France: A Hub for Deep Tech?
A disruptive form of innovation aimed at improving the world around us, deep tech has become a major strategic issue for France, which is working to catch up. Deep tech has become the leading investment sector in Europe, and France, aware of its academic and entrepreneurial strengths, is seeking to play an active role in this global dynamic.
A country with considerable strengths
For 61% of investors, France ranks among the top five destinations for investing in deep tech. The country offers significant competitive advantages for investors from around the world. France has many strengths that allow entrepreneurs seeking to have a positive impact on the world to thrive.
Internationally recognised scientific research
France has a very high-quality academic and scientific research ecosystem, ranking seventh worldwide. The country has a highly developed and high-performing university network, with world-class institutions whose research quality is widely recognised. The CNRS (French National Centre for Scientific Research) and Inria (French National Institute for Research in Digital Science and Technology) are perfect examples of the strength and dynamism of French research.
However, high-quality research alone is often not enough to develop impact entrepreneurship. The next step is to encourage young graduates to take the leap. After completing an academic career, it is still relatively uncommon to put that knowledge into practice by launching a deep-tech venture. Most graduates pursue careers in pure research, but more and more universities are developing entrepreneurship programmes or creating incubators to help young students launch their own projects.
The goal is to build bridges between the worlds of research and entrepreneurship and encourage young talent to take the plunge. The French PACTE Law of May 22, 2019, is part of this effort, notably through the creation of researcher-entrepreneur status designed to encourage young people to innovate and approach entrepreneurship differently.
Universities are also playing their part, with programmes increasingly focused on entrepreneurship to help future graduates consider this path, as well as the development of incubators within universities themselves.
These organisations allow students to launch projects while they are still studying. One example is the PC’up incubator at ESPCI Paris (École Supérieure de Physique et de Chimie Industrielles de la Ville de Paris), which hosts around twenty start-ups within the prestigious Parisian institution.
There is a genuine desire among those running these programmes to build links between start-ups and students, with start-ups offering jobs or internships to students in order to familiarise them with the world of entrepreneurship.
An ecosystem that supports the development of deep-tech start-ups
Universities, incubators, SATT technology transfer acceleration companies... France has an entire network of organisations dedicated to supporting start-up development, and those specialising in deep tech continue to grow.
Incubators located throughout the country provide support from the moment a company is created. They help train, guide and support entrepreneurs in order to make their entry into the market easier.
This stage is particularly important for deep-tech start-ups, where research and development processes are often very long. That year, the French government invested nearly €150 million to support the creation of these incubators. The objective is to build an ecosystem of organisations and structures capable of helping start-ups grow.
This network includes incubators, of course, but also SATT organisations, which help facilitate knowledge transfer between the world of research and entrepreneurship.
Partnerships have therefore been developed between Bpifrance and regional SATT organisations in order to make technology transfer between public research and young deep-tech companies easier.
Funding remains complex
Whereas low-tech start-ups can often bring products to market relatively quickly, a deep-tech start-up may need between five and fifteen years before reaching the market.
This creates a major difference when it comes to funding, as investors who prefer rapid returns on investment tend to be more reluctant to invest in deep-tech start-ups.
In January 2019, Bpifrance announced its ambition to make France “a benchmark for disruptive innovation”. This commitment resulted in funding being tripled, reaching €1.3 billion over the 2019–2023 period.
While public funding appears to be available, private funding has had greater difficulty developing in France. Because deep-tech ventures have longer development phases and very specific timelines, investors are often more cautious about investing in the sector.
As a result, French deep tech continues to be financed primarily through public funding, which accounts for 45% of total financing, compared with 26% in the United States and 35% worldwide.
Funding remains one of the final challenges France must overcome in order to catch up with its American, Asian and British competitors.
French investment funds do not always have sufficient resources to finance rapidly expanding French deep-tech companies. As a result, start-ups such as Dreem and Dynacure have had to turn to foreign investors, respectively from the United States and Israel.
However, the situation is far from hopeless for France. On the contrary, everything appears to be moving in the right direction to help these funds grow and strengthen French investment capacity.
France has major strengths that could allow it to become a pioneer in global deep tech. The quality of both its private and public research provides fertile ground for the development of disruptive technologies.
Emmanuel Macron set the tone in September 2019 by announcing plans to invest €5 billion to support promising French companies.
Since then, an entire ecosystem of players has developed across France to facilitate the emergence and growth of these start-ups, whose objective is to create disruptive innovation and help bring France into the world of tomorrow.
