Postcard from Paris: the mood of start-ups & entrepreneurs
October 12, 2014
By Lidija Pecov, European Correspondent
Having arrived in Paris I was so excited! I thought yes! The first thing I am going to do is find a café and turn it into my local for the week! I do this whenever I travel to a city because if you’ve travelled as often as I have you soon come to realise that by sitting outside a local café you get to see the beating heart of a place – and Paris was no different.
My brief was to look at the state of entrepreneurship in Paris and try and surmise whether or not things were on the up. Across Europe things have been pretty tough with unemployment at levels in some countries not seen in decades. In fact youth unemployment is higher now than in the last 30 years. From an economic perspective France has just been downgraded by Standard and Poors from “stable” to “negative” with the ratings agency saying the financial recovery is “elusive”. Just last week the IMF also indicated that the UK would now grow at a much faster rate than France. On current trend these projections would indicate the UK economy would be sitting at around $1.9 trillion pounds compared to the French at 1.8 trillion (what’s the odd billion between neighbours right?).
This in turn means that across Europe access to capital for a lot of start-ups and entrepreneurs is fairly tight. The challenge is not only for those starting out, its also for those who want to grow an existing business where they are seeking capital to grow and expand only to be inhibited at the back door by legislation and regulation that some complain is not geared towards growth.
Sitting at the café I overheard just such a story and so asked my two new friends if I could chat with them. Jean runs a medium sized business and his biggest challenge is he needs to replace and re-tool equipment in order to grow his business. His challenge (he says) is that when a business in France grows to more than 50 employees they are subject to additional regulatory costs and impacts – he said that is why many French companies cap their employees at 49.
But, are we dealing with two issues? Start-ups and entrepreneurs and then small to medium sized business who already exist but need to grow and expand? The answer is yes. Research tells us that the majority of start-ups not only begin life on the smell of an oily rag they also employ less than 5 people and those 5 people are mostly founders who either don’t get paid a wage or are paid only what is left once operating costs have been deducted. Whereas a small to medium sized business would have matured to a point (provided they last the 5 year mark) where they already have stable cash-flows and wage bases.
Therefore, what is needed by both at various times in the life of a business are different.
Capital for a start-up is usually geared towards growing a business to the next level whereby money is being used mostly for sales and marketing where as a small to medium sized business is more likely to need the capital for investment in expansion.
So, while we could get bogged down on the rights and wrongs of inhibiting growth by layering more costs on companies with more than 50 employees I returned to my initial brief – what is the state of entrepreneurship in France today? And I have to say it looks pretty good from what I am seeing, with some of this being able to be mapped back to Start-up Weekend held in Paris last year. This highlighted a series of initiatives whereby programs such as La Cantine and LeCamping (as well as Start-up Weekend) were not only providing hubs for start-ups and entrepreneurs to connect but ways and means of executing business plans and assisting in the raising of capital.
Clemence Wurtz, Co-founder and CEO of SmartRent told Forbes that there were still some challenges ahead: “In general the French culture doesn’t really recognize entrepreneurship,” and “Even when you talk to students in your own age group and they ask you what you’re going to do after university and you reply, ‘start my own company’ — they look at you as if you are insane. They don’t believe it’s possible.”
But then that is a challenge the world over when it comes to start-ups!
France has a long history of entrepreneurship and a lot of it is recent and to do with the tech industry. Take Pierre Omidyar who is the founder and chairman of ebay now worth a cool $8 billion. In terms of Le Camping they state they have raised more than $14.5 million dollars in the last 3 years for start-ups and offer up three additional examples of success stories:
“Clement cofounded DocTrackr, a solution allowing encryption and control over distributed documents. DocTrackr raised 2M USD and went on to be acquired for +10$M by Intralinks, scoring a deserved achievement for themselves and Le Camping.”
“Sebastien founded Mesagraph in 2010, a software that analyzes millions of online conversations in real time to provide analytics and actionable insights. Mesagraph has recently been acquired by Twitter for an undisclosed amount!”
“Séverin co-founded Lima with Gawen Arab, a technology that enables you to access all your files on all of your devices regardless of operating system or space. Lima reached its initial funding goal in less than 12 hours raising a total of $1.2 million while Partech Ventures invested $2.5 million in a Series A Financing round.”
So, things remain tough across Europe but one thing that is for sure – there is no let up in the taste of many young people to start-up. The challenge has always been, and remains today, building effective partnerships to grow to the next level.
That brings me back to sitting at the little coffee shop and watching the world go by, listening to stories about the challenges and success of random people. As one person told me “what choices I make today are not because someone said I could not, its because I said I can and the only way Europe is going to get itself out of the hole is by more of us saying yes I can.”
Not a bad way to end a trip to Paris
About the Author: Lidija has been travelling across 9 countries in Europe tapping the mood of local entrepreneur and start-up communities. Lidija is our resident European correspondent.
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