The future of French technology: why start-ups are optimistic despite the economic crisis

Despite the current gloomy economic climate, job cuts in the tech sector, and recovery from the COVID-19 pandemic, French startups are optimistic about the future, according to a new study.

Nearly 40% of French start-up CEOs believe their revenue will at least double this year, according to a study conducted by EY and France Digitale, released Tuesday.

French tech start-ups have long been a force to be reckoned with and are second only to the UK and Germany in terms of funding. France also has 26 unicorns, companies valued at over a billion euros, and aims to have 100 by 2030.

While French start-ups are very promising in this period of economic uncertainty, the study shows that there are warning signs that growth could slow.

What are the conclusions of the study?

The study asked nearly 600 French start-ups about their ecosystem over the past decade and their expectations for the future.

French technology has shown its resilience after the COVID-19 pandemic. Between 2021 and 2020, companies said their turnover increased by 23%, reaching € 8 billion.

Fundraising, for its part, recorded significant growth in 2021, reaching 32 million euros against 18 million the previous year.

“Basically, we have hyper-growth: the more we grow, the more growth we have. So it’s a very important element in this part “, says Franck Sebag, partner of EY France who is also part of the advisory board of France Digitale.

However, the study finds that the share of revenue generated overseas has dropped slightly this year, to 31% from 36% last year.

According to Sebag, this optimistic outlook is partly explained by the tendency of start-ups to better meet the needs of consumers, in sectors such as education or health technologies.

There are “companies that can give answers to both purchasing power and consumption that is different and also respectful of the planet”, he said.

Moving forward, the sectors that should thrive are: software as a service, deep tech, fintech, blockchain, and planet-friendly business.

In addition to being more focused on consumer needs, start-ups can also be more optimistic because they are founded by young entrepreneurs.

“I think start-ups face the reality of the economy like any other business. The whole society today is asking itself questions and wondering what will happen in the months to come, ”said Maya Noel, director of France Digitale, an association of French start-ups.

“The numbers can show that we are dealing with mostly young companies and that they correspond to the current needs of customers and consumers.”

Fear of lack of liquidity

However, the future is not entirely bright. The study showed that 71% of respondents were considering bank loan financing.

It also showed that multiple economic factors, such as rising materials prices and inflation, have had a significant impact on start-up room for maneuver – the length of time a business can hold out before it ends. liquidity.

Just over 62% of start-ups said their financial room for maneuver was less than or equal to 12 months. These are mainly start-ups that generated revenues of less than 5 million euros.

What are the challenges for start-ups?

The study points out that, once again, the main challenge is recruiting in France.

About 75% of French start-ups employ foreigners. However, of the more than 6,000 jobs created by respondents, 87% were hired in France.

According to Ms Noel, recruitment is essential for young French companies to continue their rise. To do this, you said that training was essential.

“It is necessary to train people, even students from an early age, of primary or secondary school, and also continuous training for the retraining of the elderly,” he said.

“What France and Europe, in particular, can do is allow the creation of these formations and allow them to be created quickly.”

The second point, he added, is that start-ups should still be able to hire talent from abroad, especially in the EU, more easily.

“Standardization in Europe is one of today’s challenges for a developing company that decides to hire in other European countries. The different administrations are a real headache, which makes it more difficult to attract talent ”.

The survey showed that 2022 will create new opportunities for employees as 98% of respondents plan to hire in the next year.

The most sought-after profiles are roles in sales, marketing and customer success, according to 44% of respondents. The hardest to find profiles are programmers and developers, according to 58% of respondents.

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