Building a Gateway to Improved Franco-German Startup Co-Operation

By David Knight |

Over the past year or two, I have journeyed to Italy, the UK, the Netherlands, Ireland, Finland, Norway, Switzerland and France, without ever having to leave Berlin. Kind of. In any case, that’s a pretty impressive list of embassies who have been willing to put on tech-related events. And beyond being an interesting insight into the diplomatic styling of different European countries, it’s also a sign of an increasing realisation of the need for greater co-operation when it comes to startups.

This week, it was the turn of France; without doubt the most standout location of any embassy I’ve been to so far. Situated directly on Pariser Platz, it has a glorious view out over the never-ending stream of tourists miling about on the square, and to the Brandenburg Gate beyond – made even better right now with the Festival of Lights giving the venerable old monument an extra gloss.

The occasion was a mini-conference looking at public and private policies regarding startup and spin-off funding, specifically in Germany and France, including an outline of how the authorities in the two countries – and at the European Commission – support innovative young businesses, as well as insights by angel investors, VCs and crowdfunding experts into their respective fields.

A Well-Integrated Network

Truth be told, it was at times a little dry – what had been a decent crowd had noticeably dwindled by the time the day’s sessions came to a close – but there were also some very interesting points made. In particular, these were concerning how Germany and France can work better together. One of the drums many (including me) have been banging for a while is that Europe needs to be a well-integrated network of innovative tech hubs rather than a series of competing scenes in order to compete with the rest of the world.

And if you throw in the wider economic situation – France, according to reports, has been struggling with its deficit, while Germany has also run into problems recently – concerted efforts to bring startups on both sides of the border closer together seem all the more important. Because truth be told, it doesn’t feel like the links are currently that close at all, compared to those with other startup hubs (although what I have heard – especially from Numa’s Le Camping accelerator program – has generally been very positive about Paris as a place to build a startup).

The highlight speakers for me, then, were Axelle Lemaire, State Secretary for Digital Affairs at the French Ministry of the Economy, Industry and the Digital Sector, and Brigitte Zypries, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy. Two people at the heart of central government startup policymaking.

As Lemaire told the audience on Tuesday: “Rather than Berlin vs London vs Paris in worldwide competition, we should probably try to create bridges a little bit more in order to be more powerful in the face of the rest of the world.” The really big digital players nowadays, she added, are American, Chinese and Korean, not European. But France is becoming better at supporting startups through crowdfunding, tax credits and corporate funding.

Ambitious Measures

“These are concrete, these are real, these are ambitious measures, showing how important the digital revolution is to the Prime Minister,” she said. The main policy of the government in Paris is a network of around eight cities with vibrant local ecosystems known as La French Tech (a name I’m not sure l’Académie française would approve of) aimed at accelerating the growth of young companies, ensuring they can find funding and scale.

There should, in turn, be equivalents elsewhere, Lemaire argued, such as a German Tech, a Nordic Tech, a Mediterranean Tech, etc. “For the moment it is hard for a company to launch at the European level, and it may seem easier to go straight away to the US because they see it as one single market.”

Zypries, meanwhile, praised the strength of Franco-German co-operation with projects like Airbus, but admitted: “There is one field in which France and Germany have not had any notable success for a decade – both of our countries have been struggling to develop new business models which are usually based on digital technology, and to develop those models to make a successful [entry into] the global market.”

The measures being undertaken by the German government, she added, included bringing established companies and startups together (a trend which has been growing of its own accord as well) and creating an environment in which startups can thrive – with the biggest barrier being a lack of capital. But overcoming that hurdle, Zypries argued, is not a job for the government alone: “We want people to invest in startups, and even if it is only a small [amount] of money, it is necessary to get those people involved, not only to invest money but to help by telling people how that can do it on a better way.”

A Worrying Story

The numbers do tell a worrying story – some €674 million in venture capital was invested in Germany last year, amounting to just 0.026 percent of the country’s GDP. In France that percentage was only just higher at 0.033 percent, while in the US it was 32 times more. Switzerland, the UK and Sweden can also all boast higher numbers than Germany and France.

Zypries also talked about the goal of large-scale IPOs, saying lessons can be learned from examples like Facebook: “You need entrepreneurs who really believe in their idea. And you need entrepreneurs who have the strength and endurance to turn [their startups] into success stories. Second, you need investors with deep pockets, and third we need a well functioning stock exchange that succeeds in convincing young, fast-growing companies to float their shares.”

She also pointed out the success of others around the world: “The Chinese and the Americans have developed very innovative ways of fusing national legal and economic systems to support their own companies. We in Europe should not make the mistake [of thinking] that our own small national markets, and their small invisible hands, will be enough to face extremely big challenges.”

Successfully Pulling Together

She is convinced, she added, that success would only be possible if Europe comes to be seen as one entity. “For this to happen, France and Germany must successfully pull together.”

Stirring stuff. There is no doubt that closer co-operation between countries in Europe can only be a good thing, and it is also true that many governments are starting to realise that fact – just look at the amount of embassies a tech journalist finds himself invited to.

After all the talks, we were taken up to a space with the wonderful views out over the Brandenburg Gate. Originally a customs arch built where a city gate used to stand, it is adorned by the Quadriga chariot statue, which was once plundered and taken back to Paris by Napoleon. It was rescued and returned a few years later, before the gate became one of the most powerful symbols of the Berlin Wall – which cut it off from both East and West. Now it’s a magnet for tourists and those who wish to make money off those tourists, and a decent enough symbol for a Europe which is now more united than ever before – but which could still do with working together a little more closely.

If that all sounds a little grand, well, there was plenty of French wine on offer as well…

[divider]Chapeau to Claude Boulot, co-president of Investessor, a network of business angels in the Paris region. Apologising for his poor English (he needn’t have, it was fine) before he began his talk, he said it wouldn’t be a problem in any case because “there aren’t any British citizens in the room.” Erm, actually… But having said that, given my wretched attempts at French (l’Académie française would really, really not approve) I let that one go.