Despite the word itself having French origins, ask most people and chances are entrepreneurship isn’t something they associate with France. Culture, gastronomy, joie de vivre and existentialism certainly, but economic dynamism and entrepreneurial verve? Those are to be found in Silicon Valley, London and Berlin, not Paris and Marseille.
There is much truth to this caricature. Government bureaucracy, rigid labour laws, powerful incumbent lobby groups and a risk-averse attitude to innovation and regulation have frustrated many a French entrepreneur. This is borne out in the numbers, with France ranking poorly – particularly for an advanced economy – in datasets such as the Global Entrepreneurship Monitor (GEM) and the World Bank’s Ease of Doing Business Index. Numerous commentators have seized on this to explain France’s prolonged issues with unemployment, stagnant economic growth and even terrorism and populism.
Look a little more carefully however, and things appear to be changing. Last year, France received more rounds of venture capital funding than any other European country, and came a close second to the UK in terms of value of VC capital raised – quite an achievement given that in previous years it barely came close.
A recent Economist article, cheekily titled “Less misérable“, explored France’s emerging leadership in deep tech startups, encompassing groundbreaking technologies such as artificial intelligence, big data and blockchain. And just this January, Facebook announced the launch of its first ever incubator, Startup Garage, in Paris of all places.
Perhaps France’s much maligned Socialist government can even claim some of the credit. In 2013 it launched an initiative known as La French Tech, to highlight successful French tech entrepreneurs, coordinate their efforts and offer support. So far it has unlocked €200 million in funding for accelerators, developed an accreditation for cities with dynamic startup ecosystems, and even set up a series of French Tech Hubs around the world.
To facilitate access to talent, in 2015 the government introduced a French Tech Ticket allocating visas and incubation to international entrepreneurs, and in January this year it extended the offer to foreign employees and investors via a French Tech Visa. Even the Central Bank is getting in on the act, recently announcing the creation of an Innovation Lab for fintech and blockchain startups.
In many ways, France’s belated entrepreneurial awakening should come as no surprise. As an advanced industrial economy, France possesses the infrastructure, talent and trade links to produce world-beating new companies.
New firms drive innovation and productivity by challenging incumbents; research by Nesta has repeatedly demonstrated that a minority of high-growth firms are responsible for the majority of new jobs. An ability to consistently generate high-growth startups could be the difference between a prosperous France and one on a prolonged and painful descent into irrelevance.
So what direction would a new president take? In advance of the elections the French tech and startup communities have overwhelmingly rallied around Macron. Their rejection of Le Pen is self-explanatory; her promise to pull out of the eurozone and her hostility towards France’s Muslims would create instability antithetical to running a successful business, while her pledge to cut down on trade and migration would deny startups crucial access to international markets and talent.
Establishment candidate Fillon has won the support of big business with his promises to slash taxes and state spending, but he has little to say about the specific needs of France’s entrepreneurs and the future of the digital sector.
Enter Macron. He rejects labels of Left and Right in favour of a programme focused on rebooting France’s ailing economy and future-proofing it for the digital age. Despite justified concerns about his inexperience and ideological ambiguity, his expertise and easy enthusiasm for startups and the digital economy have won him many admirers among France’s entrepreneurial community.
Although hampered during his short stint in government by the left wing of the Socialist Party, Macron did enough to suggest that he is serious about protecting France’s gathering entrepreneurial awakening. He raised the profile of La French Tech, launching a French Tech Hub in London, and led 190 French startups in the largest foreign delegation at the Consumer Electronics Show (CES) in Las Vegas last year.
He pushed through the so-called Loi Macron, which began deregulating France’s rigid labour markets, but was rebuffed by his Party in his attempts to introduce a New Economic Opportunities bill that would have deepened these reforms. So he rehashed some of those ideas for his manifesto, such as reducing the tax burden and extending unemployment insurance to small-scale entrepreneurs.
The three candidates remained true to form in last night’s presidential debate. As Le Pen attacked “ultra-liberalism” and promoted her vapid notion of “economic nationalism”, Fillon emphasised his cool head and business sense.
Macron meanwhile depicted himself as the defender of pragmatism and liberalism – which he attempted to demonstrate with several direct attacks on Marine Le Pen – but was mocked by Fillon for being “not quite on the Right, not quite on the Left”.
Yet in a country so long split along rigid ideological and party lines, a pragmatic outsider might be just what is needed. Could Macron be the one to inject France’s top-down dirigisme with a much-needed shot of bottom-up innovation?