Introduction to Paris’ startup ecosystem
France is seldom thought of as a hotbed for startup innovation. Some of the problems cited by entrepreneurs and investors include high taxes, language barrier,s and aversion to risk. That said, the Paris Startup Ecosystem is in full swing.
However, startups and innovation are gradually becoming an important element of France’s business coverage. In StartupBlink’s 2019 report, Paris ranked 1st in France and 12th globally.
While France has always had some of the best schools, the network of VC firms and journalists has also become stronger and encouraged more entrepreneurs. Many new startups are making breakthroughs in areas such as big data (Criteo, Scality) and connected devices (Withings, Parrot).
It is an exciting time to be a French entrepreneur, with new educational initiatives and innovations underway, even though there is still room for improvement.
Successful startups of Paris
- Vente-Privee (@venteprivee_fr): Vente-Privee is a French company, that was founded in 2001, by Jacques-Antoine Granjon, its CEO, and a few others. The e-commerce company is a pioneer of the flash online sales model, adopted by the Gilt Groupe. The company has a wide range of products on offer such as fashion accessories, home appliances, toys, technology, wines as well as travel and entertainment tickets. The company’s revenues in 2012 were 1.2 billion pounds.
- Algolia (@algolia): A startup supported by Y-Combinator, Algolia is a search engine that can be adapted for different websites. It has 250 paying customers that include USA Today’s Reviewed.com, SocialCam and Peeble. It has received funding from Point Nine Capital, Alven Capital and Index Ventures.
- Withings (@Withings): The startup helps make connected devices such as smart baby monitors, Wi-Fi scales, sleep-tracking devices, and a device for measuring your oxygen levels. It was founded in 2008 by Eric Carreel, Frederic Potter and Cedric Hutchings. The company is backed by 360 CapitalPartners, Idinvest Partners, Ventech and Bpifrance.
- Mention (@Mention): Started by Edouard de La Jonquiere in 2012, Mention calls itself “a turbo-charged Google Alerts”. The tool provides brands with real-time data about what is being said about them, on social media as well as the web. It has about 170,000 users and reports five million alerts per day. It is backed by Alven Capital and Point Nine Capital.
- Dailymotion (@dailymotion): Founded in 2005 by Benjamin Bejbaum and Olivier Poitrey, DailyMotion is a popular site for video content on the internet. It is currently the world’s second largest site for streaming videos, with YouTube being the first. The website has over 120 million unique visits per month.
Strengths of Paris for start-ups
The availability of top-notch talent, increasing number of financing options and a progressive regulatory framework have all contributed to the improvement of Paris’ startup ecosystem.
With some of the best schools in the country, France enjoys an abundance of engineering talent. What’s more, an increasing number of graduates are now choosing to work for startups in the country itself, instead of pursuing a career at Goldman Sachs or Bain. Xavier Niel, noted French tech entrepreneur, has started a new computer science school, Ecole 42. It is free of cost, with a unique model of education, where students are admitted regardless of their educational background. Such initiatives are certainly fueling the entrepreneurial spirit in Paris.
Financing options available to startups in Paris have certainly seen a rise. There are a number of funds that provide seed funding t startups with notable ones being Alaven, Elaia and Isai. Idinvest, Iris and Partech provide financing at the early stage. Additionally, billionaire Xavier Niel, has started a project, 1000 startups, that aims to be the world’s largest incubator, equipped with an auditorium, computer labs and workshops.
The regulatory environment, which was not thought to be conducive to a startup’s growth has changed considerably. Startups can now fire employees within the first eight months of employment. The “35 hour work week” amended in 2004, and is now almost void.
Coworking spaces and accelerators
It is easy to find a community of like-minded people in Paris, with the growth of coworking spaces, accelerators and incubators. Take, for example, Microsoft Ventures Accelerator that helps students build their products with a three-month-long program. It offers many perks to entrepreneurs such as coaching on various aspects of technology, design and business.
Weaknesses of Paris for start-ups
Even with access to venture capital and improved regulations, there are a few challenges faced by entrepreneurs.
While the number of venture capital funds may have increased, many of them are still risk-averse. They place emphasis on revenue and exits, instead of looking to build disruptive companies such as Facebook and Google. Also, even as startups find it easy to get funded at the initial stages, there is a gap in the funding cycle. French VC firms are generally small and it is not possible to raise Series B and C rounds of funding.
Another drawback is that most startups do not want to expand beyond France. Even Vente-Privee, one of France’s most successful company, was virtually unknown outside France until very recently. The reluctance of French startups and events to release their information in English is an indicator of this. A vast majority of information about the tech ecosystem in France is present in the native language. Startups need to present their company blog and products in English if they wish to expand globally.
Biggest players in the Paris startup ecosystem
Influencers in Paris:
- Xavier Niel (@Xavier75): An entrepreneur active in the telecommunications and technology space, Xavier Niel is the founder of the French internet service provider and mobile operator Iliad. He has co-founded an investment fund, Kima Ventures, as well as created a free tech school called 42. His net worth is estimated to be $10 billion.
- Marc Simoncini (@marcsimoncini): He has founded many companies such as MEETIC (an online dating site), an IT Services company and Sensee.com. He has also played angel investor to many startups. He is also the CEO and founder of Jaina Capital, a venture firm helping talented entrepreneurs.
- Jacques-Antoine Granjon (@JAGventeprivee): CEO of Vente-Privee, he invented the concept of flash sales. His company has grown rapidly in size and profitability. It has over 2100 employees and revenues equal to 1.2 billion pounds.
- Pierre Kosciusko Morizet (@pierrekm): Co-founder and ex-CEO of PriceMinister, he sold the successful marketplace to the Rakuten Group for 200 million euros. Later, he founded ISAI, an investment fund for entrepreneurs. He is also a managing partner at Kernel Investissements.
Incubators & accelerators in Paris:
- Microsoft Ventures, Paris (@MSFTventuresFR): A three-month program, it helps startups to build their products and also scale their business. Startups are offered free coaching in areas such as business, design and technology, by companies like Deezer, Eventbrite and Criteo.
- L’Accelerateur (@laccelerateur): Founded by Michel de Guilhermier, Jonathan Lascar and Juan Hernandez, it is also a three-month program that provides startups with mentorship and PR support.
- NUMA Sprint (@NUMAsprint): An accelerator program of NUMA, it lasts four months and helps startups in areas such as finance, product development and legal issues. Lima, a French startup advised by NUMA Sprint (formerly Le Camping), received $1.2 million on Kickstarter in less than 12 hours as well as $2.5 million from Partech Ventures in a Series A round.
- 50 Partners (@50Partners): 50 Partners was founded by 50 IT entrepreneurs, and offers startups support in the form of workspace, services and mentorship. Its expertise lies in mobile, software, media and web. It takes up to 7% common shares in startups for joining its four-month program.
Investors in Paris:
- Idinvest Partners (@idinvest): Managed by Christophe Bavière and Benoist Grossmann, it is a leader in private equity and specializes in the low and middle market segments. Its portfolio includes companies such as Sarenza, Criteo, Talend and Viadeo.
- Elaia (@Elaia_Partners): It is a private equity boutique founded by Philippe Gire and Xavier Lazarus in 2002. It has a special focus on the digital economy. Some of the startups in its portfolio include Miraki, ScoopIt, AllMyApps and 1001 Menus.
- Partech Ventures (@partechventures): With offices in Paris, San Francisco and Berlin, it is an international venture capital firm. It invests in companies in the field of information technology and consumer internet. Sigfox and Scoop are part of its portfolio.
Startup Events in Paris:
- Le Web (@leweb): An international conference for digital innovation, it is attended by startups, visionaries, brands, tech companies and media, in order to explore the future of internet-based business.
- Microsoft Techdays (@msdev_fr): It is an annual event for software development, IT solutions and software architecture in France. The sessions conducted include Web, Cloud, Application Development and Phone.
- France Digitale Day (@FRdigitale): It is a major event that sees the attendance of some of the major players of the digital ecosystem. Its participants include companies such as Google, Withings, Airbnb, business angels as well as venture capital firms such as Idinvest.
Coworking Spaces in Paris:
- Numa (@NUMAparis): Another hub for startups, Numa also helps startups boost their growth and fosters collaboration. Additionally, it hosts a 4-month accelerator program Le Camping.
- Coworkshop (@lecoworkshop): A coworking space for freelancers, students and entrepreneurs, it allows them to come in and work, without making a deposit.
With more and more startups groundbreaking ideas and various initiatives to support startups underway, Paris’ startup ecosystem is sure to develop more rapidly than ever. But to spark off that growth, French startups will first need to develop a global mindset!