France's digital minister: There's 'increased interest' in France from British fintech startups after Brexit
Lemaire is in Las Vegas this week for CES, and she spoke last year at TechCrunch Disrupt London. Her appearance in London was especially interesting as a number of startups are considering moving out of the UK after the result of the EU referendum.
The tech world overwhelmingly supported remaining in the EU. One poll found that 87% of respondents who work in tech wanted to remain.
Business Insider interviewed Lemaire about the outcome of the EU referendum, and why she feels that France is the perfect place for technology companies.
This interview has been lightly edited for clarity.
Business Insider: How many British startups have made enquiries about moving to France?
Axelle Lemaire: Many companies have already been in touch although I think many more will come in the forthcoming months when the timetable for Brexit becomes clearer.
In any case, whether they plan to leave now or have yet to decide, I've noticed an increased interest in the French ecosystem from British fintech companies. Whatever happens with Brexit, many startups find and continue to find France an attractive place to do business. If and when the UK leaves the single market, British startups will want to keep open access to the EU market: They will either leave the UK or at least develop their activities on both sides of the channel.
Altogether, what strikes me is the renewed interest that international investors show for France, partly but not only linked to the uncertainties created by Brexit. While investments in British startups plummeted in 2016, amounts invested in French tech have soared, increasing by 71% in January through September in 2016. In the third quarter of 2016 alone, funding obtained by French startups reached €857 million (£729 million), double the amount invested in Germany and almost equaling the €919 million (£781 million) invested in the UK.
This attention surrounding French tech is not trivial. We're now harvesting the fruit of our longterm efforts to create a business-friendly framework and to promote worldwide the quality and versatility of our startup ecosystems, especially with "La French tech" initiative.
BI: Is France changing any of its regulations around hiring and firing to make it easier for startups to exist?
AL: In the last years this government has been implementing many regulatory reforms to promote a business-friendly environment. New labour laws and fiscal regulations have significantly lowered the burden on businesses. In the 2017 budget, we've cut taxes for companies who employ staff in France, cut taxes on shares distributed by startups to their employees, and enabled business angels to make tax-free investments in French startups.
Our labour law reform, six months ago, gives more flexibility and legal security to firms while creating a new framework for a more effective and constructive relationship between work unions and companies' management. In particular, the new law generalises the primacy of firms' agreements over branch agreements. It also makes redundancies for economic reasons more straightforward.
BI: What does the French government view as its strengths and weaknesses in the tech scene compared to Germany?
AL: I am not very keen on these comparisons which I find counter-intuitive as ecosystems in the larger European countries like Germany and France are increasingly interconnected. EU tech companies face massive global competitors from Silicon Valley and China. Our goal should be to create real European champions and not to focus on a narrow competition between European states. I strongly believe the European Union can help a lot there by promoting a homogeneous and startup-friendly framework that could help European digital champions to become truly global.
BI: Many French VCs that I've talked to are conscious of previous decisions by the French government which were seen as being harmful to businesses (such as the Dailymotion saga). What would you say to entrepreneurs who have seen previous work by the French government and are worried about coming to the country?
AL: Have you heard of retinal persistence? Our eyes continue to see for a few nanoseconds an image that is not there anymore, which helps the brain to make sense of the flow of information it catches. Maybe that's what's happening to some entrepreneurs and VCs who have not yet grasped all the essential changes that have been happening in the French environment, and are seeing it as it used to be rather than as it is now!
I really think entrepreneurs stuck in the past should keep up with the times or they might miss great opportunities. By the way, I'm not alone in this view. Take John Chambers from Cisco for instance, who decided to double his investment in France this year, saying "France is the next big thing…"
BI: Station F is obviously a big boost for the French tech scene. How much participation is the French government having there?
AL: Station F will be the biggest startup incubator in the world with 30,000 square meters of space and will host no fewer than 1,000 startups. This private project is led by our successful entrepreneur Xavier Niel. It symbolises the maturity of our ecosystems and the will of our entrepreneurs to reinvest to support the ecosystem. It has full support from the French government. Our national deposit and consignment fund will have a minority shareholding in it.
AL: Startups think globally so as minister for digital affairs and innovation I do so to and strive to show the entire world how strong French tech is. That's why I try to attend major events like TechCrunch Disrupt London or CES. But be assured I still spend most of my time working directly with the French innovative ecosystems in Paris and in our 13 French tech metropoles.
AL: I'm glad you asked this question. This is a very important issue to me. Since the start, we've conceived French tech as a network of versatile local ecosystems spread all around the country, rather than a Paris-only business. One of the first programs I launched was to support 13 French tech metropoles, which included cities with robust local innovative ecosystems throughout the country like Montpellier, Bordeaux, Grenoble, and Lille. Startups from all of these 13 "Métropoles" will actually attend CES this year. We want our entrepreneurs to know that they can create a startup and make it grow in the place where they come from.
BI: France has traditionally been seen as a hub for media companies and video games, but something that it isn't known for as much is fintech. How is France suited to fintech companies?
AL: France is very well-positioned in the fintech market for several reasons. First, the size of the payment market, with around 65 million payment cards circulating in France. Second, some historical players in this field, like Gemalto or Ingenico, were founded in France. Third, our engineers are arguably the best in the world, a key point for this sector, particularly hungry for talents and technical competences. This is one of the reasons why blockchain technology is developing so rapidly in France with numerous applications, chiefly in the financial field.
A fourth key support mechanism for French fintech is smart regulation. A series of new laws have boosted the development of fintech in France. For instance, my government has allowed transactions of non-listed securities to rely on blockchain technology; the Digital Republic law that I led through Parliament set a threshold under which no authorisation is needed from the regulators to start a business in this field.
Last but not least, our regulatory authorities are well-known for being very meticulous, which results in quality authorisations that are valued everywhere in Europe. And they have set up a one-stop shop, which streamlines and speeds up authorisation procedures for those who want to settle in France, whether it is due or not to Brexit.
All this context enables fintech innovators to thrive in this ecosystem and to rapidly scale to a critical size.
BI: You've said multiple times that you don't need to pay for buses with adverts in London (or anywhere else). You may not need that now, but would you consider that in the future if you felt your current outreach wasn't having the impact you want?
AL: I have no reason to think this kind of communications trick will be necessary to shed light on the quality of the French innovative environment. As minister for digital affairs, I've been meeting lots of entrepreneurs and investors around the world. When it comes to where to put their money, they don't rely on promotion but on facts. Is the fiscal and social environment business-friendly? Is the ecosystem dynamic and mature? Is it easy to find staff with excellent skills there? Just consider the latest investment rates in France, you'll see we've been quite convincing … without having to resort to renting any buses.
BI: France has traditionally been seen as risk-averse in its approach to business. Is that changing now, do you think?
AL: Yes, it has really changed. I see it every day. According to a recent study, one in every three French people under 30 would like to create a startup within the next two years, and 52% of French people believe that startups can save the economy. More and more new graduates want to create a startup rather than work for a big firm. We were a country of engineers and we are becoming a country of entrepreneurs. I believe that La French Tech initiative played a great role in this cultural revolution.
BI: Is it correct that coding isn't currently on the curriculum in France, but is an optional course in schools at a certain age? Isn't that a barrier towards creating a new generation of tech works? How is the French school system geared towards technology?
AL: Things are changing fast as far as education is concerned. Now all French kids in all schools are taught to read, count, write, and code. The ministry for education launched a digital plan which is promoting the use of digital tools by both children and teachers from primary school to high school. It will still take time to bring the education community up to speed with the digital challenges but the journey has started for good.
In order to develop digital skills and fill the needs of our companies, we also created in 2016 the "Grande Ecole du Numérique" - one could translate it as the great digital college - which is a network of 255 labelled digital courses throughout France, open to everyone. Roughly 10,000 people fully trained in web development, graphic design etc. will have completed one of these courses by 2017.