FrenchTech: Pump up the start-up nation (yes, size matters!)

by bold-lichterman

At a time when people are on fire on social networks about the usefulness and future of the FrenchTech initiative, it is important to take stock of the strengths and weaknesses of the movement. There are questions about its governance on which the Secretary of State for Digital Mounir Mahjoubi sliced by welcoming the first proposals of France Digitale (What if FrenchTech pivoted?): the privatization awkwardly proposed by Terra Nova has already been sidelined; There is no doubt that the entrepreneur and investor ecosystem, the 13 FrenchTech metropolises and 22 FrenchTech international hubs will be associated in one way or another with the new impetus desired on this positive & unifying brand. Consultations are ongoing. Now is the time for proposals.

There are other more important questions on the long-term financing of FrenchTech companies taken very seriously by Bercy within the framework of the Pacte law, scheduled for presentation in May, and most likely in the finance bill for 2019. If the Start Up Nation France has brilliantly succeeded in putting thousands of start-ups into orbit; they should now be transformed into scale-ups, creating stable jobs over time.

The purpose of this article is not to list or reveal all the avenues studied by the government, but to analyze successful models to imagine avenues for the acceleration of FrenchTech. Nothing therefore prevents us from crossing La Manche to study the success of the English model (La perfidie d’Albin); we have seen the emergence of scale-ups, strongly encouraged by the tax exemption systems for investments in growth companies, which are acclaimed by English or international business angels established in the UK.

In the United Kingdom, regulatory and fiscal conditions are largely favorable to venture capital and investment, particularly in promising technologies, not only for start-ups (SEIS system), but above all for scale-ups (system EIS). Proof of this is the number of business angels identified in the UK: 2,069 (Source Angel List 2015) against 404 in France (five times more). Employment in the digital sector is abundant and represents 5.5% of the total working population according to the TechNation 2016 report, while France reaches 3.7% according to the AFII, a strong double-digit increase since a few years ; without being able to establish a direct cause and effect link between these programs and the vitality of employment observed in recent years in the United Kingdom. Note, however, that in a context of strong instability linked to Brexit, growth weakened to 2%, at the same level as France, but full employment remains (4.5% unemployment rate).

The Journey of Future Fifty Companies – Source TechNation 2017

FrenchTech Pump up the start up nation yes size matters

Source TechNation 2018

Here is a summary of the main features.

  • The SEIS system (Seed Entreprise Investment Scheme oriented towards start-ups) allows you to invest up to £ 100,000 in early stage companies with less than 25 employees with the possibility of deducting 50% of the amount of its taxes,
  • The EIS (Enterprise Investment Scheme oriented on scale-ups) system allows you to invest up to £ 2,000,000 in growth companies with less than 250 employees, with the possibility of deducting 30% of the amount of its taxes,
  • A company can raise up to £ 5 million per year through the EIS program, between £ 12 and 20 million in 5 years, especially for companies with a strong R&D component. The fundraising is limited to £ 150,000 as part of an early stage start-up benefiting from SEIS,
  • Capital gains on disposal are exempt from tax after 3 years in both cases,
  • Other developments are planned with a double incentive mechanism upwards and downwards.

Illustration of the EIS model on an investment of £ 100,000

Source: CSS Partners LLP

Here are the main statistics.


  • Since its creation in 1993, 26,355 companies have received an EIS investment and nearly £ 16.2bn have been raised,
  • In 2016, 3,470 companies raised a total of £ 1.9bn,
  • The south-east of England and Greater London mobilize 67% of this investment,
  • 68% of funds go to the business services and advanced technology sectors,
  • The number of investors benefiting from tax exemption on their investments thanks to the EIS was 32,770 over the period 2015–16.


  • Since its establishment in 2012, 6,665 companies have received an investment and £ 256m has been raised,
  • In 2015–2016, 2,360 companies benefited from the scheme,
  • £ 180m has been raised,
  • 68% invested in service and high tech industries.

All devices combined, 1.9 billion were mobilized by these investment tools in 2015–2016. The public cost is estimated at £ 520 million.

The brand new French IR PME scheme born in 2017, following the abolition of the ISF PME, pales in comparison to these investment tools. It limits the investment to 50,000 € with the possibility of deducting 25% of the amount of its taxes.

Hence a gap of 1 to 5 between the number of French and English business angels at all stages of maturity of a growth company in need of financing.

Given the formidable work of FrenchTech over the past 5 years to acculturate France, its economy, its administration and policies, to a new economy that creates jobs, it may be useful to imagine now tools to transform the test and for example to encourage business angels, more or less fortunate, to direct their savings towards innovation not only to nourish our breeding ground for start-ups, but also to encourage the emergence of future scale-ups.

This is one line of thought among others to imagine a new impetus at FrenchTech.

This article was published on Medium.

The contributor:

FrenchTech Pump up the start up nation yes size mattersAlbin Servant

Entrepreneur & Investor
President of FrenchTech London
FrenchConnect London co-founder
Member of the French Foreign Trade advisors, UK (CCEF UK)
CEO & Founder of Makeithappn