[Tribune] French Tech: ambition and humility are not contradictory …

by bold-lichterman

In 2012, France Digitale was born, the first association bringing together “digital” entrepreneurs and investors. We were emerging from the “subprime” crisis, the financing machine was slowing down, BPI France had not yet been created and the French Tech label did not exist.

The founding members had 2 convictions:

  • Getting entrepreneurs and investors to speak with one voice would be powerful vis-à-vis governments or the media. The misconception of the nice entrepreneur slaughtered by a vicious financier had to give way to a more positive vision: there is a fundamental alignment of interests between all the stakeholders in the ecosystem, including employees and even non-employee contributors. . It is an essential ingredient for the eventual success of a startup.
  • The model of venture capital – defined as the crescendo financing in capital of significant financial losses justified by hyper growth – deserved to be much better understood both outside and inside the ecosystem. It requires a different regulatory or fiscal environment (or in any case, adapted). It induces new challenges on which the sharing of experience is necessary.

After the painful but undoubtedly saving episode of the Pigeons, the French tech ecosystem has continued to progress.

  • The annual amount raised by all French start-ups and scale-ups has been multiplied by 7.
  • We are now on par with the UK in terms of the number of companies funded annually by venture capital.
  • We are still behind on the total amount in value, but the big rounds of funding (over 50 million euros) are increasing: 13 in the first half of 2019 against 8 over the whole year in 2018. We are only missing the “Mega-rounds” in hundreds of millions, still extremely rare.
  • Entrepreneurs show an international or even global ambition that their elders rarely displayed.
  • The battalion of unicorns and potential unicorns represented by the Next40 is growing month by month.
  • The ecosystem seems to have only one concern: how to hire the talent whose shortage has become glaring …

The current exuberance should not, however, make us lose our collective lucidity. Without wanting to play back the joys, it seems essential to recall the progress that we can still achieve:

  • Long institutional capital, allowing the mobilization of significant amounts over time, remains insufficient (despite very abundant savings). Our ecosystem remains dependent on international (and “corporate”) investors. This structural weakness must be corrected before the cycle turns. The President of the Republic made announcements last night that are going in the right direction but we must not dawdle in their implementation …
  • Involved in a competition that is global and fierce, our young companies face challenges that demand creativity, agility and determination. Our entrepreneurs have these qualities. They also require having experience of the internationalization of a company in “hyper-growth” mode. The talent pool with this experience in France is clearly insufficient. We need to strengthen our attractiveness to recruit those who have already been exposed to these issues. Some measures taken concerning “impatriates” (preparatory to Brexit) or the French Tech visa go in this direction. They must surely be completed.
  • A tech ecosystem is only sustainable when the virtuous logic of recycling the creation of value is triggered (money but also talent). This is what makes Silicon Valley so powerful. We are not there. Beautiful industrial outputs by acquisition in the hundreds of millions more numerous than in the past are still too rare. Even rarer IPOs are on the Nasdaq … The President of the Republic also announced last night an initiative that goes in the right direction. It will take time to allow the emergence of a real tech stock market that can take over from venture capital and private equity. In the meantime, we will have to accept that our finest nuggets will be bought back by those who can afford them, of which, unfortunately, very few are Europeans …

Historically hampered by blatant under-capitalization, our ecosystem is now enjoying an exciting trajectory from which it will emerge, it is certain, very successful. You can’t make omelettes without breaking eggs and you should not be alarmed by the failures potentially encountered tomorrow by some of the most promising today. Our ecosystem remains a growing adolescent, he learns by doing!

Today, September 18, 2019, is the 8th France Digitale Day. It is above all a large family reunion during which entrepreneurs at any stage of development can meet national and international investors (or large groups) and where the multiple round tables and informal discussions allow everyone to ‘learn from others to better anticipate …

Ambition and humility seem to be the two words to remember. They are not contradictory!

The contributor:

Jean-David Chamboredon is president of the ISAI fund and co-president of France Digitale.