France hits startup funding target – but the bar has already been raised – POLITICO

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President Emmanuel Macron scored a tech victory on Monday as French startups hit a funding goal three years ahead of schedule. The problem? The celebration comes as expectations for startups are already outpacing this progress.

In September 2019, Macron set a goal of having 25 French “unicorns” — a term frequently used by investors to describe a private company valued at $1 billion or more — by 2025. At the time , France had only four. The benchmark was hit on Monday when warehouse robotics company Exotec, based near the northern city of Roubaix, raised $335 million in funding, taking the company’s valuation to almost 2 billions of dollars.

The news was welcomed not only by Macron himself, but also by the Secretary of State for the digital transition of the country Cedric O and startups like French Tech.

On the one hand, reaching the funding goal three years early is a boost for a country that over the past decade has failed to produce a well-known brand with a valuation of dozens of dollars. billions of dollars, like the Swedish Spotify. The news also comes at a good time for France, at the start of its presidency of the European Council and as European leaders stress the importance of digital sovereignty. The French presidential election is also looming in April.

On the other hand, startup funding surged globally in the past year, so France isn’t necessarily a leader today despite hitting its funding target.

In Europe, for example, funding raised by French startups still lags behind that of the UK and Germany, according to figures from data provider Dealroom. UK startups nabbed nearly $40 billion in 2021, while German tech companies accounted for nearly $20 billion – both more than doubling their 2020 figures. French startups raised nearly $13 billions of dollars.

This abundance of capital raises the question of whether it still makes sense to count unicorns as they are currently defined.

For some, the answer is no. “I think we should be talking about decacorns now,” French tech billionaire and startup investor Xavier Niel said in November, referring to companies valued at $10 billion or more. (France has no decacorns – yet.) For his part, Macron acknowledged last year that Europe should think bigger – with a new plan to favor 10 European tech giants valued at 100. billion dollars by 2030.

Others, like Greens presidential candidate Yannick Jadot, aim for broader, less tangible goals than funding figures. “My goal is not just to count unicorns, but to achieve a long-term strategy,” Jadot said earlier this week.

Even France Digitale, the startup support organization, warns that startups should not become too complacent and should keep an open mind about their next steps.

“It is very difficult to say that it is only linked to the decisions taken by the last government,” Maya Noël, director general of France Digitale, told POLITICO. “There are a lot of things that have happened today, that are happening thanks to what we decided maybe 10 years ago.” She stressed that this government was “positive” for the ecosystem, but also that the COVID-19 pandemic has contributed to the rapid digitization of large parts of society.

Players in the startup scene need to be educated about their options, such as going public through an initial public offering, Noël pointed out. “We need to make startups aware that an IPO can be an option. It’s not an exit option – it’s just another way to raise money.”

Some are already moving in this direction, such as the cloud provider OVH Cloud, which entered the Paris Stock Exchange in October.

It also remains to be seen whether these next steps will still be based in Europe. Exotec was supported in this round by a subsidiary of the American investment bank Goldman Sachs, as pointed out by Frédéric Filloux, the author of Monday Note, an influential newsletter for startups.

“This fine company is majority controlled by [the U.S.] and [the U.K.]”Filoux tweeted Monday.

Elisa Braun contributed reporting.

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