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In contrast to the gloomy mood that prevails in much of France these days, optimism and ambition fill the cavernous atmosphere of the Station F business incubator in Paris. Since its opening in 2017, the world's largest startup park has nurtured 7,000 companies including two lone companies: artificial intelligence company Hugging Face, now based in the US, and health insurance company Alan.
Talk to the founders of AI companies at Station F and it will be hard to resist their enthusiasm for the potential of the technology and the attractions of France as a place to launch a company. From the incubator Top 40 performing startups34 have artificial intelligence at the core of their business. The rapid appearance of the Mistral The Paris-based AI startup, now worth $6 billion and which has developed one of the world's most impressive foundation models, has also given them plenty to cheer about.
“Europe can create competitive AI models today,” says Xavier Niel, a French investor in both Station F and Mistral. He recently told the FT. “I think we can create big things with a few hundred million euros.”
Things are going right in the startup world in France. The country's education system trains an endless stream of talented engineers. Paris competes with London as Europe's top AI hotspot. Business culture in France has changed over the past two decades, making it acceptable, even fashionable, to become an entrepreneur. Venture capital is more readily available than ever before. Despite his problems elsewhere, President Emmanuel Macron has been an active champion of the sector.
In contrast to most major AI companies in the United States, AI startups in France favor open-source models that encourage more collaboration and broader access to the technology. They hope this will give them a competitive advantage in applying AI to almost every sector of the economy.
But the question remains: Can France's vibrant tech sector overcome the political chaos and economic uncertainty plaguing the rest of the country?
The young startup founders at Station F have few doubts. Historically, French entrepreneurs have been more successful at building companies in the United States than in France itself, but that is now changing, says Thomas Le Curie, CEO of ed-tech startup Racono. He studied at HEC Business School in Paris and the University of California, Berkeley. “I strongly believe in European technology,” he says.
Joel Belava, CEO of Biolevate, an AI therapeutic research company, adds that the country's abundant tech skills are perfectly aligned with the AI industry, making France a great place to build a tech business. “France has long built a culture of engineering,” he says. He believes similarly qualified engineers in the hot US market could cost five to eight times that amount.
However, momentum in the French technology sector slowed last year, partly due to the political turmoil caused by Divisive parliamentary elections. Data from sieveFrench startups raised just €3 billion in the second half of 2024, down from €5.9 billion in the first six months, the Financial Times' sister paper showed. Latest Global Startup Ecosystem Index France ranks as the eighth most successful startup country in the world, up from 12th in 2020 but still behind the UK, Sweden and Germany in Europe.
No matter how much progress the French technology sector has made, the United States still exerts a strong pull. Parisian track for AI startups Announced last month It was moving its headquarters to the United States to be closer to its largest customers. “We need to be in the room where this is happening — and it is happening in the Bay Area,” said Zuzana Stamerowska, co-founder of Pathway.
Rumors are circulating in Paris that Mistral will have to sell itself to a US giant if it wants the resources to become globally significant, just as Google bought the British company DeepMind in 2014.
Unlike their post-Brexit UK rivals, French AI startups will have to contend with higher regulatory burdens imposed by EU AI law. But some entrepreneurs say the legislation could help build confidence and boost creativity. “This is not just a negative for Europe. It has the potential to drive better innovation,” says Samuel Bismuth, co-founder of software license management company Qorma.
Not much can be achieved without this optimism and ambition. But after benefiting from some useful tailwinds over the past few years, the French technology sector now faces tougher headwinds. This year will test France's entrepreneurial mettle like never before.
