Alex Dewespartner at 20VCIt came out as much as I expected. The state of the French tech ecosystem Report. This is a great sequel to Atomico. State of European Technology A report with a more detailed look at French startups in particular
As a reminder, the core of Atomico's report is that European startups are expected to generate $45 billion in 2024 and $47 billion in 2023, which is only a $2 billion drop, but that represents a 50%+ drop in comparison. 2022 numbers.
In France, The main themes are more or less the same. According to Dewez, with 7.1 billion euros in venture funding in 2024, the metric is slightly up compared to 2023 (6.8 billion euros). However, by 2022, French startups have raised 11.8 billion euros.
Of course, Information on private companies varies from source to source. For example, according to a report with EY. EchoesVenture funding is slightly lower in 2024 compared to 2023 (€7.8 billion versus €8.3 billion).
The bottom line is the same. Artificial intelligence represents a large portion of the total volume, and venture funding is more or less year-on-year.
There are two ways to view. The downside is that if not for artificial intelligence. We will be in a startup funding slowdown. AI now represents 27% of the total funding volume in large French businesses. AI startups will increase revenues by 82% compared to 2024. Non-AI funding is down 11% year over year.
Optimism is artificial intelligence. represented. The next big opportunity for startups is; More tech financiers are choosing to focus on this vertical in particular. Some AI founders are likely to start a non-AI startup in a different environment. The technology industry is made up of small verticals, and many investors adopt a less opportunistic approach without a specific investment vertical.
As a result of these metrics, France is the third largest tech ecosystem in Europe, behind the UK and Germany, based on total funding volume. But because Germany is a more decentralized country, Paris is the second European city behind Berlin and London.
There are now 45 unicorns in France. Some are just unicorns on paper and don't keep that label for long. The accounting software startup has 3 new entrants to the team in 2024. PennylaneBusiness planning platform Paint color and an AI-powered software dev tool By the pool.
2024 is also the year of massive bankruptcies. Some companies are Ynsect, Cubyn, Masteos, Luko and Cityscoot. The changing macroeconomic landscape makes it more difficult to boost growth without strong financial performance to justify the investment.
Besides Poolside, other potential AI startups based in France include foundation model maker. Mistral AIAI-based drug discovery companies; Owkin versus Aqemiaas well as AI applications Photo booth versus Dirt.
Dewez believes there are a handful of late-stage companies ready to go public because they generate more than $300 million in annual recurring revenue, grow 20 to 30% year-over-year, and are profitable or profitable. Companies that tick all those boxes include Back Market; Dataiku, Doctolib, This includes Qonto and Content Square.
However, As in the UK, France remains a relatively stable market when it comes to IPOs. Most French tech companies would probably consider listing their companies in the US, but this is a difficult task for companies that don't have clients in the US (eg Doctolib and Qonto).
When it comes to exits, While total output was down 14% year-over-year. Dewez believes total outflows have remained stable over the past three years, at around €12 billion.
One last interesting tidbit of concern for next-stage startup founders is that UK funds are rapidly investing in French startups. It will be interesting to see what broader implications this trend has for the overall health of French tech ecosystems in the coming years.
