How Paris is Nurturing its Growing Start-Up Scene
By JLL Real Views
Tuesday, 16th April 2019

For a city with a long-standing reputation for haute couture and fine dining, Paris has made great strides as a destination for trailblazing tech firms in recent years.

The French capital is the launchpad for music-streaming service Deezer and the billion-dollar car sharing app BlaBlaCar, as well as a host of tech start-ups including fintech firm Qonto.

More recently, President Emmanuel Macron’s push to create a start-up nation with high ambitions of becoming Europe’s leader in technology has buoyed its homegrown fledgling firms and aspiring entrepreneurs.

But is Paris becoming a true tech city on the global stage?

“The short answer to that is ‘not yet’,” says Geoffroy Mestrallet, director of Paris Unlimited at JLL. “It’s a growing sector.

“The city has no problem in attracting both domestic and international talent. Tech tenants are competing for both the right employees and the right space with multinationals and large French brands.”

The right space in the right place

In a city with low office vacancy and a rigid leasing structure of 3,6,9-year leases, finding space in central Paris is an issue, says Mestrallet.

“Flexibility is key for any firm in its infancy,” he says. “That makes the arrival of more co-working spaces a timely one as tech tenants, known for their elasticity, expand.”

While tech start-ups are like many other ambitious companies aiming for the prestige of a city centre address, space is more of the key factor when deciding on a new office location.

“The raw, formative roots of the current tech scene in the central Silicon Sentier district are well-known,” says Mestrallet. “But in recent years, we’ve seen some of those tenants move out in the search for bigger spaces and a more tailored feel to their workspace.”

Founded in 2016, French photography start-up Meero left its 700 square metre offices in the tenth arrondissement to take 3,500 square metres in the Centorial building in the second arrondissement.

“Scaling up is a new trend – and a positive sign for tech sector as well as Paris,” says Mestrallet.

Talent and stimulus

Turning Paris’ start-up nation goals into reality remains a long-term project which depends on two major factors; talent and government support. Furthermore, the two go hand-in-hand.

Mestrallet says the choices made by business and engineering graduates are changing. “Going straight into employment with a large, French corporate – Paris is a major HQ city – is still a well-trodden path,” he says. “But there’s increasingly a feeling that working on unique, ambitious projects for a small, local tech start-up offers the chance to learn and grow during a formative period of a graduate’s career.”

To encourage an innovation culture, government incentives are also key, with Macron’s reforms in 2017including the offer of unemployment insurance for people who quit their job to start a company.

Yet more change could also be needed for Paris’ tech scene to reach the next level. Critics frequently highlight France’s strict labour laws which can make it difficult to hire the right people – and get rid of underperformers. Wealth taxes on people with personal assets of €1.3 million is also discouraging high-flying entrepreneurs.

Investing for the future

State-of-the-art start-up facilities and growing support networks are helping to strengthen Paris’ tech credentials. The Station F incubator campus is Europe’s largest for tech. Launched two years ago and backed by French telecom billionaire Xavier Niel, it’s now home to more than 1,000 firms.

Elsewhere, local government agency Paris&Co is tasked with promoting and helping start-ups across a range of sectors, while France’s public investment bank, Banque Publique d’Investissement, is offering new firms loansthrough its PSL Innovation Fund.

New networks such as the Galion Project thinktank, which champions diversity in the tech start-up sector, are emerging.

While such initiatives can’t drive change overnight, they are a sure sign of progress that’s improving the city’s chances of making its mark on the global tech scene.

“With the creation of new networking bodies aimed at sharing knowledge and improving best practice, the Paris tech scene is learning from other more settled, mature sectors,” Mestrallet says. “That’s a true sign of the innovative becoming the established.”

Where next?

For Paris’ growing number of tech firms, the next move – to areas which offer more space outside the official Paris ring, such as Montreuil, Pantin, or St Ouen – is some way off, Mestrallet says.

“The focus right now is still on attracting talent,” he says. “But longer term, those peripheral districts of Paris will come into play but it needs a well-known firm to lead the way.

“It’s classic food-chain dynamics – one major tech firm move is usually enough to encourage smaller peers to also then follow and relocate.”

That, says Mestrallet, will be the true litmus test of whether Paris can become Europe’s new tech leader.

This article was originally published on JLL Real Views, JLL’s news site exploring the big trends shaping the real estate industry’, with ‘Real Views’. www.jllrealviews.com. Reprinted with permission.

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