Venture capital remains stable in France thanks to AI startups

Alex Dewesyour friend to 20 VChas just released the highly anticipated release State of the French tech ecosystem report. This is the perfect follow up to Atomico State of European Tech report, with a brief look at the French startups in particular.

As a reminder, the main point of Atomico’s report is that European startups raised $45 billion in 2024 compared to $47 billion in 2023. 2022 numbers.

In France, the main themes are more or less the same. According to Dewez, with an amount of €7.1 billion in 2024, this metric is slightly higher than in 2023 (€6.8 billion). However, in 2022, French startups raised €11.8 billion.

Of course, data on private companies varies from source to source. For example, according to EY and as mentioned Echoesbusiness investment is slightly lower in 2024 compared to 2023 (€7.8 billion vs. €8.3 billion).

The result is the same. Business investment is volatile from year to year, with artificial intelligence representing a significant portion of total investment.

There are two ways to view it. The pessimism would be that if it weren’t for artificial intelligence, we would be at a loss for start-up capital. AI now represents 27% of all startups in France. AI startups raised 82% more funding in 2024 compared to 2023. And non-AI funding is down 11% year over year.

Good hope and wisdom to do so it represents next big opportunity for startups, many tech investors choose to focus on verticals in particular. It is possible that some AI startups would have launched non-AI startups in other areas. The technology industry is made up of a porous set of verticals, where most investors take an opportunistic approach without a real investment perspective.

Thanks to those metrics, France is still the third fastest growing technology country in Europe, behind the UK and Germany based on total investment. However, since Germany is a settled country, Paris is the second largest city in Europe, ahead of Berlin and behind London.

There are now 45 unicorns in France – although some of them are unicorns on paper and may not keep the letters for long. Three new startups joined the group in 2024 – launching accounting software Pennylanea business planning platform Pigment is an AI-powered software dev tool Poolside.

The year 2024 has also been a year of great disruption. Other companies that have been in trouble are Ynsect, Cubyn, Masteos, Luko and Cityscoot. Changes in economic growth have made it difficult to raise economic growth without strong financial performance to justify sales.

In addition to Poolside, other promising AI startups from France include foundation developers Mistral AIAI-powered drug companies Ohkin and Aqemiaand AI software PhotoRoom and Dust.

Dewez believes that there are a few slow-moving companies that would be ready to go public because they make more than $300 million a year repeatedly, grow by 20 to 30% year-on-year, and are profitable or close to being profitable. Companies that check all of these boxes include Back Market, Dataiku, Doctolib, Qonto and Content Square.

And yet, like the UK, France is still a slow market when it comes to IPOs. Many French technology companies should consider registering their companies in the US But this seems to be a difficult task for companies that do not have customers in the US (for example, Doctolib and Qonto).

When it comes to outflows, while the volume of outflows is down 14% year-on-year, Dewez believes that total outflows have been stable for the past three years, hovering around €12 billion.

A final piece of interesting news that may be worrying for start-ups, UK funds have been trading low for French start-ups. It will be interesting to see if this can have a big impact on the health of the French environment in the coming years.