Could Macron and Brexit make France Europe’s tech capital? 🇫🇷

Source: Could Macron and Brexit make Paris Europe’s tech capital?

FRANCE 24

Date created : 13/04/2019 – 18:14Latest update : 15/04/2019 – 08:23

Ludovic Marin/AFP | French President Emmanuel Macron speaks as he visits the start-up campus Station F on October 9, 2018.

This article’s original headline and content focused only on a very large, high profile startup incubator in Paris, but frankly, there is a lot more going on in other parts of France as well.

Text by:Charlotte WILKINS

Shortly after his election in May 2017, President Macron said he wanted France itself “to think and move like a start-up” – a vision of the country’s digital future that is gaining traction as Britain wrestles with Brexit.

French President Emmanuel Macron’s vow to make France a ‘start-up nation’ amid the uncertainty over Brexitis raising the question of whether Paris could supplant London as the capital of European tech.

Since his election, Macron has wooed tech entrepreneurs with a string of initiatives in the form of lavish tax breaks, subsidies, and credits for research. In March 2018, he promised to invest €1.5 billion into artificial intelligence research through 2022.

Some of these initiatives, in addition to Macron’s dynamism, have lured British tech companies who are looking to gain a foothold in Europe.

“It made sense to have a European base,” said Cedric Jones*, a Briton who recently launched a start-up at Station F, the cavernous old train station that is now home to the world’s largest start-up campus. “If I’m going to make waves in continental Europe… I wanted to get here before Brexit happened.”

Jones is among dozens of foreign entrepreneurs who have recently launched their start-up at Station F, whose 3,000 desk hub has seen spiraling applications from English-speaking nationals in the last two years.

Some cite political woes back home, the burgeoning French tech sector, or are inspired by Macron’s bid to make Paris the innovation heart of Europe.

“There’s an air of optimism and a can-do spirit in France that I feel we’ve lost somewhat in the US,” said Mark Heath, a New Yorker, who stayed on in France to launch a start-up after studying at INSEAD in 2017.

The Macron effect

Much of the investment in French tech predates Macron’s reforms. The state investment bank Bpifrance, launched by former French president François Hollande in 2013, has been widely credited with developing the sector. Hollande also set up new foreign visas for start-up entrepreneurs.

But Zahir Bouchaary, a Briton who works out of Station F, credits Macron with injecting dynamism into the sector.

“Macron has installed a [start-up] mentality within the French ecosystem itself,” said Bouchaary, adding that it has become much easier to do business in France in the last few years.

“French customers are a lot more willing to work with start-ups than they were before,” said Bouchaary. “France was a very conservative country and our clients were used to working with big old-fashioned companies that have been around for a while. For the past few years, they’ve opened up a lot more to working with younger companies and seem to take more risks than they did before.”

Jones agreed that Macron was “the single variable”. “When he [Macron] goes, the dynamism will go too. I absolutely would not expect that to remain the case if he’s not the president.”

However, although Macron has moved to ease labour laws, Jones said that navigating the country’s labyrinthine bureaucracy in French remained “very burdensome”, and that it was far easier to build a business in the UK. “Whether it’s from a tax perspective or from a legal perspective it’s just so much more complicated.”

UK tech ‘resilient’

The tech scene in London appears to be just as vibrant as ever, explained Albin Serviant, president of Frenchtech in London, who said many UK-based tech entrepreneurs are adopting a “wait and see” approach to Brexit.

“The UK ecosystem is quite resilient,” said Serviant.

“In the first quarter of 2019, there were about €2 billion invested in tech in London. That’s compared to 1.5 billion last year, which is plus 30 percent. And that’s twice as much as France – which invested 1 billion. France is catching up very fast but the investment money is still flowing in the UK,” he added.

Serviant cited London’s business-friendly ecosystem and international talent pool as reasons for why London remains the capital of the European tech sector. Barcelona and Berlin are also contenders for the UK’s tech start-up crown.

Nonetheless, Serviant cautioned against the effects that a hard Brexit would have on the tech sector in the UK.

“‘If Brexit happens in a bad way and if people like me and other entrepreneurs have to leave, obviously that’s very bad for the UK because what makes it very different is the international DNA of London.”

Hard Brexit would not just damage the UK tech sector but would also pose challenges for British developers, who post-Brexit may need a carte de séjour to work in the country, looking to find work in France.

Sarah Pedroza, co-managing director of Hello Tomorrow technologies, a Paris-based startup NGO, said that if she had to choose between hiring a British national and an EU citizen with the same skillset, she would opt for an EU citizen because there would be less paperwork involved.

Brexit aside, others suggest that France is snapping at the UK’s technological heels.

“I do think France has the potential under Macron to close the gap with the UK,” said Jones.

“The single biggest factor in what’s going on for France is that France is developing a sense of confidence in itself, in its start-up scene, as a tech hub, that’s being helped by France and that’s also being helped by Brexit.”

Canada’s Entrepreneurship Dilemma: Decades Of Anemic Research Investment

UPDATE: May 21, 2015.  As if to drive home the Canadian economic crisis, Goldman Sachs has just released an oil price forecast suggesting that North Sea Brent crude will still be $55 in 2020, five years from now.  As Alberta Western Canadian Select (WCS) bitumen is valued lower on commodity markets this is extremely bad news for Canada. Further, the well-known Canadian economic forecasting firm, Enform is predicting that job losses across all of western Canada, not only Alberta, could reach 180,000. 

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This issue has driven me absolutely nuts since I first arrived in Canada from Silicon Valley.  It did not take me long to figure out that things did not work they way they did in California, and that there wasn’t much of a true entrepreneurial economy here.  Since then, I have also been appointed to the Canada Foundation for Innovation grant process, providing me with insight into how R&D funding works in Canada. I have seen many issues in Canada that have impaired the nation’s ability to develop an entrepreneurial culture,  among them is the inherent Canadian conservatism and short term horizon of investors unfamiliar with technology venture investment.  But none has been worse than Canada’s decades-long neglect of adequate funding for research and development nationwide.  A review of the OECD data on Canada’s investment in R&D compared to other industrialized nations paints a sorry picture.  This has led directly to a poor showing in industrial innovation and productivity. This is further compounded by the current government’s myopic focus on natural resource extraction, Canada’s so-called “natural resource curse.” The result now is an economic train wreck for Canada.  The fossil fuel based economy has collapsed and is not forecast to recover anytime in the near future.  During the boom time for fossil fuel extraction, there has been essentially no rational strategy to increase spending on R&D and innovation, and hence no increase in economic diversification.  Now the problem is nearly intractable, and may take decades to reverse.

 ASLEEP AT THE WHEEL, by Bruce Smardon, McGill-Queens University Press

ASLEEP AT THE WHEEL explains that since 1960, Canadian industry has lagged behind other advanced capitalist economies in its level of commitment to research and development. Asleep at the Switch explains the reasons for this underperformance, despite a series of federal measures to spur technological innovation in Canada. It is worth noting that Arvind Gupta, President of The University of British Columbia, and former head of MITACS, the organization at UBC tasked to promote R&D, has also been an outspoken proponent for increased R&D, at one point editorializing in the Vancouver Sun, that Canada needed an innovation czar, to promote innovation in the same manner as the 2010 Seize the Podium program to enhance gold medal performance for Canada.

Also, as a member of the 2012 Canada Foundation for Innovation Multidisciplinary Assessment process, and the University of British Columbia 2015 CFI grant preparation process, I can say without reservation that the Canada suffers from inadequate R&D funding and its consequences.

ANALYSIS From CBC News

Canada’s research dilemma is that companies don’t do it here

Ten-year study says repairs needed for rebound will be costly and difficult

REBLOGGED: By Don Pittis, CBC News Posted: May 15, 2015 5:00 AM ET Last Updated: May 15, 2015 6:31 AM ET

Northern Electric was a domestic Canadian technology success story that became the telecom equipment giant Nortel Networks. But when Nortel failed, the lack of an R&D hub meant there were no startups to replace it. (The Canadian Press)

As Stephen Harper handed out more tax breaks for Canadian manufacturers in Windsor, Ont., yesterday, you might ask, “With that kind of support, why is Canada’s industrial economy in such bad shape?” Political economist Bruce Smardon thinks he has the answer.

Smardon says companies operating in Canada just aren’t spending enough on domestic research and development, and the Harper government is only the latest in a long line of governments, stretching back to that of John A. Macdonald, that have contributed to the problem.

As China’s resource-hungry economy goes off the boil, taking Canada’s resource producers with it, everyone including Bank of Canada governor Stephen Poloz, has been waiting for a rebound in Canada’s industrial economy.

But there are growing fears such a Canadian rebound is not on the cards. As the Globe and Mail’s Scott Barlow reported last week (paywall), despite having the top university for generating new tech startups, Canada has repeatedly failed to become a hub for industrial innovation.

Best in North America

Interviewed by the New York Times, the president of the startup generator Y Combinator, Sam Altman, called the University of Waterloo the school that stood out in North America for creating new ideas that turned into companies.

But as Barlow reported, there is statistical evidence that Waterloo’s success has not translated into R&D success, as Canadian industrial innovation continues to decline.

After 10 years of research, Smardon thinks his recent book, Asleep at the Switch — short-listed this year for one of Canada’s most prestigious academic book awards — provides the answer.

Political science professor Bruce Smardon’s book, Asleep at the Switch, examining Canada’s R&D failure, has been short-listed for one of Canada’s most prestigious academic prizes. (McGill-Queen’s University Press)

And, believe it or not, Smardon traces the chain of events back to Canada’s first prime minister and his tariff policy of 1879. Paradoxically, those rules were put in place to protect Canadian manufacturers from cheap U.S. goods, that were in turn protected by U.S. tariff walls.

Central Canadian boom

For the industries of central Canada, the tariff barriers worked. In the years before the First World War, says Smardon, Canada was second only to the United States in creating an economy of mass production and mass consumption, where workers could afford to buy the products they produced.

However, prevented by tariffs from exporting U.S. goods to Canada, American companies did the next best thing. They started, or bought, branch plants north of the border, wholly- or partly-owned subsidiaries that used U.S. technology in Canadian factories.

Smardon says that started a trend that continues today. The majority of R&D was being done in the home country of the industrial parent, not in the Canadian subsidiaries. And in the Mulroney and Chrétien era of free trade, he says, relatively high-tech branch plants, such as Inglis and Westinghouse, started to close as products were supplied more efficiently by the U.S. parent factories.

There were Canadian R&D stars such as Nortel and Blackberry, says Smardon. But they were exceptions. And when those stars began to set, the lack of a traditional R&D hub in Canada meant there were few young research-based companies ready to come up and replace them.

Tax credit paradox

The paradox, he says, is that Canadian taxpayers have spent a fortune on R&D tax credits. The 2011 Jenkins report showed that as a percentage of GDP, Canadian R&D tax incentives were higher than anyplace else. But as Barlow showed, Canadian R&D still lags behind.

The reason, Smardon concludes, is that while taxpayers fork out for R&D, industrial R&D doesn’t happen here but in traditional R&D hubs abroad. He says that free trade agreements and a longstanding view by Canadian governments that business knows best mean it’s very difficult to put conditions on how that money is spent.

“If we are concerned with developing a manufacturing base in the more advanced research intensive sectors, we’re going to have to have incentive programs at the very minimum, that are clear in insuring that any incentives are used to develop products and processes in Canada,” says Smardon. “They’ve got to think through how that can be done.”

But Smardon is not optimistic. He says that free trade and the free market philosophy has become so entrenched in Canadian thinking that it’s impossible to change.

Market rules

He says that is why the Harper government became so enamoured with the business of pumping and exporting unprocessed oil and gas while the Canadian industrial economy crumbled. It was exactly what the global free market wanted.

It may indeed be that global market forces decide Canada is an icy wasteland that is best at producing raw materials. It may decide that the best way to use our brilliant young people is to send them to California to develop their business ideas there.

But if we want more than that, perhaps handing out ineffective tax incentives is not going to be enough.

New Zealand’s Icehouse Startups Achieve Impressive Results

 

250 Startups, $425 Million in revenue, and 880 jobs!

 

 Andy Hamilton, Director of Auckland’s Icehouse

New Zealand is a small isolated country on two islands deep in the South Pacific.  New Zealand has a population and economy roughly similar to British Columbia.  Australia, its bigger neighbor is 1200 kilometers away. Kiwi’s have therefore always valued self-reliance and resourcefulness.  So it was with some amazement that I read of the stunning results achieved by Andy Hamilton and the Icehouse incubator in Auckland.  I have had the good fortune to know and work with Andy, visiting the Icehouse as the Director of New Zealand Trade & Enterprise’s Silicon Valley incubator in Redwood City.  Andy routinely asked me to stop by when I was in town to deliver a “tough love” talk to the resident companies. 

Andy’s results contrast sharply with the results being achieved in other incubators, particularly here in BC. Much is being written and debated here about an incubator glut, massive waste of government money, and most importantly poor quantitative results from incubator companies.  For example, when asked how many companies they have helped succeed a local BC accelerator employee could only say: “You really have to define success. I mean for most of these guys our success is just about getting them to realize their ideas are bad.”  Really?

Icehouse startups make an impact

Read more: The Icehouse, Auckland, New Zealand

By The Icehouse

250 startups, $425million in revenue and 880 jobs!

These are the highlights of the impact statistics released by Auckland based business growth hub and startup incubator, The Icehouse, this week.

Since starting in 2001, The Icehouse has worked with over 250 startups to help them accelerate their growth. The alumni pool includes some of NZ’s most successful startups such as M-com, PowerbyProxi, eBus as well as many emerging businesses and brands such as DirtyMan, Tomette, LiveLink Connect and Biomatters.

Since 2006, Icehouse startup alumni have generated over $425 million in revenue of which, $302 million has been export income. They have also created over 800 full time equivalent jobs. Over the same period, Icehouse startups have raised over $170million in funding, which includes government grants and seed and angel funding. A staggering $55m of that has come from angel investor network, ICE Angels.

Additionally, Icehouse startup alumni are more than returning the money the government invests in them through The Icehouse. Over the last eight years, they have generated $72 in revenue for every dollar of government funding The Icehouse has received to run its startup programmes. This has more than tripled since 2006 showing the increased contribution startups are having on the NZ economy.

Ken Erskine, Director, Startups The Icehouse & ICE Angels, says these impact statistics are a very positive sign for The Icehouse and its startup alumni as well as NZ startups in general. “It’s exciting to see our startups continue to succeed and contribute to the growth of the NZ economy.”

Erskine believes that the entrepreneurs behind the startups are the key to their success, “In many cases they were just people with ideas when we started working with them. Their drive, skills and passion is what enabled them to turn these ideas into successful businesses that create jobs and add value to our economy.

We are also delighted that we are producing an excellent return for the Government’s investment even without measuring GST, payroll or taxes paid. The original vision of this investment was to create a world-class startup ecosystem and The Icehouse and ICE Angels have been leaders in the development of this.”

A good example of this is Parrot Analytics, a Tech startup that recently graduated from The Icehouse incubator. Having raised over $1million in funding in 2013, lead by ICE Angels and syndicated with Stephen Tindall’s K1W1 and industry partners from the USA, the startup is considered to be one to watch as it moves into international markets. Founder and CEO, Wared Segar, understands very well what level of commitment and drive, as well as support, is required to start a business: “The Icehouse was beyond instrumental in helping Parrot Analytics secure its seed funding round from ICE Angels, which was one of the largest seed rounds raised by any Kiwi startup. The support from the team extended from capital raising advice to hands-on management support, connections and wider introductions to both local and international stakeholders as well as investing themselves. The team was and remains there for us to tap into to help achieve our common goal of building a successful Kiwi technology company.”

Sean Simpson, Board member of The Icehouse and Co-founder of LanzaTech, says that it is important to have committed and skilled entrepreneurs to drive startups. “Every startup has potential, however the transformation from startup to commercial success is never smooth. The drive, enthusiasm, and determination required to overcome obstacles to commercial success is what the entrepreneur brings. Great entrepreneurs are not constrained by the limitations of today, they drive to make success and grow their vision in spite of barriers that stand in the way of others. We have learnt and are focused on helping these entrepreneurs be the best they could possibly be.”

The Icehouse & ICE Angels are looking forward to working with more highly committed entrepreneurs in the future. Erskine says, “We have a number of really promising startups in The Icehouse at the moment. Seven of them are closing rounds with investors right now. And of course our alumni are continuing to grow so we’re expecting more success stories from them as well.”

A key aspect of the startup success has been the funding partnerships which they have created, with ICE Angels and more recently the Global from Day One Seed Fund.

Brian Casey, Chair of ICE Angels commented, “We are delighted to see the progression of The Icehouse in producing promising and fast growing startups. At the ICE Angels we are excited to get alongside fantastic entrepreneurs and their teams, invest in them, help them and be a sounding board for them as they start on their journey into global markets – not only to get a return but to see the benefit to the economy and our country. It is a great time to be a startup entrepreneur.”

For more information about The Icehouse’s Startup Programmes see www.theicehouse.co.nz/startup.

Key Icehouse startup facts

Over the past 8 years The Icehouse has received $5.875m from NZTE, which has been used to fund The Icehouse incubator. Over this period, The Icehouse has helped their startups to:

• raise over $172m in total private sector funding (excluding grants), growing 40% year on year
• create 888 jobs
• realise $425m in aggregated total revenue (growing 32% year on year) of which 71% or $301.51m are export revenues (growing 136% year on year)

For every dollar of government funding The Icehouse receives, the value add to the incubated startups enables them to:

• generate $72 of revenue from the startups. This amount has almost tripled (2.98x) since 2006. Of this, $51 are export revenues, this amount has increased 12.25x since 2006; and
• raise $40 of private sector funding for the startups. This amount has almost tripled (2.89x) since 2006.