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French technology startups are forging ahead – but how?

France has sprung to the forefront of the international tech startup scene. How has this happened, and what's next for French tech firms?

France isn’t necessarily the first country that springs to mind when thinking about technology startups. Yet recently the French have shown that they have the skills and talent to become a global tech power. This change might appear to have come quickly, in the space of just a few years, but in fact its roots lie much further in the past.

Some of the higher-profile examples of current French technology startups include Sigfox, which makes low-power sensors that communicate intelligently via radio frequency, and Parrot, the drone company. But there are many others – hundreds, in fact.

For example, more than 130 French tech firms were represented at the Web Summit in Lisbon last November. Many of them won awards, including Lifeina (medtech), which won the Mercedes Pitch Competition for its product, the world's smallest intelligent fridge. Among more than 2,000 companies present at the summit, five French startups were in the top 10 most solicited by international investors.

This success is a fragment of a bigger picture, where French companies are exporting products and knowledge all around the world. Sigfox, for example, has a presence in 39 countries, of which 17 are fully covered by its network. According to Pierre-Damien Burger, secrétaire national of the internet of things (IoT) and manufacturing French tech network, “44% of the business of French startups is done at the international level”.

What is interesting – and perhaps instructive – is that this rapid growth in development and export reach has not been driven from the top down but from the bottom up. Although government incentives are available, mostly through loans and grants to companies in their early stages, the real push is coming from elsewhere.

“I am not sure the government has really been instrumental in the development of this field,” said Gilles Babinet, multi-entrepreneur and digital champion of France. “Of course BPI, the French public bank, is financing a lot of start-ups – but I cannot see any other government policy that is really specialised,” he added.

But that is not to say there is no government help whatsoever. Vijayaraghavan Narayanan, CEO at Grenoble-based Bluemint Labs, said: “Had I not had help from the French government, it would have been tougher.”

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Grants are available to prospective entrepreneurs to help them carry out feasibility studies on their business plans before deciding to make the leap. This is vital, because it’s a big step to take. “To leave a job and start up on your own s a whole different ball game,” said Narayanan.

Even so, the French government appears to be taking a largely passive role, providing connections and introductions, but not necessarily much in the way of finance. So what is really driving the French tech scene?

Olivier Ezratty, a digital consultant, innovation expert and adviser to French tech firms, traces its origins back. “Telecom business has a long history in France,” he said. “Fifty years ago it was run by the government, because in the 1960s and 1970s, most companies were government-owned. There is a strong history of telecom research, with France Telecom, which later became Orange. Out of this strong investment came a lot of research, some startups, then a lot of engineers were trained. So we can track the history of these skills back to the 1960s.”

So, arguably, the current tech boom is a national dividend, an unexpected payback from years of public investment into French telecoms organisations. And that investment is continuing through education, said Babinet. “Even though our educational system is perfectible [could be improved], it has a clear advantage regarding the training of quite good engineers in mecatronics [electronics + software + mechanics],” he said. “As a result, a significant number of graduates develop startups in that field.”

But this isn’t enough on its own. Another important factor is funding, where there have been big changes in France. There is no shortage of incubators and venture capital funds now, including the largest startup accelerator in the world, Station F in the heart of Paris. There is plenty of money available for entrepreneurs who can prove they have products of value to an international market.

Future looks bright

So the future looks bright for French technology startups. But some issues remain, and networking infrastructure is one of them. Benjamin Carlu, head of Usine IO, an accelerator that has helped more than 450 startups, said: “We have a lot of industry suppliers and so on, there are spots on the map all over the place, but sadly the network is not here. Companies need guidance and experience-sharing. That is where accelerator initiatives like ours work well to help people – even those who know how to develop a product.”

Then there is the sheer get-up-and-go that is prevalent in, say, some US firms but less common among the traditionally laid-back French. That is a cultural stereotype, but it has some basis in fact.

Pierre-Eric Leibovici, co-founder and partner of venture capital firm Daphni SAS, sees big potential in the French startup scene but recognises its weaknesses too. “We still have to work on our distribution capacity,” he said. “This can't come from government; it’s more a cultural issue. In the US, even if they don’t have the best product, they launch anyway and make it up with marketing. In France, we want the best product ever and that takes time and gets too complex. So we need to get some more product marketing guys, and that culture does not really exist in Europe.”

Some startup founders have already taken this message on board. Sigfox CEO Ludovic Le Moan is the epitome of the fast-talking, highly ambitious business leader who, but for his French accent, could have stepped right out of a Silicon Valley boardroom. “Every asset should be connected – doors, shoes, chairs, everything,” he said.

Sigfox epitomises the bullish approach recommended by Leibovici, using marketing to better effect than many French startups.

Sigfox aside, France may have to import the kind of marketing talent it needs for now, at least until its own entrepreneurs learn how best to get their message out. But that may not take long. There could soon be a situation where a new generation of marketing-focused, younger French workers join forces with older, business-savvy telecom experts. As partnerships go, that combination would be formidable.

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