France secures €5B investment to build tech scaleups
France announces €5bn push for tech start-ups Institutional investors to provide growth capital to help create more unicorns.
In an effort to increase the number of national unicorns and make France a leading ecosystem in Europe, the government secured €5B from insurance companies and institutional investors to be invested on growth companies over 3 years.
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President Emmanuel Macron announced earlier in October, that France has drummed up €5bn of capital from institutional investors to pour into tech companies over the next three years, as the country tries to grow more billion-euro start-ups.
France has tapped asset managers and insurers including Axa, Natixis, Aviva and Allianz, and is courting international investors, to help address one of the main obstacles to the development of its tech ecosystem: a lack of sufficient growth capital to help start-ups expand into multibillion-euro companies.
Speaking ahead of France Digitale Day, Mr Macron said in a speech on Tuesday evening at the Elysée Palace that €2bn will be invested in France-based venture capital funds focusing on late-stage investments. The other €3bn has been pledged to global tech funds that invest in listed companies and are managed by France-based asset managers. The country is seeking to encourage global investors to set up teams in Paris in order to do this.
“Our desire is to make France the leading ecosystem in Europe,”
said Cédric O, France’s minister for the digital economy, in an interview.
“We want to create many more unicorns [start-ups with a value of more than €1bn] in the next few years. Today there are seven and we are targeting 25 unicorns by 2025 and companies that are worth €5bn, €10bn, €15bn.”
The amount raised by French start-ups from investors has doubled from €1.8bn in 2015 to €3.6bn last year and is on track to exceed €5bn this year, according to CB Insights. This puts it ahead of Germany but behind the UK. France’s public investment bank Bpifrance has played an important role over the past few years in providing finance. Now the government is turning to the private sector and has mobilised French institutional investors, who are typically underinvested in venture capital. It also wants to encourage VCs to raise late-stage funds and incentivise asset managers to open teams in Paris specialised in listed technology stocks. The announcement follows other measures by Mr Macron’s administration to boost innovation and investment in the country, including tax cuts and a special fast-track French visa to make it easier for foreigners to work there.
“The French government seems to have understood that you can’t just fund start-ups,”
said Walid Khiara, a managing director at Rothschild & Co. in Palo Alto.
“Capital is needed across every part of the spectrum and this latest push should help ensure the next stage of growth for successful start-ups, and secondly provide more opportunities to give investors an exit.”