Incubation in Entrepreneurial Ecosystems

13. France

Abstract

A hallmark of France’s incubation system is the close integration with the research system, reflecting the ethos that innovation is key to the global competitiveness of French startups. There are large amounts of public support for incubators in France, complemented by a high level of engagement and investment from private actors including large corporates, universities and investors. The French incubation system also benefits from the cohesive and well-connected nature of the wider entrepreneurial ecosystem, supported by umbrella initiatives like French Tech as well as by major ecosystem hubs, most notably Station F.

Overview of incubation system

France has gradually developed support structures to facilitate entrepreneurship (Ministry of Economy and Finance, 2021[1]). In 2019, there were more than 400 incubators, accelerators, and startup studios in the country, with half of the active startups at that time having passed through an incubator or accelerator since their inception.

The main categories of incubator in France are:

• Public incubators, which often give startups access to the skills and facilities of public research centres in order to develop and test their product or service.

• Incubators run by local authorities, which are attached to a region or town to help develop the attractiveness of their area.

• Private incubators, often set up by entrepreneurs, investors or large technology companies. Well-known examples include "The Family", "Le Camping", and "Grand Lieu".

• Incubators run by the grandes écoles and universities designed to host projects by their students or former students.

• Corporate incubators within large companies to enable them to surround themselves with agile structures capable of rapid innovation.

The first incubators in France were established in the late 1990s and the number of private incubators has been growing since 2010. Initiators of these incubators and support structures include associations, major corporations, investment funds, educational institutions, and universities. For example, 54% of companies in the CAC 40 (France's benchmark stock market index) have established startup incubation structures, some examples of which include i-Lab (the Air Liquide Group's innovation laboratory), the EDF Pulse, and the Orange Lab1. This trend also extends to higher education institutions, with 56% of scientific preparatory French schools (“Classes Préparatoires aux Grandes Écoles”) funding incubation or acceleration programmes in 2018. These programmes target their students and individuals with specialised or unique profiles pursuing entrepreneurial projects. There are also international hardware incubators, either backed by venture capital funds, such as Hax, or by manufacturers, such as Highway1. These incubators offer an integrated model, combining the commercial and strategic dimensions of traditional incubation programmes, with equity investment and support in product development and piloting.

There are also many incubation and acceleration programmes run by public entities. For example, Bpifrance operates a Startup accelerator targeting French startups with a team of at least 15 people that have already received some funding, as well as an SME accelerator for growth-oriented SMEs with annual revenues between EUR 10 and 50 million. In January 2019, French Tech launched the "French Tech Tremplin" programme, which provides innovative startups with financial assistance to support their R&D and entry onto an incubation programme delivered by selected incubators awarded the French Tech Tremplin label. Meanwhile, Paris&Co is the economic innovation agency of Paris and the Metropolitan area and a key player in the local incubation system, with four physical locations across Paris and the surrounding area that host startups and ecosystem events. There are currently eight specialised incubation programmes in the fields of sustainable food, sustainable cities, tourism and culture, sport, health, the future of organisations, urban experimentation and social innovation, with each providing a range of supports and services including coaching, non-dilutive funding opportunities, corporate and investor matchmaking, and access to sector experts. A standout feature of Paris&Co’s support for startups is the depth and quality of its network of corporates, experts, mentors, and investors, which is leveraged through the approximately 800 meetings that Paris&Co sets up each year for its startups. Another success factor is the highly individualised support offer delivered to startups, with each client having opportunities to access Paris&Co’s resources on a flexible and needs-based basis, guided by their assigned advisor.

Another relevant group in this space are the Technology Transfer Acceleration Companies (SATTs). The 13 SATTS were created as part of the Investing in the Future programme and work to support the technological development of innovations through a EUR 856 million investment fund. SATTs are local and trusted structures with access to the skills and inventions of researchers in their territory. They detect, evaluate, protect and bring these inventions to market by entrusting them to an existing company or a future startup. SATTs have complementary missions and activities to those of incubators, providing upstream project detection and post-incubation support. Some SATTs now include incubators, such as PULSALYS, the SATT for Lyon & Saint-Etienne, which integrated the activities of the CREALYS incubator in June 2014.

Major policies for incubation

Government support for incubators is contained within “Programme 172: Multidisciplinary scientific and technological research”, which is administered by Ministry of Higher Education and Research. Action 6 of the programme (“Support for Innovation”) includes a focus on incubators, with EUR 4.4 million directed towards support for incubators as part this action in 2022. There are currently 19 incubators supported by Programme 172 throughout France. The government contributes only 20% of the operating budget of these incubators, which are mostly financed by regional and European funds. The supported incubators take in startups on an open-ended basis and provide them with premises, advice and expertise. In theory, startups hosted by these incubators must have an innovative project and strong potential to contribute to economic development. Initially intended exclusively for projects based on public research results, the eligibility criteria have been extended to cover business startup projects linked to collaboration with public research and then to companies that have won the national i-Lab competition or are less than six months old. The supported incubators will eventually be taken over by the technology transfer acceleration companies (SATT) or the regional innovation agencies (ARI). This will take place gradually, since their integration involves complex financial and legal arrangements.

The General Inspectorate of the Administration for National Education and Research evaluated this incubator support scheme in 2014. Between 2004 and 2013, the supported incubators contributed to creating 2 616 businesses, of which only 122, or 4.3%, exceeded the 20 full time equivalent employment threshold. Of the estimated 16 000 jobs that incubators helped to create over the period, expenditure per job created ranged from EUR 5 000 to EUR 30 000, with an average of EUR 17 200. The study did raise concerns, however, regarding a stagnation in the number of projects originating from or linking to public research.

In addition to Programme 172’s incubator support scheme, there are other significant sources of public support for the incubation system in France, often at the local level. For example, Paris and the Ile-de-France region support the various "Paris&Co" incubators. National public entities – such as BpiFrance – and initiatives – such as the French Tech programme – also fund an array of incubation programmes, as describes previously. Moreover, there are private incubators attached to the grandes écoles (Polytechnique, HEC, Sciences Po, etc.), which benefit indirectly from public support.

Another very important policy initiative is the French Tech, which was launched by the French government in 2013 with the overarching aim of providing startups and other actors in France’s entrepreneurial ecosystems with a common identity and to foster more interaction and collaboration within these ecosystems. As well as certifying and co-ordinating the French Tech Capitals and Communities, French Tech has also launched incubation programmes, such as French Tech Tremplin.

Conclusions and lessons for other countries

In recent years, France has strategically positioned itself as a hub for startups through a combination of innovative policies and a supportive ecosystem. The French government's initiatives, such as the French Tech Visa and Station F, have attracted global talent and provided a conducive environment for entrepreneurship. Additionally, favourable tax incentives and funding opportunities have encouraged risk-taking and investment in cutting-edge technologies. The emphasis on fostering collaboration between startups, established companies, and research institutions has created a dynamic network that facilitates knowledge exchange and accelerates growth. Indeed, the country has emerged as a fertile ground for startups, witnessing a growing number of unicorns in sectors such as technology, healthcare, and fintech.

France’s robust business incubation system is an important contributor to the success of the startup ecosystem. Supported by substantial funding and extensive assistance, this system plays a pivotal role in fostering the growth of technological enterprises. The combination of financial aid, mentorship, and guidance creates an optimal environment for startups to flourish, actively contributing to the ever-evolving technological landscape. French incubators are increasingly embracing a global perspective, signifying a significant shift towards internationalisation. This proactive engagement underscores a crucial acknowledgment: fostering international collaborations is indispensable for the sustained growth and resilience of tech enterprises.

France's strategic vision is based on the conviction that innovation is the primary catalyst for international success. Stimulating innovation lies at the heart of France’s policy support for the incubation system. This reflects the view that enabling and encouraging startups to be innovative is a crucial first step in facilitating the emergence of companies that are competitive on a global stage. The prioritisation of creating and strengthening innovative startups helps to propel French startups to the forefront of technology and position them as pivotal players in the global market.

References

[1] Ministry of Economy and Finance (2021), L’emploi dans les start-up françaises.

Note

← 1. https://321founded.com/news/les-initiatives-des-entreprises-du-cac40-pour-accelerer-leur-digitalisation