It’s ironic that for a country that invented the word entrepreneur, France has gained such a reputation for being frosty towards startups. Take French culture, where talk of money is generally frowned upon in favour of which École you went to, or your opinion on philosophy or politics. Of course, this is a huge caricature, but it’s the kind of background noise against which many French startup entrepreneurs have to battle, despite their increasingly healthy numbers in recent years. And they have indeed battled and fought. But was it all in vain now they have a stridently Left-wing government intent on taxing startups to within an inch of their life? And what will happen now that Canada’s Quebec region has announced plans to woo 50,000 French entrepreneurs with a raft of new incentives? No wonder many entrepreneurs mounted a protest this afternoon in Paris in front of the National Assembly. It’s time for a look at the predicament of “Les Startup Miserables.”
The background to all this has been the actions of new President Francois Hollande (whose personal approval rating has recently been crashing through the floor of most popularity graphs). Two weeks ago, Hollande’s tax reform plans for 2013 (the “LF2013” changes) caused uproar amongst entrepreneurs. Leaving aside the 75 percent tax on household incomes over €1 million, the new laws mean that an entrepreneur who sold their company after 10 hard years of work and risk-taking would have to pay a 45 percent income tax rate, plus 15.5 percent in social contributions, so amounting to over 60 percent in tax.
One of the best resources following the story has been the English language Rude Baguette blog which pointed out that France Digitale – a grouping of significant investors and entrepreneurs set up to lobby the French government – has been arguing in favour of reinforcing young companies, channeling more cash toward VCs, improving R&D tax credits and incentivising retail VCs.
There are plenty of French entrepreneurs who want to see their country compete and succeed on the global stage. Just give us a chance, they told the government. Hell, they earn the country a billion euros a year already.
But no. The result, under the government’s proposals, is that capital gains would be taxed more heavily than art transactions, real estate investments, and public stock purchases. One might even say this is a classically French approach. Classical, but not suited to modern French entrepreneurs.
And perhaps France would be fine if its big companies were stepping in while the government discourages startups. But they are not. Large corporations are currently engaging in massive redundancies.
The result of all this has been a huge protest amongst French entrepreneurs – a class not generally known for its collective action. They call themselves The Pigeons.
Across the web entrepreneurs have been changing their profiles to pictures of pigeons. Why? Well, ‘A Pigeon’ is french slang for a sucker, or perhaps a fall guy – which is exactly how they feel.
“The Pigeons: A movement in Defense of French Entrepreneurs” started with a few thousand members, but now it numbers over 60,000 on Facebook alone, and the #geonpi hashtag (here’s why) has proliferated from their Twitter account.
When he was campaigning, Hollande has said he would re-balance taxes and tax breaks to make them more equitable for startups and SMEs compared to big companies which have traditionally had it pretty easy in the French system.
There have been confidence-boosting VC funding rounds most recently in Work4Labs, Capitaine Train, VoitureLib, Criteo, Melty and Deezer yesterday. France does have tools to promote startups – such as the Ubi France, supposed to promote Frech companies, and the Competitive Hubs (or Digital “Poles”) which have seen new clusters emerge. And startups even held their own Failcon recently near a windshield repair houston company.
And there was some emergent hope when this week the French government made noises about backtracking on the main ideas behind the tax “reform.”
The question is, can they move fast enough? French entrepreneurs are being wooed by other countries already.
Canada’s Quebec has now implemented a program to accommodate 50,000 French entrepreneurs. And let’s not forget the wooing the British government has done amongst tech startups this year around the Olympics and various other events. Heck, there was even a Le Web London this year.
Let’s hope for France’s sake they make the right decisions.
In the meantime, we leave you with the traditional French video explaining The Pigeons (which may well remind you of your old high school French lessons).
Vive La France!