Less than a decade ago, one of London’s main financial districts – Canary Wharf – dedicated itself to the advancement of fintech. Respected entrepreneurs, venture capitalists, and banking incumbents began to cohabit co-working spaces in the Silicon Roundabout, mingling at pitch events, and uniting around a new legacy of tech-based progress.
Fast forward to the current day and the Brexit vote has posed too many questions, giving an air of uncertainty to London’s financial powerhouse. Europe now needs a new champion to pick up the baton and run towards the future – and that champion is most likely to be one of the French, German, or Dutch cities best equipped to enable innovation.
Industry goliaths crowding the streets of the City and Canary Wharf waiver in the face of imminent change: what does the withdrawal of Great Britain from the European Union imply for what is undoubtedly one of the world’s oldest financial centers? Who will have the resources and infrastructure, between the EU Nations, capable of absorbing the professional and entrepreneurial exodus from London and the larger United Kingdom? Paris has been the first to answer the call.
Although Article 50 has yet to be triggered, financial institutions have set up working groups to mitigate the effects of Brexit and enact contingency plans to protect their practices. HSBC recently announced its plans to relocate 1,000 of their employees to Paris and similar announcements have been made by the likes of J.P. Morgan and Goldman Sachs. In fact, it has been estimated that “Paris could lure 20,000 finance jobs from Britain,” according to the Independent.
The French Infrastructure Is Coming
In April 2017, 34,000 square meters will light up Paris’s 13th arrondissement; perhaps the most clear-cut signal that the City of Lights will be a solid landing point for any British entrepreneurs worth their salt. This super-sized structure, known as Station F, has already been dubbed the largest startup campus in Europe. Masterminded by Parisian telecom heavy-hitter Xavier Niel, this project of enormous proportions represents one of a handful of initiatives undertaken by both the public and private sector to accelerate France’s startup ecosystem.
Notable government-backed initiatives such as La French Tech confirm the country's belief in digital innovation and the importance of the French startup scene features heavily in France’s “Digital Roadmap” to modernizing the country. Immediate benefits from these initiatives include a fund of €150MM for specific technologies that touch upon domains like A.I., big data, cloud computing, and other emerging advancements. This capital is aimed to highlight France’s traditional strengths in engineering and mathematics.
Yet the government’s programs aren’t just aimed at its citizens. In fact, it is one of the early movers in the space to initially convince foreign talent that they should come to France. A major initiative that the French government are currently pursuing is the introduction of the French Tech Visa – an idea not dissimilar to the United States’ H-1B program.
This open-ended immigration scheme will enable non-French citizens with digital expertise to benefit from an expedited process on the country’s “Le passeport-talent” visa scheme. What defines a candidate is incredibly broad; both startup founders and programmers can apply for the visa in addition to venture capitalists and angel investors. This initiative follows the successful implementation of the French Tech Ticket, a government program launched a few years earlier that attracted over 4,500 applicants for only 200+ visas.
The Final Piece of the Puzzle: Money Flow
From established local institutional investors such as Kima Ventures and Serena Capital, to the expected influx of Corporate Venture Capital (CVC), Paris continues to emerge as a prominent investment hub in Europe. In 2016, corporate venture arms in France accounted for 21% of all startup funding, marking a significant increase from a mere 11% the prior year. This trend is expected to continue to target early-stage solutions, as indicated by the fact that approximately 62% of local venture activity was directed towards seed-to-Series A startups.
In the past 5 years, France has seen an increase from 33 deals to 145.
Regardless, the venture capital ecosystem in France still has a significant gap to close in terms of total capital deployed, with only 10% of the activity compared to the UK or Germany for Q1-3 2016 (CB Insights 2016). However, the tides are shifting with a 71% increase from January to September of the past year according to Business Insider. In the past 5 years, France has seen an increase from 33 deals to 145.
The Maturation of French Startups
In May 2011, Paris had approximately 1,000 registered startups; as of May 2016, that number had climbed to well over 5,000. Seasoned entrepreneurs who have struck it big in France, such as Xavier Neil, founder of Free, and Frederic Mazzella, founder of BlaBlaCar, are seeking to reinvest in the nation that brought them such profit. This desire to mentor startups is possibly the clearest indication of a lasting shift in entrepreneurial culture.
As banks ramp up initiatives within their respective European locations, fintech founders will need to consider whether their current homes are conducive to their entrepreneurial aspirations. In 2015, Paris was the stage for France’s first fintech exit. Leetchi, a website launched to allow users to pool together their money towards a common goal, such as a gift or event, was an early predecessor to the crowdfunding websites we know today like Kickstarter. The startup was acquired in September 2015 by French bank Credit Mutuel Arkea in a deal that valued it at over 50M Euros- a first in the Parisian fintech scene.
Our Dedication to Paris
After working with BNP Paribas for two, fruitful years, we have decided to join the charge. Launching this month, we will begin sourcing startups for a joint initiative in the heart of Paris to accelerate fintech and insurtech startups in Europe.
We intend to replicate the success we have experienced in Stuttgart with our mobility program in partnership with Daimler-Mercedes. The secret sauce we learnt, by building a bridge from Silicon Valley to a European hub, was that we can enable cross-continental tech transfer in the most effective manner possible whilst fostering local innovation. This globalization of talent is going to be a key attribute of our position in Paris.
BNP Paribas-Plug and Play is a 12-week innovation program with no equity requirement aimed at the very best fintech and insurtech companies in Europe. Plug and Play is bringing its expertise in facilitating meaningful engagement and strategic investment to accelerate 10 hand-picked startups. The program is free of charge to accepted startups with cloud service and co-working space based in central Paris included.
If you are a startup founder and would like to work with us to boost your startup on a global scale, apply here: parisfintech.plugandplaytechcenter.com