London was the place to be this week for a who’s who of political leaders and tech CEOs; or more precisely, Bletchley Park was. Famous for housing Alan Turing and other Enigma codebreakers during WW2, the British heritage site played host to the world’s first AI Safety Summit on Wednesday and Thursday.
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Culminating in the Bletchley Declaration, an agreement on AI safety signed by all the countries in attendance, the event was also very much about “positioning the U.K. as a central player in setting the agenda for ‘what we talk about when we talk about AI,'” TechCrunch’s Ingrid Lunden reported from the ground.
Let’s not, however, overestimate the leg up that hosting the conference might have given Great Britain over its cross-channel rival. While this week did put the U.K. and its prime minister in the spotlight, things should soon even out. After a mini, virtual summit in Korea in six months, France will be hosting the next in-person AI Safety Summit next year.
French minister of finance Bruno Le Maire was already in attendance, as was French entrepreneur Arthur Mensch, whose startup Mistral AI raised a $113 million seed round at a $260 million valuation earlier this year. Yes, a nine-figure seed round.
But whether it’s in France or in the U.K., and despite all the hype around AI, mega-rounds are once again rare. And without mega-rounds, unicorns may become an endangered species.
Unicorn dearth on both sides of the Channel
The U.K. fancies itself as the “Unicorn Kingdom,” per a recent ad campaign in the U.S. Meanwhile, French president Emmanuel Macron said he wants the country to have 100 unicorns by 2030, including 25 “green” unicorns.
Neither of the two countries made much progress on the unicorn road last quarter. According to a recent Dealroom report, only three new unicorns were born in Europe in the third quarter of 2023. Of these three, none is headquartered in France, and just one in London: Zyber 365, a web3 startup that is arguably better known for its Indian operations. (The CEO himself describes it on LinkedIn as “India’s & Asia’s fastest unicorn in 3 months” and the “109th unicorn of India.”)
Of course, it’s not just France or the U.K. that suffered a dearth of unicorn births this year. Quarterly Crunchbase data shows that global unicorn creation levels hadn’t been that low since Q3 2017.
With so few unicorns being minted this year, this leaves France and the U.K. pretty much where they were a year ago — that is, with the U.K. well ahead of France by unicorn count: 59, compared to 29, including 46 in London and 24 in Paris, according to Crunchbase.
While the actual tally is undoubtedly lower now that many unicorns are losing their horns, there’s no reason to think that valuations were more affected in one country over the other, meaning that the pecking order remains unchanged.
As a side note, while Germany falls somewhere in between by mere unicorn count, its population is significantly larger than the U.K.’s and France’s, which makes its relative position less encouraging than it seems for German startups.
Since France and the U.K. have both been vocal about their unicorn goals, it is these two countries we are looking at today. But is this even the right metric to look at? Probably not, as politicians, too, are starting to have doubts about paper money milestones.
Rethinking unicorns
This month marks the 10th anniversary of the TechCrunch column in which Cowboy Ventures’ Aileen Lee coined the term “unicorn” as a way to describe private tech companies with billion-dollar valuations.
Coincidentally or not, La French Tech, France’s government-backed initiative in charge of promoting and fostering its startup community, also celebrated its 10-year anniversary this month. TechCrunch’s Romain Dillet was at the birthday party, and while there was cake, mood killers were also looming.
A few hours before the event, Les Echos reported that French DIY e-commerce unicorn ManoMano was about to lay off 25% of its staff. It’s not just ManoMano, Romain noted: “Just like many tech ecosystems, the French tech ecosystem is currently going through a rough patch and facing layoffs, down rounds, fire sales and even bankruptcies.”
Still, that unicorns aren’t immune to the turmoil made many wonder whether they deserved all of the attention they had received. Unicorn-sized rounds used to guarantee startups a spot on La French Tech’s Next 40 ranking — forever. But these criteria are set to change, said Jean-Noël Barrot, France’s deputy minister in charge of digital transition and telecommunications.
Starting in 2024, France will refresh the criteria of its Next 40 and French Tech 120. Based on recommendations from ad hoc committee French Tech Finance Partners, the rule of “once a unicorn, always a unicorn” may no longer apply.
It remains to be seen how a proper audit can be conducted, as Les Echos recently noted that only 17% of French Tech 120 startups published their financial accounts in 2022; but the intention makes sense as a way to make these rankings more current.
Meanwhile, 20 startup associations from 16 European Union member countries and Ukraine teamed up to create a new index called LETS — Leading European Tech Scale-Ups. There are some limitations, starting with the fact that it doesn’t include Switzerland and the U.K. But the focus on growth potential and scale-up status, rather than billion-dollar valuations, is at least refreshing. What Europe really needs now, though, is a series of billion-dollar exits.