Should France even want to be another Silicon Valley anyway?

If there’s one thing I have a low tolerance for, it’s France-bashing. Sadly, it seems to be a default sport for many journalists. Whenever they have nothing better to write about, a little critique of the oh-so-traditional French Republic will surely fill up the sapce. Take The Economist, for example. It’s a magazine that I actually still highly admire. But I remember reading this one article not too long ago about how London was just all the more attractive for the young, French population – because “France itself is hardly booming.” Uh, right.

Having second thoughts ?

(Some  anti French-bashing humor to lighten the mood)

But then, as if the magazine had suddenly woken up to reality, it decided to follow-up with an article on how startups are actually helping to jump-start reform in the economy. Yes, the media actualy finally picked up on what the article refers to as France’s “silent majority.” This is “the France that does not go on strike…” the France that casually gets ignored whenever the press discusses anything even mildly France-related.  And even better, the article even includes a nice little interview (in English with a twist) with Vente-Privée founder Jacques-Antoine Granjon to prove that yes, good ideas and determination can make big companies – even in France. Now, I don’t want to get ahead of myself, but if the rather traditional Economist is going to change its view of France (even ever-so slighly), maybe it means something.

Still not your average piece of cake.

That being said, France is still not an entrepreneur’s heaven. It’s got its fair amount of administrative headaches and complications. But I’ve said it before and I’ll say it again: US entrepreneurs have it easy. Sure, there are some that think that France will never be like Silicon Valley – but then there are some, like serial entrepreneur Gilles Babinet, that would argue that it is in fact possible.

More than on the right track.

Gilles published a fantastic article in Les Echos -just after the French Government awoke to the fact that Internet companies were responsible for over 700,000 jobs in France -where he made some bold suggestions on how France could help local entrepreneurs make the country an industry leader. Some of his suggestions include developing official university courses dedicated to the Internet industry and multiplying public and private partnerships between universities, research centers and small and large companies. Most of what he proposes actually isn’t foreign to France – it just isn’t as developed or valued as it should be. For example, 3 of France’s top entrepreneurs obviously recognized the need for university cirriculum dedicated to the Internet industry – which is why Xavier Niel, Marc Simoncini and Jacques-Antoine Granjon are launching the Ecole Européenne des Métiers de l’Internet. But in such a centralized State, some of these initiatives may need to be actively promoted by the local administration.

No longer dreaming about Silicon Valley.

But Gilles doesn’t just draw on inspiration from the US to make his suggestions – but from other international models as well (like the Ministry of International Trade and Industry in Japan). Silicon Valley, as incredible as it may be, is not necessarily what France should be trying to be. In fact, France – like all other European countries, currently including the UK – has already tried to make its own Silicon Valley (see the video below, in French).

Fortunately, the country seems to have now recognized that you cannot just cut and paste what works in California on the sunny French Riviera. Therefore, some initiatives – entirely unique to France – have been put into place and prompted innovation and investment in their own way. Some of these include the Crédit d’Impot Recherche, the Statut Jeune Entreprise Innovante – and maybe even the weath tax (ISF) credit for investing in a startup. It takes a little bit of trial and error but I can’t say that these initiatives haven’t had a positive impact in one way or another. But if there is one thing I don’t get, it’s why the Government likes to change some of these startup-oriented benefits on a rather regular basis.

If at first you don’t succeed…

Sure, the Silicon Valley does seem to provide a lot of inspiration for the tech world, whether it be product innovation or stories of rags to riches. France has definitely taken some of the models that have worked abroad and tried to adapt them to the local environment – it’s only natural. And slowly but surely, they seem to be tweeking them to fit the local environment.

Euhhhhh, it’s better when it’s (not only) French.

If there is one thing that the French often take a lot of heat for, it’s being “too” French. I remember in the US, many entrepreneurs used to tell me “but isn’t France is only for French people?” As a foreigner who has known many foreigners in France, the answer is simple: no. There are some hot-shot US entrepreneurs that have left the States to launch projects in France. I also know of some very successful local entrepreneurs and investors that are not of French origin (Spanish, Moroccan, etc.). France may seem somewhat less cosmopolitan than London, but the integration model is also very different and mirrors that of other continental European countries. The entrepreneurial crowd is unique and recognizes the value of being more internationally oriented.

LeBridge.eu

I’ll leave you with a quick word on a new initiative I recently got involved with – because I think it’s a nice way to show how the local tech scene is coming out of its shell. It’s called Le Bridge and it’s an organization that aims to help connect the various European entrepreneurial scenes through events (in English!) and whatnot. For now, it’s primarily targeted towards bridging Paris and London but additional European cities will likely follow. And I wouldn’t be surpirsed if an interconnected European startup scene doesn’t catch the eye of our friends in Northern California…

PS/ Yes, Axelle’s article is what prompted me to write this – but I think deep down inside she was trying to communicate a similar message 🙂

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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).