The Current State of the French Tech Ecosystem: An In-Depth Look
In the latest update on the French tech landscape, Alex Dewez from 20VC has released a comprehensive report titled “State of the French Tech Ecosystem.” This serves as a detailed companion to Atomico’s broader “State of European Tech” report, shedding light on the nuanced progress within French startups. Atomico highlighted that European startups garnered $45 billion in 2024, a slight decrease from $47 billion in 2023. While this may seem minor, it’s part of a more significant downturn since 2022.
Venture Funding Trends in France
In France, similar patterns emerge. Dewez points out that French startups attracted €7.1 billion in venture funding in 2024, a modest rise from €6.8 billion in 2023. However, these figures pale in comparison to the €11.8 billion raised in 2022. Notably, data discrepancies exist; for example, EY reported a slight decline from €8.3 billion in 2023 to €7.8 billion in 2024, as noted by Les Échos.
“The overall venture funding scenario remains relatively stable with artificial intelligence taking a larger share of the pie,” according to Dewez.
{Alex Dewez, Partner at 20VC}
The Rise of Artificial Intelligence
The report underscores AI’s growing significance within the French tech ecosystem. AI now accounts for 27% of total funding, with investments surging by 82% from 2023 to 2024. Conversely, non-AI funding experienced an 11% decline year-over-year.
- Pessimists might argue that without AI, the startup funding environment would be stagnating.
- Optimists suggest AI signifies a burgeoning opportunity, drawing more tech investors towards this promising vertical.
This trend indicates an opportunistic investment approach across different tech sectors, with investors adapting to emerging opportunities rather than fixed verticals.
France’s Position Within Europe
Despite these shifts, France remains Europe’s third-largest tech ecosystem after the UK and Germany based on total funding amounts. Paris stands as the second most prominent city after London and ahead of Berlin due to Germany’s decentralized nature.
Emerging Unicorns and Notable Startups
As of now, France boasts 45 unicorns, although some might lose their status if unable to sustain growth. In 2024 alone, three startups—Pennylane (accounting software), Pigment (business planning platform), and Poolside (AI-powered software dev tool)—joined this prestigious list.
However, it’s been a challenging year for some with notable bankruptcies like Ynsect and Cubyn amidst an evolving macroeconomic environment demanding strong financial performance for growth investments.
The Future of French Tech: IPOs and Exits
Dewez identifies several late-stage companies ripe for IPOs based on their robust revenue profiles and profitability potential. These include Back Market, Dataiku, Doctolib, Qonto, and Content Square. Yet, France remains a lukewarm market for IPOs; many companies are likely to look at U.S. listings despite the challenges posed by lacking an American customer base.
Total exits have decreased by 14%, yet exit values remain steady at around €12 billion annually over the past three years.
The Implications of Cross-Border Investments
An intriguing aspect is the reduced pace of UK funds investing in French startups—a trend worth monitoring for its long-term impact on the health of France’s tech ecosystem.
