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Op-Ed: Macron’s vision to make France a ‘country of unicorns’ requires a big shift in mentality

  • French President Emmanuel Macron wants to turn France into a "country of unicorns", making it a world leader in technology.
  • But he faces a tough task in reforming tax and labor laws in France which will be key.

"Vive la French tech!" That was the message last week during the Viva Technology conference in Paris, where some of the biggest names in the industry came together.

The message was clear from newly-elected President Emmanuel Macron: France will become Europe's leader in technology and transform into a "country of unicorns" – the term for companies valued at more than $1 billion.

"I want France to attract new entrepreneurs, new researchers, and be the nation for innovation and start-ups," Macron told CNBC on the sidelines of the event, prior to the announcement.

The speech he delivered was met with a standing ovation and there is cause for optimism in France. Venture capital investments in France hit $1.6 billion in 2016, just a touch lower than the $1.7 billion recorded in 2015, according to KPMG. In contrast, VC funding in Germany fell sharply to $1.9 billion in 2016, from $3.6 billion the year before, while the U.K. also saw a hefty drop.

France remains the third-largest player in terms of VC funding into start-ups, but it didn't see the falls recorded in Germany and Britain, which is encouraging. Europe's third-largest economy is also beginning to build billion dollar start-ups with the likes of BlaBlaCar and Criteo.

But the path to become a "start-up nation" could be a tough one given some of the structural issues in France. Entrepreneurs complain about the country's rigid labor laws which can make hiring and firing staff difficult, while a French wealth tax levied on those with personal assets of 1.3 million euros or more, has faced criticism.

Emmanuel Macron, France's president, speaks on stage at the Viva Technology conference in Paris, France, on Thursday, June 15, 2017.
Marlene Awaad | Bloomberg | Getty Images
Emmanuel Macron, France's president, speaks on stage at the Viva Technology conference in Paris, France, on Thursday, June 15, 2017.

Also, a lot of money raised by start-ups in France has come from corporates. Around $1.1 billion of capital raised in 2016 by French start-ups involved corporates, more than the figure in Germany and the U.K., according to non-profit technology firm Sirris. While it shows that large firms are trying to work with start-ups, it can also be a hindrance.

"Too many French startups focus on France-first, versus becoming global companies. That's changing, but not fast enough," Hussein Kanji, partner at London-based VC firm Hoxton Ventures, told CNBC by email.

"It's reinforced by French investors who don't seek outlier returns and are happy with median returns focused just on the French market. I don't think the government understands it reinforces this by encouraging tax incentives and French corporates to act as venture capitalists."

Macron, however, has made positive noises about loosening labor laws and regulation, cutting corporation tax, and supporting entrepreneurs. But turning France into Europe's leader will require more than just law changes. It will need a more global looking tech ecosystem, ready to think bigger than just France.

President Macron has at least inspired entrepreneurs, who delivered a standing ovation after his speech at Viva Tech. The path to become a "start-up nation" will no doubt be tough, but the country will be hoping Macron's vision will be real, and not just as fictional as unicorns.

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