Since the election of president Emmanuel Macron in 2017, Paris has experienced a surge of momentum as a startup hub. Investor interest had been building for years, but Macron’s government has aggressively focused on adopting more business-friendly regulations and heavily courted the startup and VC community. In September, he announced a €5 billion initiative to bring more late-stage VC capital into the market.
To get a sense of where France’s investor community sees startup opportunities, I surveyed 10 leading VCs who focus on the Paris ecosystem and asked them to share some of their current interests:
- Nicolas Debock (Idinvest)
- Marie Brayer (Serena Capital)
- Yacine Ghalim (Heartcore Capital)
- Romain Lavault (Partech Partners)
- Pia d’Iribarne (Stride VC)
- Alain Caffi (Ventech)
- Philippe Botteri (Accel)
- Alice Zagury (TheFamily)
- Jean de La Rochebrochard (Kima Ventures)
- Benoit Wirz (Brighteye Ventures)
Here are their responses:
Nicolas Debock (Idinvest)
Privacy is a trend I am really excited about. After the years of deployment of the web through different platforms (browser, mobile, TV, objects…) where personal data was just gathered and used in a ruthless way, I believe end users and companies are getting more conscious of the value (and not only the financial value) of their data.
This is creating the emergence of different tools around personal data management: from personal data platform, synthetic data to anonymization tool and encryption there is a wide range of new kind of businesses that could emerge. I believe that the future always emerge from tension between two trends. The web has been all around transparency and data deluge it is maybe time for the opposite trends to build its momentum.
Marie Brayer (Serena Capital)
We’re still big on deeptech startups because we are deeply convinced that France is a great place to start them (not unlike Israel) and there are still huge fields like healthcare, infrastructure and fashion where you can develop relevant and persistent value.
We are more and more focused on positive investing, which is much more than a buzzword: the current generation of entrepreneurs (and returning entrepreneurs as well!) want to dedicate their time to a worthy cause with social and societal impact. At Serena, we already invested in several companies with strong missions such as Lifen for instance (mission: reduce medical errors), Inato (decrease R&D cost of new medicine) or Accenta (reduce carbon footprint), and can see first hand the appeal they have towards tier one talent.
A new strong focus for us is also the gaming and entertainment industry, which will take a larger share of our lives thanks to all the existing solutions already optimizing our work time and our daily mobility.
Yacine Ghalim (Heartcore Capital)
Here are 2 of the overarching themes that I see playing out in different categories of the Consumer economy:
- “the Bottom 90%” — most of the startups we fund are building products catering to the top 10% of consumers by income. This is largely explained by VCs “availability bias.” The result is that we’ve been largely ignoring the needs of the “bottom 90%” of consumers, who in Europe account for ~70% of consumer spending! I’m incredibly excited by companies democratizing access to categories of goods or services to that segment of the population. I have written about this here and invested in a company called La Fourche which is a good example.
- “Soulful Aggregators” — I think that the D2C retail craze is largely over: consumers don’t want to maintain direct relationships with dozens of different brands; profitably acquiring consumers at scale for such narrow needs is hard. Most D2C businesses are more likely to end as “bonsai brands” (cute, but small) than large VC outcomes. Soulful Aggregators are the next evolution of that. These are trusted marketplaces or retailers that build loyal communities around an area of passion ([e.g.,] the environment, social justice). Like the first generation of online retailers, they tackle broad spending categories and sell products made by other people. Yet, they do that in the same “soulful” way as their D2C cousins. I have written about this here and La Fourche or Italic are good examples in our portfolio.
Romain Lavault (Partech Partners)
I am particularly excited about the market disruption caused by the uprising of Generation Z consumers.
Their switch to more purposeful, eco-conscious, transparent and digital-native products is impacting work, finance, food, mobility and retail in a big way.
With 2.5B Generation Z adults and teens globally, established companies are scrambling to adapt, and we see a rising number of startups addressing those verticals with Gen-Z focused products at the consumer level, but also across the entire B2B value chain as the shockwave propagates upstream.
Along those lines, we are actively investing globally in decentralized work and learning platforms (Holberton School, CoachHub, Fastwork, Wanted), digital-native finance and insurance (Alan, TheGuarantors, Axinan, Novicap), healthier food and robotic restaurants (Pazzi, Dejbox, Dahmakan, Blendid, Endless West, CollectivFood), new safer/cheaper/cleaner mobility models (Drover, Frontier Car, Beam, Shohoz, Bestmile, Commsignia) and social commerce (Jellysmack, Shox, NA-KD).
Pia d’Iribarne (Stride VC)
I’ve just been blown away by how far and fast the ecosystem has come. From Algolia to Front in SaaS or Voodoo and Zenly in consumer mobile, we’re seeing so many highly ambitious founders nailing it and inspiring the next generation. What’s striking about the French ecosystem is that the opportunities are in every segment. I am particularly excited about the opportunities in consumer mobile, with a product-centric generation of founders and deeptech, where France has some of the most competitive engineering talent. The government has really understood what the ecosystem needs with effective measures like the French Tech Visa, which has given us a real talent boost.
Alain Caffi (Ventech)
I’m very excited about the applications of real-time analytics and API-fication we’re seeing today. Between economic pressures, shifting balances of power, changing consumer preferences and regulatory evolutions, adaptability and dynamism are more essential for businesses globally than ever. In support of creating an economy powered by dynamic decision-making frameworks, real time analytics and the use of APIs are some of the smartest uses of data Ventech has come across. We’ve supported applications of this technology in KYC, compliance and anti-fraud (4stop), automated SME lending (Capcito), supply chain traceability (Tilkal), audience monetization (Mediarithmics).
We’re also closely following the idea of democratization via the the emergence of tools promoting the democratization of technology through the enablement of non-technical users. We’ve seen great applications of this trend in development (Frontastic’s front-end-as-a-service offering, Open As App’s no/low code platform), sports video (Veo’s AI-powered, low-cost 4K filming solution), and content delivery (Antidot).
Philippe Botteri (Accel)
France has been one of the pioneers of the democratization of cloud applications for small businesses, with companies like recent unicorn Doctolib, the booking platform for specialized doctors; PayFit, the integrated payroll and HR management software; and Qonto, a neobank for SMEs and freelancers. I am watching this space closely and expect to see more of these models emerge from the country.
France also has shown its ability to innovate around developer and API driven services like search-as-a-service provider Algolia. The emerging second generation businesses are very exciting, leveraging the power of AI and covering a range of areas from security and infrastructure management to compliance.
Alice Zagury (TheFamily)
I’m excited by four developments in Paris’ startup ecosystem:
- Ambition: The level of ambition has been rising high in the recent period. Paris-based startups are not afraid to tackle difficult challenges and to look beyond their domestic market, as Payfit for instance.
- Security: It becomes easier for founders to access capital and talent. Also the regulatory environment is (slowly) becoming friendlier toward innovative business models. Hence founders are able to take bolder risks and grow faster.
- Peer pressure: The market for talent is now very competitive, with fast-growing startups poaching talent from more mature companies. It forces everyone to remain on the edge if they want to retain their best employees. So being mission driven and thinking of happiness at work, perks and sharing equity is not just cool, it’s necessary.
- Attraction: We’re seeing more and more founders moving to Paris to build their company. It’s explained by trends such as the growing transatlantic rift and, of course, Brexit. But it’s also because Paris has made great progress in terms of supporting ambitious founders.
Jean de La Rochebrochard (Kima Ventures)
I don’t have a specific trend I’m focused on right now — I’ve found that an opportunity is too late once it’s a trend. I love that more and more entrepreneurs in Europe demonstrate the genuine ambition to build $10B+ companies though. They are not afraid anymore to address large scale opportunities, whether they want to conquer the U.S. or go big in Europe even though it’s a fragmented land of mixed cultures. This courage spreads among investors as well and it’s good to feel that growing trend.
Benoit Wirz (Brighteye Ventures)
On-the-job training is undergoing a quiet revolution. Machine learning is being used to provide effective, individualized real-time feedback on performance in fields ranging from sales (Chorus) to manufacturing (Drishti) to teaching (TeachFX) to law (Litigate) at a scale and precision hitherto impossible to achieve (TeachFX and Litigate are Brighteye portfolio companies). In addition, cheap, ubiquitous video conferencing is dramatically lowering the cost of professional human coaching and peer-to-peer mentoring, democratizing executive coaching in white collar industries and broadening mentorship across the board. We expect these trends to continue as the accelerating pace of innovation increases the need for people to continuously acquire new skills.