Stay up to this point with free updates
Simply log in European corporations myFT Digest – delivered straight to your inbox.
In contrast to the dour mood that permeates much of France lately, there may be optimism and ambition on the cavernous Station F incubator in Paris. Since opening in 2017, the world's largest startup campus has nurtured 7,000 corporations, including two unicorns: AI company Hugging Face, now based within the US, and health insurer Alan.
Speak to the AI company founders at Station F and it's hard to withstand their enthusiasm for the potential of the technology and the appeal of France as a spot to start out a business. From the incubator 40 strongest startups34 have AI on the core of their business. The rapid rise of Mistral, the Paris-based AI start-up now valued at $6 billion and which has developed some of the impressive startup models on the earth, also gives them plenty to rejoice.
“Europe can create competitive AI models today,” Xavier Niel, the French investor in Station F and Mistral, recently told the FT. “I consider that with just a few hundred million euros we will achieve great things.”
Lots of things are going well in France's start-up world. The country's education system trains an limitless chain of talented engineers. Paris is competing with London to turn into Europe's top AI hotspot. French business culture has modified during the last 20 years and it has turn into acceptable, even fashionable, to turn into an entrepreneur. Venture capital is more available than ever before. Despite its problems elsewhere, President Emmanuel Macron has been an energetic champion of the sector.
Unlike most large U.S. AI corporations, French AI startups favor open-source models that encourage greater collaboration and broader access to the technology. They hope it will give them a competitive advantage in applying AI in just about all sectors of the economy.
But the query stays: Can France's dynamic tech sector overcome the political chaos and economic uncertainty plaguing the remaining of the country?
The young start-up founders of Station F have little doubt. Historically, French entrepreneurs have been way more successful at constructing businesses within the US than in France itself, but that’s now changing, says Thomas Le Corre, CEO of edtech startup Rakoono. He studied on the HEC Business School in Paris and the University of California, Berkeley. “I firmly consider in European technology,” he says.
“The country’s extensive technical capabilities are perfectly aligned with the AI industry, making France an awesome location to construct a technology company,” adds Joel Belafa, managing director of Biolevate, an AI-powered therapeutic research company. “France has long been constructing a culture of engineering,” he says. He estimates that similarly qualified engineers could cost five to eight times as much within the red-hot U.S. market.
Still, momentum in France's tech sector slowed last yr, partly on account of political unrest following the controversial general election. Data from Siftedthe FT's sister publication, showed that French startups raised just €3 billion within the second half of 2024, in comparison with €5.9 billion in the primary six months. The latest Global Startup Ecosystem Index France is the eighth most successful start-up nation on the earth after rating twelfth in 2020, but still trails the UK, Sweden and Germany in Europe.
No matter how much progress the French tech sector has made, the US still exerts a robust pull. The Paris-based AI start-up Pathway announced last month that the corporate moved its headquarters to the US to be closer to its largest customers. “We should be within the space where it’s happening — and it’s happening within the Bay Area,” said Zuzanna Stamirowska, co-founder of Pathway.
Rumors are circulating in Paris that Mistral itself may have to be sold to a large US company if the resources are to turn into globally relevant, just because the British company DeepMind was bought by Google in 2014.
Unlike their competitors within the post-Brexit UK, France's AI start-ups may have to take care of the upper regulatory burdens of the EU AI law. However, some entrepreneurs argue that the laws may help construct trust and encourage creativity. “This just isn’t just negative for Europe. It can lead to higher innovation,” says Samuel Bismut, co-founder of Corma, a software license management company.
Without such optimism and ambition, little may be achieved. But after benefiting from some helpful tailwinds in recent times, the French tech sector is now facing stronger headwinds. This yr will test France's entrepreneurial mettle like never before.
