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Station F: A symbol of France's startup ambitions

Leah Hodgson

Two years ago, the French people elected Emmanuel Macron as their 25th president. His pro-business policies and visions of transforming the slow-moving state into a European powerhouse of innovation helped make him the youngest leader of the nation. Sensing change in the air, Station F, which is said to be the world's largest startup campus, launched in Paris to represent France's tech renaissance. 

Based in Paris' 13th arrondissement, or district, Station F sits in an unused rail depot said to span the length of the Eiffel Tower. It is home to over 1,000 startups and offers incubator programs run by companies including Facebook, L'Oréal and Microsoft

In addition to its working spaces, event areas and restaurant, Station F launched a co-living space in June. The space is the largest of its kind in Europe, according to the company, with the capacity to house 600 startup founders and employees. All of these elements combined have reportedly attracted a steady stream of tech juggernauts like Facebook COO Sheryl Sandberg and Twitter co-founder Jack Dorsey, as well as French dignitaries.

Perhaps a surprise to some, Station F is a private sector initiative rather than government-backed. It's owned by Xavier Niel, the founder of telecommunications provider Illiad and international seed investor Kima Ventures. Having a high-profile backer is surely a huge benefit for Station F's startups, especially when it comes to raising money. Several Station F businesses have secured millions of euros from investors. 

Team Vitality reportedly landed a €20 million (around $22 million) investment from entrepreneur Tej Kohli in November; the esports company was developed under the tutelage of Naver, a South Korean search engine provider. In February, co-living space provider Colonies received €11 million in a round that included Idinvest Partners and Kima, per reports. And in April, cybersecurity company Alsid, which is part of aerospace giant Thales Group's program, raised €13 million in a round led by Idinvest Partners.  Boom in VC activity  The success of Station F's resident startups has seemingly made the accelerator the physical manifestation of the growing popularity of France's VC ecosystem. Year after year, the country has seen record amounts of capital go into its startups. French VC deal flow increased from €1.6 billion in 2015 to €2.5 billion so far in 2019, while the median VC deal size for French companies increased from €2.2 million last year to this year's €3.2 million, per PitchBook data. 

Further evidence of France's swelling deal sizes is witnessed via two new French unicorns. AI photography platform provider Meero raised the country's largest VC transaction so far this year with a $230 million round co-led by Eurazeo and Prime Ventures at an estimated $1 billion valuation in June. Doctolib, which offers an online medical appointment service, joined the herd in March with a €150 million round led by General Atlantic and others.

France has also seen an unusually high level of VC transactions above €100 million in 2019 and half of the country's 10 largest deals on record have taken place this year, per the PitchBook Platform. That includes agtech startup Ynsect's €110 million Series C in February and ecommerce marketplace provider ManoMano's fundraise of the same amount in April. 

A commonality across many of these fundraises is the presence of foreign capital. Participation in French rounds from VCs abroad has increased, which has benefited the country's ecosystem, according to PitchBook's 2019 Venture Ecosystem FactBook: France. This trend is reflected at Station F, which has reported that a third of its startups aren't French. The US, in particular, has ramped up activity in the space in recent years, participating in nearly 30 financings in 2019 worth more than €1 billion, also per PitchBook's 2019 Venture Ecosystem FactBook: France. 

Of course, domestic initiatives are the primary driver of the French VC landscape's growth and Macron is at the forefront of the country's shift toward the creation of a 'startup nation.' One of his first moves after the election was to announce a €10 billion innovation fund that is expected to invest between €200 million and €300 million in deep tech startups per year, financed by the sale of long-held public assets and utilities. Other initiatives include a 'French Tech Visa,' a fast-track four-year residence permit for entrepreneurs and their families, for which a reported 10,000 global startups qualify for. 

Behind venture capital heavyweight UK, France is one of the top VC dealmakers in Europe so far this year. Yet, the never-ending Brexit saga poses as a potential threat to pretty much all industries, particularly with the dissolution of the UK's parliament and the prospect of a no-deal exit—and VC is no exception. While the UK's VC dealmaking significantly tops that of France, this might not always be the case. And one need only look at Station F, a multi-million euro testament to France's startup ambitions, to see how serious the country and its President are about crushing Europe's tech scene. 

Featured image courtesy of Station F
 

For more information on the French VC landscape, download our Venture Ecosystem FactBook: France