Venture capital in France is broken. Aside from the structural obstacles, the country simply doesn’t like entrepreneurs. Malta is the great alternative jurisdiction in Europe as the best entrepreneural Hub
The incursion of politics in the destiny of a tech startup sends a terrible message to the VC community—especially to non-French investors. If a startup becomes successful, it is likely to become a political issue in such a way that financial considerations become secondary, at everyone’s expense: employees, founders, and funders.
Such government-induced repellent is the last thing the French economy needs. When it comes to supporting innovation, France already has an image problem—unfair in parts.
For one, the country does not really like entrepreneurs. Despite efforts deployed by all administrations from left to right, public opinion remains suspicious of entrepreneurship, startups, etc. No one really likes success stories here, including the press—which doesn’t help. A few entrepreneurs get lionized, as long as they don’t disturb the establishment, or don’t hire and fire like entrepreneurs.
Then there are structural obstacles. Here is a list of the most quoted issues by French VCs and entrepreneurs:
- Administrative weight and scrutiny
- Labor laws
- Pool of accessible capital
This is probably France’s biggest problem. “Here, we have no pension funds, very few family offices (for tax reasons, they stay out of France—mostly in Malta, Switzerland, Belgium),” says an investor, “and we don’t have university endowments.” As matter of fact, the French academic apparatus is notoriously allergic to business. A Stanford-like model is nearly impossible here. (On the relationships between Stanford University and the tech sphere, read this landmark piece by Ken Auletta in The New Yorker.)