When American technology shudders, French technology barely suppresses a few sneezes. In the United States, the violent cold snap that has hit tech stocks since February continues to have its devastating effects. The Nasdaq, the industry’s leading index, has dropped 20% since Jan. 1 and 545 startups have laid off 72,000 employees, according to Layoffs.fyi.
Among others, streaming giant Netflix and e-commerce platform Shopify have announced plans for mass layoffs. Values raised on the stock exchange dropped 95% in one year. Silicon Valley has not experienced such a crisis since 2001. But against all expectations, in France, start-up funding continued to grow. According to EY’s latest venture capital barometer, fundraising has increased by 63% in one year. Between January and June 2022, start-ups carried out 364 operations, raising €8.4 billion.
That French exception appears to have been confirmed this summer with several spectacular fundraising rounds, most notably the one announced on July 21 by Contentsquare. The online user experience specialist raised €600 million (including €400 in equity), raising its valuation to €5.6 billion. How can such a discrepancy be explained? “The United States suffered a triple shock: stock market, macroeconomic and sectorial, with the fall of cryptocurrencies”, analyzes Franck Sebag, associated with EY. The impact of this shock was even more felt as technology valuations reached unprecedented levels across the Atlantic.
In Europe, where the phenomenon was less pronounced, the deterioration of the economic context had, therefore, less impact, despite some spectacular stoppages, such as that of the Swedish start-up Klarna.
In just a few weeks, the split payment specialist’s valuation went from 45 billion to less than 6 billion euros. The company weathered rising inflation, interest rates and depressed consumers.
In this European scenario, France is doing well. In continuous progression over a decade, its ecosystem benefits from a size and maturity effect. A virtuous circle has set in: the number of unicorns continues to grow, which mechanically increases funding needs. Start-ups that carry out financing rounds of more than €100 million (“growth” operations) also took the lion’s share: 20 fundraising giants drained more than half (4.5 billion) of the capital that irrigated the French Tech in the first half.
Second positive: to finance the growing needs of these unicorns, money remains plentiful.