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Invest in France – 1/2

Emmanuel Delaveau - Partech - Invest in France

Why should a large IT company decide to invest in France? This is a question that Emmanuel Delaveau, General Partner at Partech, a venture capital company based in Paris, Silicon Valley and Berlin, addressed in a recent presentation. In his view, France is a country of choice for innovation and investment for at least four reasons.


I/ Introducing Partech

Partech is a transatlantic Venture Capital (VC) company born in the US in the early 1980s. With offices in Paris, Silicon Valley and Berlin, Partech has a unique access to some of the world’s most active innovation hubs. Approx. 5,000 startups are reviewed by the team every year. With now more than 120 investments spread over 15 countries, Partech invests:

  • 1/3 of its funds in the US
  • 2/3 of its funds across Europe

Why is Partech investing a significant part of its resources to financing innovation in France?

II/ Invest in capital efficiency

France offers superior capital efficiency for at least two reasons:

A/ IT wages are mid cost

First of all, despite what most people think, the cost of IT talent in France is lower than in most of the other large tech hubs including Silicon Valley, London and Berlin. This is particularly true for junior positions. For senior positions, IT talent in France remains competitive relative to Silicon Valley costs. This data is useful because it debunks a myth according to which wages in France are inordinately high.


B/ Superior productivity

The second reason why the French economy offers superior capital efficiency has to do with productivity. French workers tend to be much more productive than their European and American counterparts. This is partly due to the fact that the French education system is one of the most highly selective in the world. Some of the best management schools in Europe, according to the Financial Times, are French. A number of French engineering schools have acquired a worldwide reputation. A number of coding schools including the Ecole 42 have met with so much success in Paris that they are opening offices in Silicon Valley.

Similarly, Nature has published a new ranking based on the productivity of scientific schools and the number of Nobel prizes per undergraduate student. L’Ecole Normale Supérieure, based in Paris, outperforms any other school in the world.


III/ Invest in the booming French innovation ecosystem

The second reason why IT companies should choose France over any other European country for investment has to do with its booming innovation ecosystem.

France hosts two to three times more active early stage funds than the UK or Germany. In the first half of 2016, France has been the most active country in Europe by the number of startups financed, before the UK, Israel and Germany; and the second most active country by the total amount of venture capital funding received, behind the UK. Most French startups are getting series A funding which remain small amounts compared to series B and C. In contrast, startups from the UK tend to be more mature: they are now seeking series B and series C funding.

Hence, the French startup ecosystem is still under the radar from a total investment amount standpoint, but will massively increase as the series A startups mature to later rounds of financing.

Broadly speaking, France is changing extremely rapidly. Only a few months ago, Paris opened up the largest startup incubator in Europe called The Cargo (“Le Cargo”). And a few months from now, in early 2017, Paris will host the world’s largest startup incubator, called Station F. Backed by Xavier Niel, a prominent French internet entrepreneur, as well as the mayor of Paris, station F may nurture the world’s next generation of leading startups.

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