How French software businesses are making it big

Last updated: 13 June 2023 Views: 2088
How French software businesses are making it big

While many businesses have suffered in the past year or so, one sector that has profited is that of software. Software as a service (SaaS) companies such as Zoom and Slack have benefitted from a large contingent of remote workers, and this trend looks set to continue, as many companies embrace the benefits of remote working.

Of all the places to start a software company, France may not be the country that comes to mind. Yet Europe's third biggest economy is becoming a world leader to rival Silicon Valley - and an ideal place to live, work and find the talent and support that any great tech business needs.

Making things tick

Think of all the pieces of software you use on a daily basis. It’s a list that likely rises into the dozens, from phone apps, to general utilities such as Microsoft Office, Google Drive and Adobe Creative Suite, to industry-specific applications. The world runs on software, and behind it all are some extraordinarily successful companies. The global revenues for enterprise software alone reached $214 billion in 2019, and are projected to rise to $324 billion by 2024.

One of the great advantages of a software company is that it is essentially futureproof. While there is a need to continually develop and improve your products, these changes can be rolled out instantaneously online, as opposed to replacing physical products or hardware. And the market for this kind of software is only going to get bigger, both as more businesses use software to improve their efficiency, and as more people begin to work from home.

Related article: Start A Business In France in 8 Steps

You may already have experimented with or implemented some of these technologies during the coronavirus pandemic. Apps such as Slack and Teams allow for remote collaboration, Zoom and Meet allow for video conferencing, and Toggl or Basecamp allow you to manage time and projects more efficiently. This is not to mention things like building management software for facility managers, or warehouse management software for warehouse operators.

The future is French

Software is a good business to get into, then - but why start a software business in France? The answer is in a series of reforms and programmes that started back when current President Emmanuel Macron was a government minister. The crux of this was the establishment of La French Tech, an initiative to establish tech hubs around France to bring businesses together, and promote them to the world. There are now 18,786 startups with La French Tech accreditation, as well as over 2500 investors and 98 seed accelerators.

Nine cities were originally accredited as French tech hubs in 2014, including Lille, Lyon and Bordeaux. Since then, four cities have been granted ‘thematic’ status for different specialities, while four regions in France also have their own status. These areas are bustling with co-working spaces, feature startup-friendly infrastructure such as high internet speeds, and benefit from support and investment under the La French Tech umbrella.

Related article: A Guide To ‘Silicon IX’ - The Biggest Tech Hub In Paris

Around seven years on from the first accreditations, La French Tech is still going strong. Thanks to a 1.6 billion euro public investment fund from France’s national investment bank, startups have proliferated across the country, with rich ecosystems in multiple cities. France has now sent the largest foreign delegation to the Consumer Electronics Show for several years running, and boasts ten tech unicorns, adding four in 2019 alone. Notable names include ride-sharing app BlaBlaCar, music service Deezer and rising e-Health platform Doctolib.

The heart of Europe

As well as great infrastructure, France boasts great talent. It is home to the world’s top engineering school, the second largest mathematics institution, and a range of other world-leading education centres. Perhaps more importantly, being in France puts you right at the heart of the European Union, with all the benefits that affords. As well as benefiting from great trade deals and transport infrastructure, talent can freely travel within the Schengen area - giving you access to a broad pool of potential employees.

France has also made strides to improve its general business environment, which has often been perceived as inefficient and stifling. Most relevant is the creation of a world-leading tech visa, offering four-year stays with no diploma, fees or quotas. But Macron’s government has also moved to implement a series of labour reforms, including flexible bargaining, simplified contract terminations, and encouraging longer opening hours. Every shop being shut on Sundays is becoming a thing of the past!

Related article: David & Goliath - How France is Squaring up to the US Tech Scene

Taxes and expenses have also come under the microscope. French tech startups can benefit from a 30% deduction on their R&D expenses, the most favourable terms of any OECD member. Capital gains tax has also been lowered to 30%, while wealth and exit taxes have been eliminated entirely. Until 2017, the bottom rate of corporate tax was 28%; this is due to be reduced to 25% from 2022 onwards.

While the present looks pretty good, the future should be even better. France is likely to benefit significantly from Brexit, with its near neighbour now having left the European Union. A natural home for US businesses and others looking for a gateway into Europe, the UK is now a less than ideal destination, given that businesses there cannot benefit from the trappings of the EU. A number of financial firms have already made the move to Paris, and with the UK facing unfavourable trade terms, more departures seem likely.

If all of those benefits aren’t enough to persuade you about French software’s future, there’s something to be said for the lifestyle too! Living in and attracting employees to France isn’t a hard sell, whether you’re based in the sun-kissed south or one of its beautiful and thriving metropolises. As other traditional tech hubs wane, quality of life is going to become an even bigger factor in choosing your business location, and there can be few better places for food, culture or employee benefits. So raise a glass to French software companies - and make it a good vintage.

If you need more information on company formation and registering a new business in France – or for issues relating to tax and accountancy in France or bank account introduction in France, please contact us directly by calling 0033 (0)1 53 57 49 10 or emailing us from our contact page. You can also download our free guides below.

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