France’s Rising Tech Stars

The European Tech Tour Association served up France’s best start-ups to 60 venture capitalists from the U.S. and Europe during a hectic 48 hour road trip. Click “read more” to see the video and read the story.

The July 1-3 tour, which began in Paris and ended in Strasbourg, included stops at research centers focusing on medical technology, robotics and synchrotron radiation, an extremely powerful source of light that permits researchers in the fields of physics, chemistry, material sciences, life science, earth sciences and atmospheric sciences to explore  matter. At each stop VCs heard pitches from the selected French hardware and software companies, which ranged from seed to late stage. Companies which won high marks from VCs participating on the tour include  Criteo, an Internet on-line marketing company headed by a serial entrepreneur and Spartoo.com, an online retailer targeting the $53 billion a year European footwear market.

Along with presentations from companies built around France’s strengths in smart cards such as Inside Contactless were demonstrations of technologies not normally associated with the land of cheese, wine and haute couture.  Aldebaran Robotics, for example, demonstrated a prize-winning talking, dancing robot named NAO it intends to sell to the Japanese while Total Immersion, an augmented reality company which has snagged deals with big U.S. companies such as McDonald’s, The Walt Disney Company and Mattel, showed VCs how it intends to target the consumer market. “These companies want to dominate the world,” says Jean-Pierre Brulard, president of the 2009 French Tech Tour. “And they have the level of confidence and ambition to do it.”

Sven Lingjaerde, founder of the European Tech Tour Association (pictured on Informilo’s home page) said he was impressed by the quality of the companies on the 2009 French tech tour. “A number of the companies are headed by serial entrepreneurs, their presentations were professional, their English is good and the business models make a lot of sense,” he says.

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The July 1 to 3 French tech tour was the third conducted by the European Tech Tour Association.  The Geneva-based non-profit organization has organized 36  tours over the last 11 years to introduce venture capitalists to the best start-ups in a particular country. Most of the tours are in Europe but it has also organized tours in Israel and India.  Tours in major European countries such as Britain, France and Germany, are organized once every four years. The tech tour also organizes sector specific events, featuring the best start-ups from across Europe in fields such as semiconductors, Web 2.0 and clean tech.

 The tech tour cooked up a few surprises for the venture capitalists,  including asking them to prepare their own dinner during a trip to a research center in Strasbourg, under the watchful eyes of some French chefs. On the menu were gourmet burgers made with fois gras, underscoring how France has changed since the 2001 and 2005 tech tours. France has not only adopting its own brand of fast food it has morphed from one of the worst places in Europe to start a business to one of the best, according to Denis Payre, a co-founder of Business Objects who famously moved to Brussels for tax reasons.  Payre, once one of France’s harshest critics, recently returned to Paris.

While Payre was not on the tour Bernard Liautaud, Business Object’s other co-founder, was. He gave a keynote speech  at the tech tour’s opening dinner July 1. Liautaud, a French native who moved to the U.S. to run Business Objects, is back to Europe, investing in a whole new generation of start-ups in a new role as a venture capitalist in the London offices of Balderton Capital. Liautaud also gave the keynote speech at the 2001 tech tour. He remains one of the few examples of French entrepreneurs who have founded start-ups which went on to become global giants.

That may soon change. Anther keynote speaker at this year’s tech tour dinner, Nathalie Kosciusko-Morizet, French Secretary of State in charge of Foresight and Development of the Digital Economy, emphasized how the environment has evolved. In a discussion with journalists during the dinner she mentioned how ten years ago 80% of French students surveyed said they would like to be civil servants when they graduate. In the same survey, conducted 18 months ago, the majority of the students said they would like to become entrepreneurs.

That may be because the government is now making it easier for young companies. Kosciusko-Morizet is behind a French decree which  encourages – but does not oblige – government agencies to grant up to 15% of public contracts to small, innovative companies, a move that is expected to have significant impact on the growth of software start-ups.  Other measures are helping all manner of start-ups companies. The “Young Entrepreneurs Law,” enacted in 2004, offers tax breaks for French companies below a certain size and age, says Daniel Kahn,  chairman of the French Tech Tour advisory committee and founder and partner  at Kahn & Associates, a Paris-based law firm which specializes in working with technology companies. And a more recent law known as TEPA allows well-off people in France to decrease their wealth tax if they invest in start-ups. (Crocus Technologies, a semiconductor memory company selected to participate in the 2009 French Tech Tour said it raised funds thanks to the TEPA law). That’s not all. France’s Strategic Investment Fund, known in France as Fonds Strategique d’Investissement of FSI, a six billion euro fund set up in December last year to invest in companies that will help the French economy thrive, is expected to designate a significant portion for innovative young French companies.

The French government has understood that “the future will be about  innovation,” said Adrien Zeller, presient of Alsace’s regional council, which helped sponsor this year’s tour. Strasbourg, known as the home of the European community and for Alsacian dishes such as sauerkraut, wants to become known as a hotbed of cutting edge technologies, particularly in the medical field.

“The ecosystem in France has really evolved since the first tech tour in 2001,” says tech tour association founder Lingjaerde, a partner at Geneva-based venture capital firm Endeavor Vision. “The government is doing all the right things, the VC ecosystem is a good one and there is a clear appetite for foreign investment.”

 That said, the total amount of venture capital invested in start-ups in France has decreased slightly since the last tech tour. In 2005 €712 million was invested by venture capitalists in French start-ups: €487 million in IT, €217 in biotech and €8 in clean tech. In 2008 only  €684 million was invested by VCS into French companies, a 4% drop.  Still, the companies from the 2005 tech tour fared relatively well, raising a total of €263 million euros, according to research conducted on behalf of the tech tour prepared by Nicolas Vin Bulow, a managing partner at Clipperton Finance in Paris. Only one of the 25 companies on the 2005 French tech tour went out of business. There were five trade sales: Soisic was sold to ARM, Pertinence to Intercimn, Iware to Trium, Boonty to Nexway and Advestigo to Hologram.

The start-ups selected in 2005 snagged investments from both local and foreign investors.  Sofinnva Partners made four investments, Axa Private Equity made three. Outside investments included Intel Capital, Qualcomm, dfjsesprit, Motorola Ventures, Kennet and Reliance Technology.

Two of the companies that raised money on the 2005 tech tour, Ekinops, a telecoms transmission equipment provider and Total Immersion, were back in 2009, seeking additional capital to fuel their expansion. A third, software security company OpenTrust, did not raise money last time but is now profitable and is hoping to raise money early next year to expand internationally.

 

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