Emmanuel Macron Dreams of Unicorns

Ambitious French president Emmanuel Macron wants to see a fivefold increase in the number of billion-dollar start-ups, or “unicorns,” in France over the next few years. His goal is to replicate the American model.
Emmanuel Macron in 2018 at Station F in Paris, one of the world’s biggest start-up incubators. © Ludovic Marin/Reuters

Emmanuel Macron has a dream. He wants unicorns to flourish in France, and hopes that their number will rise from five to twenty, or even twenty-five, by the end of his presidential term. Of course, he’s not dreaming of mythical animals. In today’s world, a unicorn is a start-up valued at more than a billion dollars.

France isn’t generating nearly as many unicorns as other countries. The United Kingdom has 25, China 94, and the United States a whopping 182, including some of the more recognizable names. Uber, Airbnb, Stripe, SpaceX, and Vice Media are all valued much higher than any of their French peers. The problem with France and Europe is not a shortage of ideas, but a shortage of funding. Europe has seen a number of great ideas turned into unicorns: carpooling with BlaBlaCar, music streaming with France’s Deezer and Sweden’s Spotify, on-demand photography with Meero, real-time location tracking with Zenly (bought by Snapchat), and online gaming with Voodoo.

French Start-Ups… Bought Out by Americans

The challenge is raising the capital needed to enable start-ups to grow and expand internationally as fast as their American counterparts. It is perhaps a sign of the times that the French language has no word for “scale-up” (a fast-growing company, past the start-up phase but not yet a unicorn). French – to the dismay of French-language purists – just borrows the English word. While start-ups rarely have trouble raising capital to launch, it is often impossible to find investors willing to inject the hundreds of millions of euros needed to scale up.

That’s when they get bought out, usually by American companies. Another challenge comes from Europe itself. The E.U.’s population of 513 million (before Brexit) makes it a bigger market than the U.S., with 327 million. But 62 years after the Treaty of Rome, the E.U. is still fragmented into 28 legally and culturally distinct markets.

Can France Become a Start-Up Nation?

We are at a turning point. Macron is determined to transform France into a “start-up nation,” and he appointed one of his close advisors, Cédric O, as minister for the digital economy. Born in France after his grandparents fled North Korea, Mr. O was in charge of determining which companies to include in the “Next 40” index of France’s most promising start-ups. The government has pledged to help those companies grow in the hope of revitalizing France’s blue-chip index, the CAC 40, which has long been dominated by emblematic companies, such as LVMH, Hermès, L’Oréal, Airbus, and Total. Another example of French interventionism? Yes, but the government has also enacted tax reforms to encourage the French to invest in start-ups and become long-term shareholders in the country’s current and future unicorns.

Capital is also becoming more available. Historically low interest rates are pushing investors to move their savings to private-equity funds. U.S. investors also have a greater presence in Europe today. European start-ups used to have to set up in Silicon Valley to gain access to U.S. funds. Now, Silicon Valley comes to them. A few questions remain: Will competition for the best deals drive up the amount of money invested in European start-ups, as it has in the U.S.? Will European investors continue to favor profitability and realistic business plans, or will they start taking more risks?

Belgium also offers some promising news for French start-ups. France recently sent businessman Thierry Breton to Brussels, where he was appointed E.U. commissioner in charge of industry, defense, space, and digital policy. An expert in quantum computing, he was formerly CEO of Thomson, France Télécom (now Orange), and Atos, all of which joined the CAC 40 under his leadership. He is determined to help European (and therefore French) start-ups succeed. His mission as member of the European Commission headed by Ursula von der Leyen is to unify the European market and encourage the development of strong companies that are finally able to compete with the Americans and the Chinese — a big challenge indeed!

Article published in the January 2020 issue of France-Amérique.