As underlined by a recent report from EY, France is currently bucking a global trend. Even as the energy crisis and skyrocketing inflation have cooled the ardour of investors around the world, French venture capital is positively booming. Start-ups in the country raised a record €13.5 billion in 2022, a 17% increase on the previous record set the year prior.

This prosperity is even more impressive given the slumps which France's regional rivals are experiencing. France's sterling numbers mean that the country has now overtaken Germany (whose tech sector saw an investment decline of 43% year-on-year) to become the second-best funded tech ecosystem in Europe behind the latter. It's quite the turnaround for a sector which was a late bloomer compared to well-developed tech ecosystems such as Silicon Valley.

What's more, the future looks rosy as well, as prominent French politicians and industry stakeholders are united in their determination to ensure the coming decade is every bit as fruitful as the previous one.

Bearing out early predictions by French VC funds like Breega

The sector's success can be witnessed in microcosm through the boom story of French venture capital fund Breega. When CEO Ben Marrel launched the company along with cofounders François Paulus and Maximilien Bacot, a mere 0.05% of France's GDP was invested in the tech sphere-a figure ten times lower than in market leading nations such as the US and Israel, equating to tens of billions of euros of capital that deserving entrepreneurs and start-ups in France simply could not access.

When deciding to start Breega, the fund's cofounders noted a number of key factors-including the fact that France has a large talent pool of high-level managers and engineers, as well as a thriving university ecosystem-that led them to believe that this investment gap would quickly narrow. Indeed, the turnaround in French Tech has been precipitous. The country has benefited from dedicated government initiatives aimed at bolstering the sector, such as bespoke tech visas and remote hiring facilities.

These efforts are paying dividends-47% of surveyed start-ups now believe the government is more supportive than a year prior and the efforts are paying dividends, and France has witnessed the highest rise (27.8%) in the search for tech jobs on the continent, while it has also experienced a 2.2x positive inflow of tech leaders between 2020 and 2022. All of these factors have contributed to a 40% average increase in tech investments across the last five years, culminating in 2022's record-breaking €13.5 billion haul.

Breega's rise has been similarly meteoric. The fund surpassed the milestone of half a billion euros' worth of assets with the closure of its fourth fund--€250 million- last June. According to Ben Marrel, the fact that he and his cofounders are former entrepreneurs themselves has been instrumental to the fund's success-and to the success of the numerous startups Breega has invested in.

"Our very entrepreneurial and very operational DNA gave us the certainty that we could bring something different compared to traditional funds," he explains, pointing out that most investors have not sat on the other side of the table. This experience has meant that Breega has placed an emphasis on providing operational support as well as financial stimulus-the fund devotes 25% of its workforce hours to mentoring entrepreneurs and providing the on-the-ground assistance they need to flourish.

Exotec success opens door to more ambitious goals

This model seems to have paid off handsomely, both for Breega and for the French tech sector. One of the first companies which Breega invested in, warehouse robotics startup Exotec, recently became France's first industrial unicorn and its 25th unicorn overall.

As Breega's Chairman and co-founder François Paulus noted, despite fierce competition in the e-logistics industry, Exotec's turnover grew in the span of five years from €700,000 to well over €100 million. This runaway success is not only a handsome return on Breega's early-stage €5 million investment-the maximum allowable amount for a first-time fund-but has also galvanised political and entrepreneurial will to pursue an even more aggressive expansion of the French Tech sector.

For example, French President Emmanuel Macron responded to the news of Exotec's unicorn status-a milestone which marked the accomplishment of his national goal of 25 unicorns by 2025 three years ahead of schedule-by announcing even loftier targets. Macron wants the country to have 100 unicorns and 10 decacorns (companies worth €10 billion) by 2030, while he hopes that Europe as a whole will boast 10 tech giants worth a colossal €100 billion within ten years. He hasn't lost sight of the country's sustainability goals, either, identifying a target of 25 Green Tech unicorns by the end of the decade and setting aside a sum of €54 billion for the purpose.

The progress thus far is encouraging. The number of start-ups in the sector has grown from 800 in 2020 to more than 1,800 at the time of writing. In 2021, new companies raised a cumulative €1.6 billion in venture capital, while the Green Tech sector generated €3 billion in revenue and created more than 60,000 jobs in the same year. That makes it the fourth largest in Europe behind Sweden, Germany and the UK.

A thriving future

Of course, France still lags some way behind the global leaders in the tech sector, with the USA's 644 unicorns over five times the French number even after adjusting for relative populations. At the same time, no one is under any illusions that the current purple patch of investment can continue indefinitely, nor that obstacles and challenges will fail to arise.

But as Breega CEO Ben Marrel pointed out, "it is impossible for the world of tomorrow to be less technological than it is today", which is why investing in the sector makes sense from both a practical and fiscal perspective - and as the country is concentrating on Green Tech in particular, it's a sustainable endeavour, too.

With the government making the appropriate sounds and backing them up with the right incentives, and conscientious funds like Breega doing the same, the stage is set for Exotec to be joined by many more overachieving unicorns in the years and decades to come.