Last Week, Emmanuel Macron - deputy secretary-general at the Elysee - sent us an email to come and exchange upon entrepreneurship in France. This is part of our job at TheFamily, as long as we can help, we do answer, we are involved. The government needs to understand, when we need to have a startup-friendly environment.
So this monday, in one of the apartments of the government, in a golden and ancient French saloon, the officials and some actors of the digital scene gathered : several young entrepreneurs, accelerators and the “usual suspects” - Xavier Niel - Founder of Free, Marc Simoncini, founder of the dating website Meetic, Jacques-Antoine Granjon, founder of the e-commerce website, vente-privée and Jean David Blanc, founder of Allociné.
Xavier Niel was animating the conversation with Emmanuel Macron. He was clearly the “facilitator”. While waiters were serving the finest food ever tasted in my mouth, Xavier Niel started :
”Girls, Guys, with Marc and Jacques-Antoine, we are tired of being always “the startup dudes” everyone knows, ears and sees when it comes to digital purposes. It’s important that the government meets with you too. You are all great representatives and - I hope - you will be also involved in the upcoming growth of the next ten years. I wanted you to take part and exchange upon the main problems you can encounter, in your day to day work.”
That is how the crowd of entrepreneurs - shy & quiet impressed, started talking fund raising, legal & cultural barriers.
FUND RAISING - is it a problem for startup to have access to capital in France?
Access to the seed money wasn’t the biggest problem for the successful entrepreneurs there. But serie A is, 5 Millions or more are hard to find.
Well, this deserves to be counterbalanced by the fact that you can’t realise all the diamonds killed on the road of fund raising - already too dead to be invited at this table.
The other tricky things mentioned was that at the seed stage, money doesn’t come fast nor in the right conditions. We still need to work on the balance of powers between investors and startups, but also on creating legal vehicles that makes it flawless. This is precisely when I told our host that at TheFamily, we had launched AIR (the French version of SAFE) which unfortunately, couldn’t fit in it the tax break law given to business angels (TEPA law). Just a suggestion.
STOCK OPTIONS - How can we align the interests of our startup employees to the growth of the startup ?
The French version of stock options is called “BSPCE”.
1) Employees are afraid to sign the papers - it’s too complicated to understand.
2) It doesn’t work for big startups.
EMPLOYMENT LAWS - What’s the problem?
Everybody around the table agreed on the fact that hiring and firing fast was impossible in France. The price to pay isn’t the problem, it’s more on the administrative and time consuming constraints that it is too hard. This problem also prevents international companies to set up and hire in France.
This is when Mister Macron understood that only few startups were following the French rules: no one is hiring the way they should. Startups develops other tricky ways to pay their “employees”. This creates - legal insecurity and a psychological tension for founders.
We talked about the rule of being prevented from hiring more than 10% of interns. Alexandre Malsch CEO of the fast growing online media Melty was against this: “I receive more than 150 internships applications a month. That’s because they know Melty isn’t exploiting interns, we don’t ask them to serve coffees. Most of my employees have been our interns before.That’s the best training for young professionals. Other companies may even fight to hire our former interns: they are known for being operational and up-to-date, using all the latest and best tools. So if you make this law of 10% happen, you’ll just kill this virtuous circle.”
IMMIGRATION - Why is it so hard to welcome talents from abroad?
”It’s way too hard to manage welcoming foreigners to join our team" said Daniel Marhely - CTO and cofounder of Deezer while Roxanne Varza from Microsoft accelerator added a "Thanks for talking about this!" related to her own experience to get a visa but also, related to the too closed ecosystem we have. We are all well aware that the French tech scene is too French to be fully innovative. You just travel abroad and understand how the best tech places mixe a larger diversity of foreigners.
CULTURE - Can we be ambitious?
”When I pitched US funds, I knew they wanted me to talk about my future “one billion company” but I felt uncomfortable to say so" - Celine Lazorthes, CEO of Leetchie. She honestly pointed a reality, which is an important fact: ambition has to be encouraged and taught. It’s not natural.
Now, let’s say you’re ambitious. Going global, or at least targeting Europe, when you have an e-commerce platform like Vente-Privée is super hard, as Jacques-Antoine was saying : “If I hire one great HR personne in France, I’ll have to get one new for each new countries, I can’t scale because all the laws are very different." OK - We have to align by the rules with all the other european countries, Europe isn’t a homogeneous market, that’s another important problem to face.
OFFICIALS - Do they understand the opportunity provided by startups ?
Many entrepreneurs mentioned the fact that officials hey see innovation as a threat.
Deputies and senators don’t know nor trust the new generation of startups at all. There is a real problem in the way our law makers see digital innovations, they won’t support us as long as they won’t get the opportunity we can represent. This means education for officials is KEY.
TAX LAWS - Let’s keep the best for the dessert ;)
Chocolate cake, a crazy one with béchamel sauce and orange salad.
The problem is that our government makes an error in mixing speculation and venture capital. Laws preventing speculation can’t be applied for investors, otherwise, you kill risk takers willing to invest in young startups.
Regarding the tax on benefits, I felt like it was the same old song. The main sentence that everyone kept on repeating was : “Please make it simple and compatible with the global market.” Make it simple and stable, with no sub-sub-sub categories, no changes, no need to pay a tax experts to abide by the law.
This is when our President, François Hollande, entered the room. This was a surprise for all the entrepreneurs - and, HE SAT JUST NEXT TO ME. I felt like a student having a spot test and my face did the rainbow, from green to red. I looked at my neighbours, and tried HARD to focus - Alice, seriously, you’re here now, there is no way to escape, so be in charge. The President needs to know about the problems entrepreneurs have every day.
We all introduce ourselves, Emmanuel Macron summarised the topics and the president followed the conversation. It went into the harmonisation of the tax rates with all the European countries - “Some will have to increase the level of taxes, others will have to downsize it…" said Jaques-Antoine - like a subliminal message sent to the most important person in the room.
I was wondering, will this meeting be efficient? We all already know about this list of things to change. So, I really don’t think this was another bullshit meeting made for communication, no journalist was invited.
My opinion is that, lucky we, the government does understand the need to encourage this new category of entrepreneurs - startups. It is an achievement. Startups might become the pillars of the next French growth. Startups are now treated kindly, received and listened. Great. But, as long as they will be seen appart from the “serious matters” they will stay small. We can still gather and talk about the main problems to help them grow. The reality is that these small players are protected and encouraged as long as they don’t create troubles. Once you have a startup threatening a monopole - transportation, hotels, insurance… The historical players will be protected first. That’s how you end by having the road fully opened to the disruptive “barbarians from Silicon Valley" - as we call them at TheFamily, like Uber being too strong to have any comparable competitors in France, competitors killed on the road by rules and mechanisms supporting historical players.
One thing is to see young startups as a new potential, another thing is to support innovation when it perturbs historical players. We’ll stay a little country on the tech scene as long as we act like that.
This is an idea : let’s set up the same types of meetings - putting around the tables actors, but this time, by industries. Imagine a lunch with the players of the banking sector for instance. You invite very young, already growing and the main players within the banking industry. No journalist, but still deputy secretary-general at the Elysee and the President. This is where making a stand might become harder, but efficient. We’d be here to help, again.