After starting the year at five-year lows, France could be in a position to lead EU venture capital investment out of the dark ages. The country has emerged as a rising star in Europe’s active financial technology (FinTech) sector, attracting a wave of venture capital investment that is fueling the growth of startups seeking to disrupt traditional banking.

Thanks to a $4 billion investment from Microsoft announced on May 14, a series of public-private partnerships and investment-friendly regulation have made France a formidable FinTech destination after years spent in the digital dark age. According to PYMNTS author and noted economist David Evans, writing in PIMNTI on April 18, Europe has created relatively few leading digital businesses over the past thirty years. “Of the 69 digital companies worth $10 billion or more as of December 2023, Europe, which represents 21% of global GDP, generated only five: Spotify, Adyen, Revolut, Adevinta and Checkout.com,” he said. written Evans. «Together they represent less than 1% of the total value of the 69 companies. None are based in Germany, France, Spain or Italy, the four largest economies in the EU.”

Maybe someone in the French government was reading.

In 2023, the French FinTech sector experienced a noticeable change in its deal activity and financing landscape. The year saw a total of 147 completed deals, marking a 12% decline compared to 2022. This is much better than the European average which saw a 43% decline over the same period. French fintech companies collectively secured $1 billion in funding throughout the year, reflecting a significant 79% decline compared to the previous year’s figures. Despite the decrease in overall funding, the average deal size in the French FinTech sector remained relatively consistent at $6.8 million, a 77% reduction indicating a sharp decline in large deals.

Register, which provides security and infrastructure solutions for critical digital assets, was the largest French FinTech deal in 2023, raising $108 million to extend its Series C funding round. The extension round kept the company’s valuation at 1 .3 billion euros. Led by Pascal Gauthier, President and CEO, Ledger is a global digital assets and Web3 platform, with more than 6 million devices sold to consumers in 200 countries, more than 100 financial institutions and brands as customers, and 20% of the world’s cryptocurrency assets guaranteed.

This fintech boom has coincided with efforts by French President Emmanuel Macron’s government to revive the country’s startup scene and attract tech talent and capital. Through his French technology Launched in 2013, France has worked to reduce bureaucracy, encourage entrepreneurship and promote itself as a business-friendly hub.

This was stated by the French government quoted by the newspaper le MondeIn 2023, France benefited from 1,815 international investment projects, which are expected to retain 1,391 jobs and create 57,863 new jobs over the next three years, exceeding 2022 figures. Investors are likely attracted by reforms aimed at reducing the labor costs, cut corporate taxes and introduce a “green industry tax credit”.

Microsoft announced on May 14 it made its largest investment ever in France, for a total of 4 billion euros. The company plans to expand its cloud and AI infrastructure, bringing up to 25,000 advanced GPUs to the country by 2025. Microsoft will expand its data center presence in Paris and Marseille and invest in a new data center campus in Mulhouse Alsace Agglomération .

“With this major project, the Grand Est region makes Alsace a reference region for artificial intelligence in France and Europe. This unique project, which benefits from a technological novelty, will strengthen the competitiveness of our regions and our businesses, while ensuring the security of their data”, said Franck Leroy, president of the Conseil régional du Grand-Est.

Microsoft is also committed to upskilling 1 million people in AI by 2027 by working with government institutions, learning partners, nonprofits, and universities to launch new training programs focused on AI development. fluency of artificial intelligence, on the development of technical skills, on the support of business transformation and on the promotion of responsible skills. Development of artificial intelligence.

Microsoft aims to accelerate 2,500 French startups with the support of artificial intelligence through its new flagship program, Microsoft GenAI Studio. This initiative offers a complete package of AI skills, cloud credits, and collaboration opportunities with customers and partners. Microsoft GenAI Studio will run a bespoke 4-month program at STATION F twice a year for three years and will expand with a national tour and localized actions to foster connections with regional players.

In 2019, France implemented significant regulatory changes for digital assets and initial coin offerings (ICOs). These changes include defining tokens as digital representations of securities, allowing token issuers to obtain optional visas from the Autorité des marchés financiers (AMF) for ICOs, and introducing a framework for a secondary market for assets digital with digital asset service providers. Registration will entail additional requirements such as internal controls, conflict of interest rules and communication with clients, reflecting France’s commitment to establishing a comprehensive regulatory framework to promote responsible practices and investor protection in the digital assets sector and ICO space.

Investors and founders say Brexit has also worked to France’s advantage, prompting some FinTech companies and talent to relocate from London. Economy Minister Bruno Le Maire said this Le Monde that its aim is to build on the momentum generated by Brexit and attract even more jobs, businesses and, importantly, sustained investment flows.

The French government supports it that since the start of 2021, the Parisian financial district has seen an influx of over 5,500 positions in the banking and finance sectors, with the majority of major English-speaking financial institutions choosing to establish their Eurozone market operations in the French capital. Stéphane Boujnah, chief executive of Euronext, a major stock exchange operator, summed up the situation, saying: “While it may not be remarkable when compared to the enduring importance of London, it is certainly noteworthy when considering the former status of Paris.” .

A high-profile French FinTech success story is Lydia, a payment app popular among French Generation Z and millennials. The Accel and Tencent-backed startup will invest 100 million euros over the next three years to expand its digital banking services with a new app called Sumeria. Despite this significant investment, Lydia co-founder Cyril Chiche expects the company to reach profitability in 2023.

Other notable French FinTech deals include Qonto’s €486 million raise in 2022, which values ​​the neobank at €4.4 billion, as well as sizable rounds for Spendesk, Bleckwen and Fintecture.

See more in: David Evans, EMEA, European Union, News Featured, FinTech, France, GenAI, Investments, Microsoft, News, PIMNTI news

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