The difficulty of entering a particular market is the main question that a startup needs to get in before rushing to hire translators of text on the landing page and salespeople on the ground.
We believe that in order to launch an international direction in their startup successfully, founders must know how the economy as a whole and the VC ecosystem work in the country where the startup is aiming.
Paris has its undoubted advantages - delicious food, great wines, rich history, convenient public transport, free medicine, and many walking opportunities. However, life in this city is quite expensive. But if you work in high technology, France has a lot more to offer.
Along with such giants as Silicon Valley and Stockholm, the Paris startup scene is a great place for a high-tech entrepreneur, but with several additional benefits.
Here we will talk about what startups will face when entering a new market. Let's start this blog post with a story about France as one of the tech industry leaders.
Want to learn more about European startup communities? Check our guides to:
What makes the Paris startup scene unique
Historically, it has always been difficult to do business in Paris. But the situation has changed. Today, this process has become much clearer, and the closest attention is paid to every element required to build a new technology hub.
France realized that the development of the technology sector requires three main elements:
- an influx of specialists (young specialists from educational institutions or through immigration);
- venture capital investments at every development level (seed, series A, B, etc.);
- ecosystem to support growth (incubators, accelerators, mentors, etc.).
In France, each of these three elements is booming.
Paris is not only food, fashion, and architecture. The Parisian tech scene is wide and worth exploring.
1. Tech Specialists
France has a young president, Emmanuel Macron. He is in many ways similar to John F. Kennedy - the same young and charismatic leader who is leading France to dominate high-tech. Macron was an investment banker. Before his presidency, he served as Minister of Economic, Industry and Digital Industry, so he is well-versed in this and understands the importance of technology in the future's digital economy.
Macron wants to abolish the luxury investment tax and lower capital gains tax, which will lead to investment inflows. To attract talent, he eased immigration rules by introducing a new Technology Visa for three categories of professionals:
- startup founders,
- employees,
- investors.
In addition to the accelerated procedure, such a visa has the following features:
- valid for four years,
- applies to next of kin,
- does not require an additional work permit.
To get a visa as a startup founder, you first need to get into one of 38 incubators or accelerators. After that, you have to prove that you have money equal to the French minimum wage (€ 18,254.60 in 2019).
To qualify for a Talent Passport visa, you need to invest at least € 300,000 in a growing company that creates jobs and is valued at over € 3 million.
It's much easier than it used to be when it could take years to get a visa. In addition to attracting startups and external engineers, France is actively developing its own talents.
The French educational system is one of the most demanding in the world. Famous universities such as Ecole Polytechnique, CentraleSupelec, and Paris Saclay University are located here.
The University of Paris Saclay was established in 2014 and has become one of the world's largest innovation, scientific and educational centers. More than 65 thousand students study here, 25 thousand of whom are undergraduates and graduate students, and ten thousand hold research positions in 300 laboratories.
More than ten thousand students are involved in entrepreneurial development programs, from where they disperse to 28 incubators, accelerators, and campus laboratories. In 2016, students launched over 100 startups.
Education in France is not limited to engineering and entrepreneurship programs. Business programs are also very strong here. The Financial Times Top 10 includes four French universities: HEC Paris, INSEAD, ESSEC, and ESCP. A similar verdict was passed by Forbes magazine, and INSEAD was named the best in the "International MBA" category.
Programming schools such as Ecole 42 and Holberton School are also booming, open to all students, even those without a basic education.
The most pleasing thing is that the cost is much lower than in Silicon Valley or other large technology centers in the United States, and in some respects, even lower than in the UK, Germany, Holland, and Japan.
2. Venture Funds
The second pillar of the ecosystem is the availability of finance at any level. If you have a lot of excellent business angels and seed investors, but the A, B, C, and D series are not developed, this is almost as bad as not having sources of capital at all.
According to the European technology site Tech.EU, France is the first country in the region in terms of the number of transactions concluded in 2016. France ranks third after the UK and Israel in terms of deal size, but this ranking primarily took into account large deals in the later stages. In 2016, 227 transactions were closed with amounts exceeding € 1 million and one transaction exceeding € 150 million.
Time also plays in favor of the Paris startup scene. After Brexit, Europeans are trying to move away from excessive concentration on the UK, and France is only better off this, which is also demonstrated by the Tech.EU chart.
More than 75 venture capital funds have offices in France. This estimate does not include European and American funds that enter into deals with French companies. First of all, we were pleasantly surprised by the balance on this list: there are a dozen funds available for funding at each stage, and those who are not based in Paris can cooperate with regional funds.
Besides, there are Paris angel investors and investor clubs, which are increasing all the time. As the general partner of Partech Ventures, Emmanuel Delaveau said,
“Many successful entrepreneurs become business angels and share their experience with the community.”
The Partech Foundation caught our attention by creating subsidiaries for each stage and investing generously in the ecosystem's development. Partech Entrepreneur is a seed fund with deals ranging from € 150,000 to € 2 million. With a capital of over € 100 million, it is the largest seed fund in Europe.
Also, there are funds for series A and B with a capital of € 400 million for transactions ranging from € 2 to € 15 million, as well as a growth fund with a capital of € 400 million for transactions from € 10 to € 40 million. There is also a pre-seed investment fund, funds from which are sent to local incubators and Paris accelerators, which smoothly brings us to the third whale, the ecosystem.
3. Ecosystem
The business development and support ecosystem is another area in which France has made significant progress. There are impressive ideas behind the many incubators and accelerators attached to major universities, Station F, and other centers.
Station F, which opened in the summer of 2017, is called the world's largest startup center. It occupies a building with an area of 34 thousand square meters, which previously served as a warehouse for rail transport. The project was created by French billionaire Xavier Niel, who has invested over $ 250 million. Niel is the founder of Iliad, France's second-largest Internet provider and third mobile operator.
Station F, located in famous 13th district of Paris is being dubbed as the world's largest start-up campus
There is enough space for 3 thousand desktops in the center, that is, thousands of companies of three people or 500 companies of six people, and the latter can already be considered a "large" startup.
In addition to startups, Station F is home to corporate players such as Facebook, Microsoft, and Naver. Facebook Garage will be able to host up to 15 companies for a six-month cycle - this is the company's first attempt at supporting startups. Some of the participating companies are already known:
- Chekk, a personal information management service;
- geolocation service Mapstr;
- medical service The Fabulous;
- Karos carpooling app.
Partech Ventures has opened its own incubator, Partech Shaker. It is located in a nine-story building that used to be the office of the Le Figaro newspaper. Shaker can accommodate up to 270 startups. There is an event space with an impressive view in addition to several conferences and rooftop meeting rooms. Corporations also work with the incubator on an ongoing basis, which attracts startups to solve their business's critical problems.
The TechStars-Paris program was launched on the basis of Partech Shaker, in which, among others, such corporations as Air Liquide, Renault, and Total participate. It is worth mentioning the constantly growing number of coworking spaces and specialized Paris startup events.
Paris business district, La Defence, is where the big money is made in the City of Lights
Problems Facing Paris Startup Scene
Of course, not everything is so cloudless. You will come to a foreign country where another language is spoken, which will present certain difficulties. Most French people can speak English, but speaking with the CEO of a promising technology company, won’t be able to understand each other if you do not know French.
It can be difficult to find a common language with Paris's inhabitants, but the same problems can arise with New Yorkers or residents of any other large city.
Best Paris Startup & Tech Conferences and Events
IT Partners 2022
Date: TBA
Organizer: Reed Expositions France
Exhibition Center: Disneyland Paris
Link: https://www.itpartners.fr/fr-fr.html
IT Partners brings innovation to the fore and fosters the discovery of new solutions, the vendors that offer them, opening up new markets.
In recent years, the field of audiovisual integration has grown sharply, a market closely related to IT and telecommunications is developing dynamically.
In 2016, business solutions were put forward to expand systems' use and integration in information technology services.
In 2017, IT Partners opened up new markets for IoT, robotics services, drones, and virtual reality.
IT Partners are offering you the unique opportunity to meet over 250 brands and wholesalers in two days, bringing their latest news and business deals created at the show.
E-Marketing Paris 2022
Date: 29.03.2022 - 31.03.2022
Organizer: Weyou Group
Exhibition Center: Paris Expo Porte de Versailles
Link: https://www.emarketingparis.com/?lg=en
E-Marketing Paris provides leading experts from the digital marketing industry to attend this event and have the opportunity to embrace the latest business strategies and opportunities.
This show will also showcase the importance and value of investments and market opportunities that will help improve the overall digital marketing industry. It will provide an opportunity for digital professionals and digital marketers to share their knowledge and experience with each other, etc.
Viva Technology Paris 2022
Date: 15.06.2022 - 18.06.2022
Organizer: VivaTech
Exhibition Center: Paris Expo Porte de Versailles
Link: https://vivatechnology.com/
Viva Technology Paris 2022 is the 5th Global Exhibition and Conference for Startup Owners and Investors.
Over 45,000 people attended the first Viva Technology exhibition. The event dedicated to innovation was a great success, bringing together the largest French and international companies, digital and internet market players, as well as promising startups.
Viva Technology is a huge scale exhibition. You won't see anyone here with robotic assistants, and you can walk between the stands for hours. VivaTech-2018 had about 1000 exhibitors, 9000 startups, 1900 investors, 100500 visitors from 125 countries, and about 1900 journalists were registered. For the first time, Russia's stand was presented, where 16 companies represented different sectors of the economy.
A significant part of them are small startups that have undergone acceleration or cooperation with world-class companies (among them - Facebook, Google, IBM, Microsoft, Cisco, Airbus, Bosh, Valeo).
Two days out of three, the exhibition is closed for "casual" visitors, admission is strictly by invitation or prior registration.
Subject:
- Investments
- Setting up and running a business
- Small business
- Financial services
- Licensing
- Franchising
Viva Technology is by far our favorite tech conference in Paris.
Hello Tomorrow Global Summit 2022
Date: TBA
Organizer: Hello Tomorrow
Exhibition Center: Le Centquatre
Link: https://hello-tomorrow.org/
Hello Tomorrow Global Summit is an event within the Deep Tech Week held in Paris. This is a platform where developers of advanced technologies (deep tech) find their investors. The event will bring together over 1000 startups, over 300 accelerators, and the same number of investors, as well as corporate experts, researchers, and media channels.
Deep Tech Week 2022
COVID-19 UPDATE: Deep Tech Week has been cancelled due to the situation surrounding Covid-19, and we are yet to announce news about when it will take place.
Organizer: Hello Tomorrow
Exhibition Center: Le Centquatre
Link: https://www.deeptechweek.com/
The Forum consists of several conferences, exhibitions, and meetings, many of which are the most important events. The main goal: exchange of best practices and new horizons of cooperation. acquaintance with the latest developments in various areas of deep tech:
- synthetic biology,
- quantum technologies,
- neurobiology,
- cell agriculture,
- autonomous driving,
- much more.
Participants will see what impact deep tech has on our world and the future of humanity: climate and other changes.
Startup community
With the changes in the rhythm of life, the approach to work also changes. In the modern world, there is more choice in how to organize your working day and a desire to organize your time independently. Here we’ll list the most popular meetups, coworking, and "after-hours" in Paris.
Coworking
One of the excellent alternatives to the office is coworking - a space organized for the work of professional teams or individual specialists. Coworking spaces bring people together by providing a comfortable, flexible space to work and meet, as well as opportunities for communication, education, and creative interaction. Here are the most interesting ones:
Kwerk
The Parisian Kwerk is a joint project of Congolese architect Albert Angel and French-British entrepreneur Lawrence Knights.
“Isolation is the enemy of creativity,” the space creators are convinced. Their Kwerk (the name mixed with many associations, including abbreviations for "co-work" and "quirk" and a hint of playful "twerk") not only works seven days a week but also around the clock - you never know when the inspiration comes to work.
Located in the eighth arrondissement of Paris, the coworking space looks like a boutique hotel in a vibrant business district. It reflects the influence of many traditions and cultures in its interior. This is absolutely multicultural, but at the same time purely Parisian place, and in addition to tables for work, there is an art gallery and a yoga studio.
Amazing interior design of Kwerk is only one reason to visit the place
Bliss
In addition to its elegant interior, Bliss, located on the right bank of the Seine in the Les Halles quarter, offers its residents a full range of facilities - from coffee and internet to comfortable meeting spaces.
As a coworking space, Bliss operates during standard business hours - from 9 am to 6 pm. And then space is transformed into a bar. This allows residents to actively interact and get involved in the vibrant social life of freelancers and entrepreneurs in Paris.
SERVCORP
The combination of well-designed work conditions and a well-organized work experience is part of the reason why Servcorp Coworking clients seem to love the spaces. Servcorp gives its clients space and support to be their authentic best selves. They provide entrance to a team of bilingual secretaries, ample meeting space quickly bookable via an app, and color printing from any desk.
COWORKSHOP
Coworkshop is located near two major train stations. Here you'll have stages of stylish and ergonomic workspace with the possibility of planning your office according to an individual project. A place where everything is included for the most effective teamwork and where everything is provided to balance work with rest: comfortable meeting rooms, a sports bar, a summer terrace, recreation areas, kitchens, etc.
DESKOPOLITAN
Deskopolitan is not a typical office, but a workspace with its own ecosystem that inspires novice businessmen to realize their professional potential, boldly move forward, and achieve success in their business.
WeWork
Located in 33 Rue La Fayette, in a stately Parisian building, WeWork LaFayette provides space for individual work and for large creative teams. At the same time, everything here is arranged so that our clients feel the maximum comfort for productive activities and receive aesthetic pleasure from the creative atmosphere.
DIGITAL VILLAGE
Digital Village is a unique coworking dedicated to Digital, a place for exchanges and meetings. All the spaces (Toulouse, Bordeaux, Strasbourg and Paris) are designed to stimulate and develop teamwork. Digital Village Paris welcomes in its 1800m2 digital experts, agencies, startups and dedicated events. It's much more than a classic rental, we offer you a unique experience and support for your digital requests. Our ambition is to find the best partners to collaborate and develop business together. We believe in real coworking in which we share and where we can work together.
LA RUCHE
Located in 24 Rue de l’Est, Paris, a collaborative coworking space under the umbrella of “La Ruche,” is a huge site for 400 people with a fully prepared infrastructure. Offices of different sizes from one to 30 residents, meeting rooms, skype rooms, a separate dining room in the spirit of American diners, a shower room, an incredibly beautiful lounge with a bar counter, and aromatic coffee - and this is just a part of what we have!
INTENCITY
Intencity has now 4 spaces around Paris:
- a very small one in Levallois - 100 sq meters
- a small one in Paris near Bastille / Nation - 400 sq meters
- a middle one in Clichy - 2000 sq meters
- a new big one in Choisy-Le-Roi - 4000 sq meters
Focused on local business, especially on companies that need manufacturing or prototyping. Most of the spaces are not offices but light industrial spaces. But we are also glad to help some foreign businesses to settle up in Paris and around.
Our clients work in arts and craft, fashion, light industry, technology and also in services to businesses. We are working on the basis of a monthly fee. We are also a certified professional education provider, specialising in the development of small businesses. We can help in English!
Meetups + "After-Hours"
Meetups and after-hours are of great importance for entrepreneurs and young talents. It is a crucial part of the Paris Startup Scene. So, if you want to visit meetup - the most popular ones you can find here.
Concerning another part of the startup community (after-hours), the most exciting places and events can be found here.
Paris VC Market
Key Players
The French venture capital market can be called mature and, to some extent, highly competitive, which is good news for startup founders. For startups, capital is available, both traditional venture funds and small regional funds, corporate venture funds, and PE funds.
But the most important insight, and perhaps the main recipe for the success of the international success of French startups, is the massive presence of VC giants from other countries and in particular, from the United States - such legendary funds as Khosla Ventures, USV, and Index Ventures make deals in the country.
Venture funds investing in France
VC investment market size
The French venture capital market had grown more than five times since 2013 from $ 615M to $ 3.1B in 2017, and this is largely due to the foreign capital that has been invested in the country in the previous 2 years.
2017 became a record year in terms of the volume of transactions (growth by 49% YoY) and the number of closed transactions. In total, 743 transactions were concluded, which is 45% more than in 2016.
Dynamics of growth of transactions and volume of transactions
But early-stage startups (seed/angel and Round A) have no time to relax - the share of deals in these segments is declining. Here, we note that the median value of the investment amount in one round is also increasing and, at the end of 2017, was $ 1.4M.
As noted earlier, VC in France does not end in the capital. Still, there are several dozen regional funds, and this is a logical development of an ecosystem in which there are 6 regions with more than 10 public transactions per year.
Paris remains the leader with 342 deals in 2017, almost 100 more than in the previous year. The other top cities are Lyon with 26 deals and Bordeaux (17 deals).
The largest technology hubs in France
One of the reasons for the growth of French VC is government support for this industry, which includes an emphasis on supporting investors who invest in companies from France. In addition to supporting investors, they do not forget about startups, which are supported by tax incentives and other soft support, as well as cool infrastructure projects.
This policy's effectiveness is evidenced not only by figures reflecting the volume of the Paris venture capitals market but also by statistics on search queries. France is becoming another Startup Nation in the minds of other countries.
Technology segments
French specialists have strong competencies in various areas of Data Science, and the reason for this is the strongest mathematical school that still educates geniuses of mathematics - 13 medals out of 55 at top international competitions go to French specialists.
The largest players in this segment have already grown to the coveted IPO - they are Criteo and Talend.
France is a venue for the largest corporations in the life science (Biotech and Medtech) industries, such as Sanofi and startups that are growing to the level of the public offering. The number of life science companies listed on the Euronext Paris exchange will convince readers that this French ecosystem segment is extremely good. These market leaders are in the picture below, and there are 64 such companies in total.
Special attention is paid to startups in the IoT and the sharing economy. There are global leaders in these segments, such as SigFox in the IoT and BlaBlaCar in the sharing economy. By the way, the latter is a unicorn and one of the most expensive companies in France.
Business, funding, and investing possibilities
Talents and workforce
Key facts about potential hires for tech startups and co-founders from France.
1. There is plenty of them
- More than 100 thousand engineers graduate annually
- 70 thousand Ph.D. students graduate annually
2. They are highly skilled
- More than 93% of French entrepreneurs have at least a bachelor's degree or higher
- Again, they are strong in mathematics - 13 out of 55 medals mentioned above
3. Hiring engineers is profitable
- Thanks to attractive tax deductions, keeping an engineer on a team is 50% more profitable than in Silicon Valley (this is the reason for the opening of dozens of research centers from the USA in France)
Strong economics
One of the most important factors when choosing a country is the B2C market's capacity, and in France, this is not a problem, unlike most small European countries. France is the largest country by population after Germany.
- 65 million inhabitants (30.4 million - working population)
- Average salary (Gross) - € 35,484 / $ 42,300 per year (2017)
- In terms of GDP, the country is among the top 30 leaders:
GDP per capita - $ 39,869 (nominal; 2017)
Which sectors form the GDP (a little tip for startups about where the more money is):
- Service sector (78.9%)
- Industry and manufacturing (19.4%)
- Agro-Industry (1.6%)
Ease-of-doing-business rank - 31st place (2018)
Taxes for startups
Most often, the conversation about the country's advantages begins with taxes, and we will end with this point because not everything is so great. Here is a brief summary of what is happening with taxes in the country and measures of support in this direction:
- Сorporation tax rate (corporate income tax): 33.33%
- 28% can be applied for the first € 500,000 income.
- VAT: 20%
If we summarize and compare, France is a leading country in terms of the interest rate on taxes, which should always be borne in mind.
What are the bonuses for startups?
- No corporate tax rate for companies that have received the status of New Innovative Company
- Property Tax and Social Security Deductions for New Innovative Companies
- Tax deductions of 30% of the R&D cost for companies with a turnover of up to € 100M
It is worth noting that it is not easy to obtain benefits, and since 2004 only 4.5 thousand companies have received a New Innovative Company status. The deductions amounted to only € 800M over 14+ years.
If we talk about deductions for R&D costs, then this is a more widespread practice and 20,000 companies per year with a volume of tax savings of 5 billion euros per year.
It is important to note that 88% of all recipients of support are small and medium-sized businesses. Perhaps this measure of support is one of the key components of the success of the French hi-tech.
French Tech Ticket
France has provided financial support of € 5 million for foreign entrepreneurs who decide to start a new business in Paris. The city will also help newcomers with paperwork and finding housing and office space. Knowledge of French is optional.
A scheme called "French Tech Ticket" should attract startup companies to France. Financial and administrative assistance to foreigners will help become a magnet for new ideas and help maintain the country's reputation in innovative technologies. The pilot project will operate in Paris, prian.ru reports.
The French government is committed to improving the country's business climate. After a joint project to build a technology incubator near Austrelitz station, François Hollande's office allocated € 5 million to attract foreign entrepreneurs.
"The aim of the measure was to attract foreign talent to France, which will create new enterprises, expand the supply on the labor market and increase the country's attractiveness,"
said Axel Lehmer, Government Secretary for Digital Technologies.
In the first year, the French Technology Ticket program will receive € 5 million in subsidies, which implies about 50 participants. Each founding member will initially receive € 12,500 if the company has no more than three founders. The grant can only be invested in the company's development, and the company should be the only place of work for its founder. Applicants must speak English, and there can only be one French member on the founding team.
After receiving the funds, the company will be monitored, and if all the rules are observed, it can use the amount of € 75,000. The pilot project will operate only in Paris, and if successful, it will be applied throughout the country.
In addition to money, entrepreneurs will be helped to find an office for a new business in one of three incubators around the capital. The city council will assist in finding housing and navigating the jungle of the French administration.
Summary
Paris is beautiful and unique, not only in terms of gastronomy but also in the business climate. And here is why:
- Top 3 Most Attractive Cities for Foreign Investment (KPMG)
- 4th city in the ranking of innovative hubs (Cap Gemini 2016)
- Center of gravity for R&D and Innovation centers: 100,000 employees of such centers in the following companies: Microsoft (2012), Google (2013), Facebook, Intel, Samsung, Cisco, BNP Paribas, Nokia, Salesforce (2015), Huawei, Accenture, GE (2016 ), Renault (2017).
- #1 in the EU by the number of corporate headquarters from the 500 largest international companies (CNN Money Fortune 500 2013)
- 3,500 startups in the city (EY 2017)
- 110 business incubators and accelerators operate in Paris and the surrounding area (Etude Apur octobre 2016)
Paris has Numa, TechStars, and of course ... Station F - probably the greatest world and Paris startup hub.
Station F is the world's largest startup campus, home to all ecosystem representatives - from startups with ideas to giant startups and venture capital funds that support both.
34,000 square meters, 3,000+ startup locations, and over 10 international startup programs, including Facebook incubator.
To sum up, if you want to experience all the Paris startup hub's glory, don’t hesitate to contact Ideamotive’s funding and software consultants.
There are various business and technology experts in our Talent Network: from business experts to developers who can help you build your product. Moreover, we are from Europe, therefore we know the local market and can be your guide.
Be sure, these guys will definitely help you reach your goals!
