Politics

France hits startup funding target — but the bar has already been raised – POLITICO

President Emmanuel Macron claimed a tech victory on Monday as French startups hit a funding target three years ahead of schedule. The problem? The celebration comes as expectations for startups are already outpacing that progress.

In September 2019, Macron set a goal of having 25 French “unicorns” — a term frequently used by investors to describe a private company valued at $1 billion or more — by 2025. At the time, France boasted only four. The benchmark was reached Monday when warehouse robotics company Exotec, based near the northern city of Roubaix, raised $335 million in funding, bringing the company’s valuation close to $2 billion.

The news was welcomed not only by Macron himself, but also by the country’s Secretary of State for the Digital Transition Cédric O and startup organizations like La French Tech.

On the one hand, reaching the funding target three years early is a boost for a country that in the last decade has failed to produce a well-known brand with a valuation in the tens of billions of dollars, like Sweden’s Spotify. The news also lands at a convenient time for France, at the start of its European Council presidency and as European leaders stress the importance of digital sovereignty. The French presidential election also looms in April.

On the other hand, startup funding surged globally last year, so France is not necessarily a leader now despite hitting its funding target.

In Europe, for example, the funding raised by French startups still lags behind those from the United Kingdom and Germany, numbers by data provider Dealroom have shown. U.K. startups got their hands on close to $40 billion in 2021, while German tech companies accounted for close to $20 billion — both more than doubling their 2020 numbers. French startups raised close to $13 billion.

That abundance of capital raises the question of whether it still makes sense to count unicorns as they’re currently defined.

For some, the answer is no. “I think we should be talking about decacorns now,” French tech billionaire and startup investor Xavier Niel said in November, referring to companies valued at $10 billion or more. (France has no decacorns — for now.) For his part, Macron acknowledged last year that Europe should think bigger — with a new plan aimed at fostering 10 European tech giants valued at $100 billion by 2030.

Others, like Green presidential candidate Yannick Jadot, are eyeing broader, less tangible targets than hard funding numbers. “My goal is not to be satisfied with counting unicorns, but succeeding in a strategy in the long run,” Jadot said earlier this week.

Even France Digitale, the support organization for startups, warns that startups shouldn’t become too complacent — and should keep an open mind about their next steps.

“It’s very difficult to say that it’s only related to decisions the last government took,” Maya Noël, director general of France Digitale, told POLITICO. “There are a lot of things that happened today, that are happening thanks to what we’ve decided maybe 10 years ago.” She did underline that this government was “positive” for the ecosystem, but also that the COVID-19 pandemic helped to rapidly digitize big parts of society.

The startup scene’s players should be educated about their options, like listing on the stock exchange through an initial public offering, Noël stressed. “We have to sensitize startups about the fact that an IPO can be an option. It’s not an exit option — it’s just another way to raise some funds.”

Some are already moving down that path, like cloud provider OVH Cloud, which listed on the Paris stock exchange in October.

It also remains to be seen if these next steps will still be based in Europe. Exotec was supported in this funding round by a subsidiary of American investment bank Goldman Sachs, which Frederic Filloux, the writer of Monday Note, an influential newsletter among startups, pointed out.

“This beautiful company is for the majority controlled by [the U.S.] and [the U.K.],” Filloux tweeted Monday.

Elisa Braun contributed reporting.

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