Dear US Entrepreneurs, You Have it Easy.

Everytime I meet a new entrepreneur – French, American or otherwise – the topic comes up:

What are the differences between being an entrepreneur in the US and in France?

In my former job, I was constantly confronted with the opinion from the other side of the Atlantic vis-à-vis doing business in France: “The French are always on strike, it’s impossible to fire someone, 35h work-weeks, 2h lunch breaks, blah blah blah…”

US, you need to get your facts together.

Revolution by Gilles BarbierA majority of the stereotypes are downright incorrect. The rest are negotiable; I’m not saying that there are NO strikes or that firing someone is a piece of cake – but it’s all relative. Strikes probably tend to impact tourists more than local residents. For example, strikes at the baggage claim at Charles de Gaulle Airport aren’t really going to affect a majority of local start-ups. Obviously a metro strike is a little more annoying but not all the metro lines are affected and there are other ways to get around. And if you want to talk work contracts – naturally it’s not the hire and fire system of the US, but it’s definitely not impossible to let someone go.

The proof is in the pudding.

It seems that Americans entrepreneurs are coming around and discovering the truth first-hand. Here is a tweet from Michael Schneider (CEO of MobileRoadie), from when he stopped in Paris before the Mobile World Congress last week:

A non-issue.

Oddly enough, many of the French entrepreneurs I have met have actually not complained about the issues that their American counterparts seem to fear in the local market – but they do understand their concerns. Correct me if I am wrong, but either the French know how to navigate their own turf well-enough that these things are simply a non-issue  – or they accept these aspects of doing business as a fact of life. So what then do the French complain about most in their local market?

The problem: 63 million French people.

It’s a recurring theme in all my conversations: the difficulty for French entrepreneurs is not the administrative red-tape but rather the market size. Being number 1 in Europe is NOT the same as being number 1 in the US. A French company is limited to a market of 63 million, whereas a US company automatically has access to a local market of 308 million. Europe may be looking more and more like the US but at the end of the day, a French company wanting to take on a leading US company needs to do more than just translate a website into a bunch of different languages.

It’s not easy being green.

Americans love to give the French a hard time (maybe they’re jealous of the food?). I think the annual Europe-US showdown at LeWeb is a good example of the malentendus that exist between the 2 sides of the same coin. But all things considered, American entrepreneurs have it easy. Rather than bashing a French company for not having an English Twitter feed, they should realize the difficulties of French entrepreneurs and give them a little more credit.

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Invest in a Start-up = Reduce your Taxes

Yes, that’s right my friends; while Silicon Valley was over there spreading rumors that it’s impossible to score VC money in France, the French government got a little creative.

Since 2007, French tax payers can lower their wealth tax (ISF) by investing in a company.

French taxpayers can now reduce their wealth tax by up to 75% via making an investment of €50,000.

In the beginning, it wasn’t obvious if any magic had been made; were French tax payers going to go knocking directly on the doors of companies they wanted to invest in? And how were emerging start-ups to sniff out the money?

Et voilà, le VC: what’s mine is yours, what’s yours is mine.

That’s right, who better to play the intermediary than a VC.

And now for a little name-dropping.

One example of a company that was recently funded this way is Proxi-Business.com, a French e-commerce solutions platform, which scored €1.15 million (I might cry if I convert this to dollars) at the beginning of this week from a company called Audacia.

Audacia has also funded companies like French organic e-commerce site, Brindilles.fr, IT security company, ASP 64, and a few more.

And they’re not alone. France’s darling start-ups DailyMotion and Deezer – which both scored funding in October 2009 – have received funding from AGF Private Equity, who raised over €35 million in June 2009 through an ISF campaign. Not too shabby if you ask me.

So who is laughing now?

Ok, ok. Maybe this scheme hasn’t dramatically changed the investment practices of local VCs (yet!). But it certainly looks like VCs aren’t agnostic with regards to this new resource (here is a non-exhaustive list of French companies that received VC funding in 2009).