the time was pretty fast, and everyone had a Minitel terminal while the Internet was barely getting going. His Franco-centric worldview killed him then, and it has the potential to kill this groundswell again if they aren’t careful.
From what I’ve seen and heard so far, I don’t think there is much risk of this happening again, so this cultured American is headed to Paris.