France leads the European startup ecosystem again

The ESNA Report assesses the progress of European countries in creating startups and developing favorable ecosystems. To draw up its report, ESNA uses following eight “standards of excellence”, including: Fast Startup Creation, Attracting and Retaining Talent, Innovation in Regulation, Access to Finance, Social inclusion and Diversity, and Digital First indicators.
 

France in leading position

As Bpifrance, a public investment bank, explains, this report “guides public policies in terms of innovation, by highlighting good practice and encouraging the alignment of national policies with the best European practice”. Its objective is to “create an environment favorable to the development of startups and reinforce opportunities for tech entrepreneurs in Europe”.

More precisely, the 2024 report shows the progress of the 24 European countries in terms of access to finance and attracting talent, with an average implementation rate of 61% (compared with 54% in 2023). France is ranked first for the second year in a row, with a score of 93%.

Indeed, France has achieved a maximum score in:

• access to finance, thanks to “the use of public financing mechanisms”, as part of the “France 2030” plan;
• the creation of a stock options system, enabling it to attract and retain talents;
• highlight is brought to social inclusion, diversity and respect for democratic values. These values guarantee entrepreneurs equal access to the opportunities they need to turn “their ideas into reality, and fair access to technologies and skills, essential for an inclusive and diversified startup ecosystem”, says the French Ministry of the Economy.

To consolidate its leadership position, according to the Ministry, France “can rely on its strategic levers, which also contribute to making Europe more competitive in terms of innovation”. In its report, ESNA calls for “coordinated action to reduce national disparities, simplify processes and strengthen tools to attract talent”.

French startups: a growing industrial fabric

The publication of this report comes at a time when a study by the French Ministry of the Economy’s Directorate General for Businesses, entitled “Startups: the industrial fabric of tomorrow?”, analyzes the sector’s growth and development in recent years.

According to this study, the number of startups created has risen from 13,000 in 2016 to 16,600 in 2021, using 8 years as the age threshold, and from 18,800 to 22,700 for those over twelve years old. Overall, the sector, supported by government subsidies, is expanding. In the latter case, the stock of startups is growing by 500 to 1,000 a year.

In terms of business sectors, the startups observed are mainly active in information and communication (just under 40%) and specialized, scientific and technical activities (30%). On average, for the under-8 age group, startups are very small companies, employing seven full-time equivalent (FTE) staff and generating sales of one million euros. Although these companies are small in size, in terms of startup employment, this has risen from some 166,000 employees in 2016 to almost 200,000 in 2021.

Guidance and support from public powers

As the ESNA report points out, the keynote from the ministry of economy shows that in France, startups benefit from various support mechanisms adapted to their needs. Support to development of startups in France takes many different forms to cover their specific needs. Public powers guide and support research, development and innovation through targeted measures throughout the startups’ development cycle.

Such mechanisms include:

• actions of the Mission French Tech, created in 2013 to promote the ecosystem and create favorable conditions to the development of startups;
• financial support adapted to the first phases of development, through direct support from Bpifrance, such as the i-Lab contest, created to support future business creators of companies aged under two years offering highly innovative projects;
• the French Tech scholarship, which aims at encouraging the creation of innovative companies with strong growth potential.

Explore more: 

- ESNA report

- “startups: the industrial fabric of tomorrow?”