While Silicon Valley still steals the headlines, France may be the world’s most interesting startup destination. With a relentless focus on promoting tech startups over the past decade, France has accelerated from a standing start to become a major player on the world stage. The country now sends the second largest delegation to the Consumer Electronics Show (behind the US), and boasts dozens of well-developed startup hubs.
The epicentre of this success is undoubtedly the capital, Paris. Most of the focus in recent months has been on the startup campus Station F, founded by tech entrepreneur Xavier Niel. The converted train station hosts hundreds of small businesses at fair rates, along with a presence by numerous multinationals, including L’Oreal and Microsoft. But if Station F is where many businesses are finding their feet, the next goal is now the 9th Arrondissement - now being dubbed as ‘Silicon IX’.
Red Light, Green Light
The 9th Arrondissement has always been a popular area, though perhaps for different reasons. Once the home of brothels and places of ill repute, the area just north of the Louvre still contains Paris’ red light district, known as Place Pigalle. It was this slightly sordid nature that kept rents fairly low, and encouraged hipsters to set up shop there over the past 15 years. A host of trendy bars saw the area dubbed ‘SoPi’ - South Pigalle - and its stock has risen ever since.
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Here heavyweights like Google and Criteo mix it with smaller startups, as well as those vying for the next unicorn valuation. Current tenants include mobile game developer Voodoo, recruitment platform JobTeaser, fintech firm Shine and travel platform Evaneos. Many still occupy co-working spaces, including Voodoo, who are the most popular developer on the global App Store, and recently received $200 million in investment from Goldman Sachs.
The district now boasts an impressive 645 startups, which raised 3.6 billion euros between them in 2018 alone - up 40% compared to 2017. Where the 13th Arrondissement around Station F has so far failed to ignite (despite the success of the campus itself), Silicon IX has built up a reputation that’s become self-sustaining. The pronounced success of many of its businesses has cast off the myth that French startups struggle to scale up, and moving in there now offers significant prestige. It also offers practical benefits, with the ability to network in co-working spaces such as WeWork and Wojo.
Finding a Foothold
As you might expect, this rising reputation has also seen a rise in rents. Prices for offices in the 9th Arrondissement have risen from 550 euros just a couple of years ago to more than 800 euros today. Yet the opportunity for bargains still exists, and not just in the co-working spaces and hubs which dot the area. Landlords are increasingly looking to give smaller startups a helping hand, in the hope that they grow and provide greater profits in future.
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Examples are plentiful: JobTeaser secured a prime location over ten bigger competitors, as they were able to convince their landlord of the positive impact they would have on the area, and their plans to grow the business. Elsewhere, the owner of one large building turned down a major investment bank in favour of a selection of smaller tech companies. They share the site for more or less the same cumulative rent, and have the potential to grow rapidly, further increasing the value of the area.
Increasingly, these upstart tech companies are occupying the sites of former industry giants. The previously mentioned group of startups have set up in the former HQ of Generali, while a cloud and fintech firm have set up in the old BNP Paribas building. Meanwhile, the area’s reputation is such that a new generation of giants is starting to move in, with Netflix chief among them. The streaming giant recently opened its new European headquarters in the area, complete with a functioning film studio.
Developing Outwards
Of course, this competition can’t last forever. For some, the arrival of Netflix and others is a sign that the area’s popularity has peaked, and that it’s no longer accessible to smaller startups. While this may be true, there are clearly still opportunities for some to break in, and enough benefits for certain businesses to make it a viable option. It’s also something French startups can look to as proof of a flourishing ecosystem, and a sign that funding is arriving in France.
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Interestingly, the competitive nature of finding office space in Silicon IX is forcing some startups to reconfigure. Instead of basing their entire operations in the area, many businesses are looking to maintain an office in the district, and setting up the bulk of their operations - research and development, for example - in other parts of the country. This spreads talent and money around the country, helping to further boost the network of startup hubs known as La French Tech - avoiding the issue of economic success being concentrated in Paris.
The government’s drive to support the digital economy should help to sustain this. While the many city hubs are already flourishing, a combination of better wired internet and the 5G rollout should further improve the links between them, removing any logistical barriers. Funding is also a major part of this philosophy, with billions promised by national investment bank BpiFrance. France is also a world leader in R&D funding, and recently launched a new ‘tech visa’ to expedite the arrival of talented individuals from outside the EU.
It may be that the 9th Arrondissement follows a similar trajectory to Shoreditch in London, where its popularity eventually priced out the people who made it successful. For Paris and the wider French tech community, though, even this would be a momentous development. The rapid growth of the area and its tech firms proves that there’s a pathway to success for French businesses, without having to move to Silicon Valley. Silicon IX may never be a true competitor to the Bay Area, but it’s another sign that La French Tech is on the right track.
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