Matt Turck: France, seemingly irrelevant to the technology internet

I know that when we think of the hot land of startups, it's probably not the French nation that jumps out of the mind. Admittedly, some interesting things are happening in the European tech Circle-London, or Berlin (as I wrote in my previous blog), and even Finland.

But France? Ask any American investor or entrepreneur about France, and more or less you'll hear similar comments: taxes are too high; it's almost impossible to dismiss workers; too much government intervention; language as a barrier; fear of failure; all kinds of strikes; that law requires 35 hours of work a week. 6 after the reply work mail is an illegal exotic country ...

But in France's tech start-ups, things are moving in the right direction, especially over the last two or three years. Recently, as a representative of the American Venture and media community, I was invited to Paris, France, and was fortunate enough to meet with local entrepreneurs, VCs and President Hollande and other senior government officials.

As a Frenchman who spent most of his career in the United States, my attitude may be more biased than most to criticize France's shortcomings. But this trip gave me a strong interest in the great potential of the current French science and technology start-up circle.

For anyone concerned about the French start-up ecosystem, an obvious conclusion is that there is a big gap between what we see on the surface (perception) and what actually happens (reality). While all aspects of the ecosystem have evolved enormously-more interesting startups, more investment, more talent pouring into the field, better legal support, and so on-but what we are talking about is not following these changes.

Narrowing the gap in people's understanding will take time – reversing a negative reputation takes a long time, even if there are no other factors. But you can't really blame others for the lack of understanding and even confusion about the state of France's own approach to innovation and business success.

Even with the emergence of a large number of talented technology entrepreneurs, most French people are ambivalent about pursuing business success and creating personal wealth. French entrepreneurs are getting commercial success, but they often show dissatisfaction with themselves and their country. The current French government signals a "fight" (or a 180-degree turn, depending on the angle of view).

Rooted in the left wing platform, the initial signal released by the government was against business-including the doomed attempt to raise capital gains tax and clumsy meddling in Yahoo's takeover of Dailymotion, a rival for YouTube in France.

Now the government has launched an attractive offensive against French and foreign start-ups, named La French Tech, which was first launched by the then-Pellerin, the digital economy, and handed over to its successor, Axel Le Meille, after April 2014. The two of them are both capable and able to keep abreast of the younger generation of entrepreneurs. All of these things are exciting, and I believe time will tell whether that means a big change in the long-term attitude of the government.

Here I offer some personal insights--not a comprehensive summary of all the things that are happening in France, and not all the people and companies that are worth mentioning--this is just some of my personal notes.

Talent is the most important asset in French science and technology. France has a number of outstanding engineering schools, over the past few generations accumulated and the emergence of a large number of outstanding technical personnel. A notable change in recent years has been that many of these schools have chosen to work for startups (or to start their own businesses) rather than to big companies such as Bain, Goldman Sachs, total, etc. Many of these schools have launched their own incubators, and some seem to be working well. And the new generation of graduates of English than their predecessors much better.

Outside of the French education system, it is particularly worth mentioning Ecole 42, an innovative it online education school. It was created by the French billionaire Zeville Nier donated 100 million of dollars, Xavier himself is France's most successful technology entrepreneur. As far as I know, their model is unique: Anyone with educational background can apply, even without a high school degree.

After the initial online logic test, applicants need to undergo one months to receive the selection test, including 15 hours a day, 7 days a week of intensive learning. Those who pass the selection will receive courses that are entirely based on the team project, and only through the student-peer review (peer review) to evaluate the results. In addition, it is free. It is said that the quality of the students in the first class is excellent.

Large data and networking equipment. French start-ups tend to be "original" and replicate fewer American companies that have been successful. Vente Privee, for example, was the first to do a flash-buy, a model that was subsequently introduced into the United States. Large and small startups are distributed in many industries, such as E-commerce (showroomprive), Video (Dailymotion) and music (Deezer, edjing).

For reasons of personal interest, I am excited to see French startups get good grades in big data and data, math-driven areas (such as criteo,talend,scality,qunb,pricematch, etc.). France is also particularly innovative in networking equipment and hardware (such as Parrot,withings,netatmo,sigfox,sense,aldebaran, etc.). ）

Startups have bigger dreams: a common complaint among American investors about France (or European countries) is that, relatively speaking, start-ups in these countries are less ambitious. In an environment where financing is limited, many startups focus on achieving profitability rather than scaling up.

In retrospect, at least in the early stages of entrepreneurship, French companies are more focused on the domestic market. This is not to say that this is not a good strategy: the French market is large enough (65 million people), and some of the successful large technology companies are also focused on the domestic market-the Zeville Nier created by the 17 billion dollar ISP and mobile communications company Iliad) is an example.

But such companies are not sought by American investors, who operate by looking for companies that have a high rate of growth and have the potential to reach a value of 1 billion dollars and then exit. Such startups are often able to capture huge markets quickly.

This seems to be changing, too, as a new generation of French entrepreneurs seems to be more systematic about internationalization and starts early in the business. To be sure, French start-ups have been successful in international markets (Business Objects,ilog,kelkoo, etc.).

But now a growing number of startups with a strong international trend are--criteo (last year on Nasdaq) with 80% of revenues coming from international markets. BlaBla car, a carpool company that is in a fast-expanding period, has entered 12 countries. In private conversations with French entrepreneurs, they clearly showed an ambition to enter the international market as soon as possible.

more VCs: Although there is still a long way to go with the United States, French startups seem to have a lot more options than ever before:

Seed financing: Compared to other European countries, it appears that the seed fund is more than angel investors (individual angels): such as the names often mentioned in the talks--elaia, Alven and Isai.
Early investment (Early stage financing): The main participants are Partech, Idinvest and Iris.

Growth Finance (substituting financing): there seems to be some gaps, partly funded by London's funds (mainly Accel and index).

The national investment Bank of France (BPI France) is a very important role in the entire ecosystem (though somewhat peculiar by American standards). At the end of 2012, a combination of many state-owned entities, the French national investment Bank contains a VC fund (including 5 different funds), a risk-lending provider, and a fund investment Fund (Fund of Fund, including 56 partner funds).

A more relaxed regulatory environment, this topic is worth writing a separate blog, which lists some of the key points discussed during the most recent trip to France.

Startups can have the right to dismiss employees for the first 8 months of hiring.

More than 8 months later, France's labor law was amended in 2008 to dismiss employees in many scenarios – including changes in employment requirements or labour standards due to economic reasons – although not as lax as in the United States, the actual operation is not a particularly big problem.

The 35-hour work week, which was passed by law in 2000, has been largely ineffective in 2004, as amended.

The rule of no mail after 6 o'clock in the afternoon never existed, it was due to improper translation (The Economist here has a more detailed description)

Welcome to law--the rise of the American start-up company

Whether you call it a brain drain or a global partnership, you can't ignore the recent influx of French tech entrepreneurs into the United States. Admittedly, some French entrepreneurs in the United States are already famous, among them more famous: Bernard Leotold (Business Objects), Jeff Claville (Softtech), Loic le Meur (le Web), Fabrice Grinda ( OLX), Tariq Krim (Netvibes, now Jolicloud), Hubert tieblot (Curse), and Renaud Laplanche (lending Club). Now, however, the influx has been so fast that it is quite different from the past.

French-American startups look like there are three different forms:

Start-up companies funded by the French in the United States, such as the Lending Club (San Francisco), Wit.ai (California Paroo), Datadog (New York), Placemeter (New York) and so on. These companies have no special relationship with France other than the founders of the French.

The French start-ups in France were then transferred to the United States in the early stages of development, some even in France by the cultivation of local incubators (such as Le campaing), and then by the United States to receive the cultivation of native incubators such as TechStars: Some examples such as Sketchfab, Infinit,doctrackr. Dashlane Company (my company Firstmark was an early investor) is another obvious example. The development teams of these companies are usually in France, and half of the management teams are in the United States.

Founded in France by the French start-up companies, after a certain size in the United States to seek further development: such as Novapost,synthesio,criteo ...

While it is not easy to simply classify this trend as another Israeli model (with many nuances), this dual structure (developed in France, where business operates in the United States) looks pretty good.

A new generation of transatlantic start-ups should be praised and encouraged. From a Frenchman's point of view and in the short term, the model is imperfect: Many of these companies will be transformed by legal French companies into American companies registered in Delaware, and some entrepreneurs will become rich but not taxed in France.

But in the long run, the benefits are huge-most of these French entrepreneurs will return to France, bringing deep entrepreneurial experience back home, along with international contacts and financing channels, will help them become early investors in French start-ups, creating jobs for more Frenchmen.

The key is to think of the French science circle as a global ecosystem, not just within France. Many of the great successes of the French tech industry will happen in the US and Asia.

New York is the French science and technology circle of the ideal second home, while Silicon Valley remains the unquestioned center of Science and Technology, New York offers a clear advantage to French entrepreneurs who want to build international business – shorter flying miles, smaller jet lag, somewhat smaller cultural differences, and a younger, The technological ecosystem of desire is more likely to provide a chance for future visitors to become famous.

So, to my surprise, when I talk to the founders in Paris, they think of New York, not Silicon Valley.

New York is emerging as a powerful French technology start-up community, Fabrice Sergent (cellfish), Mathieu Nouzareth (freshplanet), Morgan Hermand-waiche (Adore Me), Olivier Pomel and Alexis lê-quôc (Datadog), Alexandre Douzet (The Ladders), Gaspard de Dreuzy (Kapitall, Pager), Christophe Garnier (Mommycoach) and many other examples.

Some of the key figures in the New York tech circle are deeply connected or interested in France, such as Kevin Ryan (Gilt, MongoDB, Business Insider, Zola) and Ed Zimmerman (Lowenstein Sandler). The community is developing well. The French Consulate in New York (led by the new Bertrand Lortholary) is actively promoting the French entrepreneurial community. Just this week, a new Congress (La French Touch Conference) is convened and may become a new and important focus.

What do you need to do next? Creating a technology ecosystem requires the efforts of several generations of start-ups. Startups need to go through start-up, financing, growth, and investor withdrawal. Entrepreneurs and early employees need to bring their experience and money back into the next generation of startups through angel investment. The high rewards of a successful exit inspire a new generation of entrepreneurs and VCs.

So France, like other emerging technology circles, needs more successful exits. Yet France has the same secret weapon--Zeville Nier--who has invested 200 million euros to turn a railway station into an incubator for 1000 start-ups.

This may be the last push that the Paris business circle needs to reach the tipping point--for us VCs, in their travels through the European Technology Center, this alone should give them enough reason to make Paris a must-see place.