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French start-ups take the U.S. by storm

French start-ups are booming in the United States. Largely based in San Francisco and New York, they have honed in on the American entrepreneurial spirit while exporting French expertise.

The International Consumer Electronics Show (CES) takes place in Las Vegas every January. While Sony, LG, Samsung, Intel, Panasonic, Nikon and other global electronics giants settle into the aisles of the Las Vegas Convention Center, the future of innovation is actually decided several streets away. At the Sands Expo Center – rechristened Eureka Park for the Show – the CES welcomes an increasing number of start-ups looking for greater visibility. These fledgling companies come from far and wide to take advantage of the presence of leading CEOs and investors, hoping to find a way out of their “basement” phase. This year saw nearly 600 start-ups in attendance, including 190 French companies.

Clément Perrot and David Zhang were at table 80741, and had travelled from San Francisco to present their project, Prynt. They had found that an increasing number of people in the 18-25 segment had become disenchanted with the immaterial aspect of the digital revolution, and were resigned to storing thousands of unused photos on their smartphones. With this in mind, they set themselves the challenge of pushing instant photography back into the limelight, and the two Ecole Polytechnique graduates began talks with the University of Berkeley in January 2014. They came up with an idea to integrate a Polaroid case into the back of an iPhone during a Tilt! event, and with a prototype developed four months later, the pair set off for China. Working in a start-up incubator, they improved their product while studying the industrialization process. The team attended the CES in January 2015 armed with functioning Prynt prototypes, and launched a crowdfunding campaign on Kickstarter three weeks later. They reached their 50,000-dollar objective in just 30 minutes. The end of the 35-day campaign saw a total of 1.6 million dollars raised for the project – a French record on Kickstarter – and Prynt entered its production phase. According to Clément Perrot, Prynt’s objective for the CES in 2016 is to “land a contract with a major American distributor”.

The Prynt adventure got off the ground in less than two years. It has been lauded by CNN, Forbes and Wired, and is distributed in the top-end chic Parisian boutique Colette. But while this may smack of fairy-tale 2.0., it’s hardly an isolated case. A growing number of French entrepreneurs are moving to the United States to found their companies.

“If you’re in fashion you should go to Milan, but if you’re in technology, computing or electronics you need to be in Silicon Valley”, says Jean-Louis Gassée, a former Apple executive and current partner at the Allegis investment firm, who has lived in California since 1985. Buoyed by the success of its resident companies – Hewlett-Packard, Intel, Oracle, Apple, Google and Facebook to name but a few – the region between San Francisco and San Jose has become the global capital of technological innovation. François Mitterrand visited Silicon Valley in 1984 and met with Steve Jobs, who praised France’s resources and potential for success in the new technology sector. A congress of Francophones was held in the San Francisco Bay once a month from 1994 onwards. This meeting was called “DBF” after the .dbf file extension used for managing members, and aimed to provide a setting in which entrepreneurs could meet and exchange. Silicon Valley is now home to some 500 French companies and 60,000 expatriates, and represents the largest, most dynamic French community in the United States.

New York is close behind California as it tries to position itself as an innovation center. However, these two sites have different focuses. Silicon Valley generally welcomes software and computing companies, while New York focuses on media, e-commerce, stock markets and fashion.

French profiles at the top of the list

The French are doing very well in the United States, and it is partly down to their education; French engineers and mathematicians are recognized and appreciated by American universities, laboratories and investors. An entrepreneur who has graduated from a prestigious French institution such as the Ecole Polytechnique or the Ecole Centrale, and trained in both theory and practice, is seen as the guarantee of a versatile mind. “The best-educated people are graduates of both engineering and business”, says Francis Pisani, a journalist who has covered current events in Silicon Valley for 15 years. Case in point, Morgan Hermand-Waiche studied for a Master’s degree in Mathematics and Computing at the Ecole des Mines, followed by an MBA in Business & Finance at Harvard, and launched Adore Me in 2010. This online lingerie boutique is now in competition with Victoria’s Secret on the American market.

Being French “sets you apart” says Emmanuel Letouzé, the founder of Data-Pop Alliance, a New-York-based start-up that focuses on big data for development. “Investors remember your French accent and are drawn to the idea of potential contacts and opportunities in France and even Europe in general.”

But long-term visas are increasingly hard to come by. French entrepreneurs are now obliged to play the system in order to move to the United States. French students study in universities such as Stanford, Berkeley and Columbia as part of exchange programs, some work for American businesses in France before being transferred to the U.S.-based parent companies, and others accumulate 90-day tourist visas in order to stay in America.

Emmanuel Letouzé points out that those who do best in the United States are long-term expatriates who “have had the time to build up a network”. In any phase of a start-up, it is vital to be able to open your address book and find an American electronics engineer who speaks French, an industrial designer specialized in plastic molding or an international distribution specialist. “Without this network it’s so hard to break through, it’s almost like you live in a different world”, says Clément Perrot. “Integrating your start-up without a list of contacts in very complicated, and requires far more time.” As Morgan Hermand-Waiche sees it, a solid network “means you can progress ten years in just a few months”.

Another disadvantage on the American market is that the French are unused to selling themselves to an audience of investors. By definition, a start-up has nothing to sell when it is founded, but needs to attract and convince potential financial partners. Promoting an inexistent product requires both persuasion and confidence. “You have to know how to present yourself and communicate efficiently”, says Thomas Gayno, founder of Cord, a voicemail application launched in 2014. “The Americans tend to be more enthusiastic than the French.” When Emmanuel Letouzé (who uses the name MANU for his artwork) used his own press drawings and caricatures in his PowerPoint presentations, he won over the Americans who “appreciate profiles outside of the box”. But he put off the French, who “see it as pure self-promotion. Being French and drawing has always been an advantage in the United States, but it would have held me back in France”, he says.

“Risks are inevitable”

The founders of Data-Pop Alliance, Prynt, Adore Me and Cord all agree that moving to the United States was key to the success of their start-ups. “I could have achieved the same thing in France, but not as quickly or as easily”, says Thomas Gayno. His start-up, Cord, managed to raise 1.8 million dollars from 17 investors including the Google Ventures fund, Free CEO Xavier Niel and Price Minister founder Pierre Kosciusko-Morizet. “I would never have been able to raise so much money, and so quickly, in France”, he says. Prynt founder Clément Perrot had a similar experience. “My friends who have launched start-ups in France spend half their time bogged down in paperwork in order to scrape together a few thousand dollars here and there. These restrictions just don’t exist in the United States. You just hit the throttle, find investors and demonstrate the fastest growth.”

Jean-Baptiste Rudelle is CEO of the online retargeted advertising company Criteo, based in both Paris and California. In a “manifest” published last September, he criticized the “cultural locks” and “mental blocks” which are still holding back innovation in France. A large majority of the 15-25 segment want to become entrepreneurs, and the government is increasing initiatives to foster start-up creation. “France has enough intelligence and entrepreneurial drive”, says Jean-Louis Gassée. But the “unintelligible labor code” and an “opaque tax system” make it difficult to found a company. Entrepreneurs are naturally drawn to the flexibility of the American system, in which it is possible to create a company in just 30 minutes online. Another difference is that risk and failure are not nearly as stigmatized in the U.S.A. as they are in France. “It’s not the end of the world when a start-up fails”, says Clément Perrot. “In fact, it’s seen as part of the learning curve.”

In an effort to stem the national “brain drain” towards New York and California, the French government has introduced a program encouraging start-ups to base their activity in France. After originally moving to the United States to enjoy the innovation-friendly climate and gain experience, some companies decide to move back to France when their project takes off. This concept is what Francis Pisani calls “brain circulation”. Other companies are eager to enter the European market, and keep their headquarters in the United States while opening an office in Paris. Prynt, for example, has a Parisian team in order to “repay their debt to France”, but also to keep a foothold for expanding its product distribution in Europe. However, companies looking towards the global market often decide to stay in the United States. “If you want to conquer the global market, you need to do it in English”, says Jean-Louis Gassée. “If you want to create the next Google, do you think you can do it in France?”

Article published in the February 2016 issue of France-Amérique.

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