Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Alex Dewesa partner of 20 VCjust released its long-awaited State of the French tech ecosystem report This is a great follow up to Atomico State of European technology report, with a more granular view on French startups in particular.
As a reminder, the bottom line of Atomico’s report is that European startups raised $45 billion in 2024 compared to $47 billion in 2023. That number decreased by only $2 billion, but it represents a 50% drop + compared to Numbers of 2022.
In France, the general themes are more or less similar. According to Dewez, with 7.1 billion euros in venture funding in 2024, that metric is slightly higher compared to 2023 (6.8 billion euros). However, in 2022, French startups have raised up to 11.8 billion euros.
Of course, data on private companies varies from one source to another. For example, according to EY and as reported by The Echoesventure funding is slightly down in 2024 compared to 2023 (€7.8 billion versus €8.3 billion).
The background is similar. Venture funding is more or less stable year over year, with artificial intelligence representing a larger share of the total amount.
There are two ways to look at it. The pessimistic take would be that if it weren’t for artificial intelligence, we’d be in a startup funding slowdown. AI now represents 27% of the total amount of funding in French startups. AI startups raised 82% more money in 2024 compared to 2023. And non-AI funding is down 11% year over year.
The optimist is that artificial intelligence represents the next big opportunity for startups, more technology financiers who choose to focus on this vertical in particular. It is possible that some AI founders would have started a non-AI startup in a different environment. The tech industry is made up of porous verticals, with many investors taking an opportunistic approach without any specific investment vertical in mind.
As a result of these metrics, France is still the third largest technology ecosystem in Europe, behind the United Kingdom andfront German, France in the technology ecosystem in Europe based on total funding amounts. However, as Germany is a more decentralized country, Paris is the second European city, ahead of Berlin and behind London.
There are now 45 unicorns in France – although some are only unicorns on paper and may not keep this label for long. Three new startups join the group in 2024 – accounting software startup Pennylanebusiness planning platform Pigment and AI-powered software development tool On board the pool.
2024 was also a year of large-scale failures. Some companies that have been in trouble include Ynsect, Cubyn, Masteos, Luko and Cityscoot. The changing macroeconomic landscape has made it more difficult to raise growth rounds without strong financial returns to justify the investment.
In addition to Poolside, other promising AI startups based in France include the foundation model Mistral AIAI-based drug discovery companies Owkin and Achemiaas well as AI applications PhotoRoom and Dust.
Dewez believes there are a handful of late-stage companies that could be ready to go public because they generate more than $300 million in recurring annual revenue, grow 20 to 30% year over year, and are profitable or about to become profitable. Companies that tick all the boxes include Back Market, Dataiku, Doctolib, Qonto and Content Square.
However, as in the UK, France remains a tepid market when it comes to IPOs. Most French technology companies are likely to consider listing their companies in the United States But this seems a difficult task for companies that do not already have customers in the United States (Doctolib and Qonto, for example).
When it comes to exits, while the total number of exits is down by 14% annually, Dewez believes that the total amount of exits has been stable for the last three years, standing around €12 billion.
One last interesting tidbit that might concern the next wave of startup founders, UK funds have been investing at a lower rate in French startups. It will be interesting to see if this trend will have wider implications for the overall health of the French tech ecosystem in the coming years.
