There are many ways the country can support the technology industry. In France, this involves selecting an annual cohort of 120 high-potential startups (French Tech 120), including 40 private companies considered the most promising, called Next40.
This year, French Minister of Digital Economy Marina Ferrari revealed this year's winners at VivaTech Week in Paris. According to promoters, this fifth class was the most elective since the program began.
The French Tech Next40/120 program was first launched in 2019 and lessons have been learned along the way, especially when some unicorns turned out to be ZIRPicorns. Based on recommendations from tech insiders, the criteria has changed and now half of the selections are based on revenue metrics rather than fundraising.
As a result, only 28 of the 120 French technology companies selected for 2024 claimed a valuation of more than $1 billion. Meanwhile, La French Tech reported that the group's total revenue would be €10 billion in 2023, compared to €7.5 billion in 2022. 31 companies reported net revenues of more than €100 million.
Overall, this group reveals or confirms some interesting trends that France is riding, such as the rise of deep tech and AI. But it's also worth expanding on Next40's new winners. We expect some of these to go public when the IPO window reopens, reinjecting long-awaited liquidity into the venture capital pipeline.
Without further ado, here's a summary of the Class of 2024 in one image:
It's not the easiest format to digest, so let's take a closer look at the newcomers.
welcome to the club
Companies joining the Next40 list include:
- AddGuests, parent company of BungalowSpecials and Campings.com, joining French Tech 120 in 2023;
- ChapsVision, a B2B company that has established itself as a national information processing company
- Ekwateur, a renewable energy provider raised through a mix of venture capital and crowdfunding;
- Equativ, an advertising technology company previously known as Smart AdServer, spun out of Aufeminin;
- ilek, another green energy supplier;
- Malt, a freelance marketplace operating in France, Belgium, Germany, Netherlands, Spain and the UK;
- ‘Mr. Temp’, an online temporary employment agency;
- Mistral AI, an open-ended LLM rocketship, is rumored to be raising funds at a $6 billion valuation, three times its December valuation.
- Pennylane, the accounting software expansion company that became a unicorn in February;
- Qair Group, another renewable energy company;
- Weezevent, a ticketing platform created in 2008.
It's especially impressive to see how quickly Mistral AI has joined lists like the 20-year-old Weezevent. The AI company may have only recently launched, but Arthur Mensch and his co-founders are now leading one of France's most promising companies, which may eventually become a public company.
The nickname “Next40”, an allusion to France's CAC 40, suggests this to some extent, but it is still too early to tell when and where any of these will turn into IPO candidates. In 2023, Euronext welcomed only 64 new listings, down from 83 in 2022 and 212 in 2021.
Among the other 80 companies that completed FrenchTech 120, new entrants include Adagio, AQEMIA, Braincube, Comet, DriiveMe, Ekimetrics, Exotrail, Flowdesk, Foodles, Greenly, HappyVore, Hoppen, iSupplier, La Fourche, Madbox, Moon Surgical, Mooncard, mylight150 , Opteamis, Pasqal, PerfectStay, Planity, Shares, SiPearl, Swan, Umiami, Unseenlabs, Volta Medical, WAAT, WeMaintain and Worldia.
As far as we know, none of these startups are unicorns yet. Then again, maybe it was never the North Star. Nonetheless, this may have been a difficult goal to achieve in recent months. Investment in French startups fell significantly last year, from €13.49 billion in 2022 to €8.32 billion. According to EY, green technology was the largest group receiving funding at €2.7 billion and is also well represented in the French Tech 120.
Reflect the trend
The French Tech 120 covers a variety of sectors, from fintech to space technology, but there are clear trends.
However, the caveat is that for the first time, applicants were asked to honor their commitments in terms of gender equality and ecological transition. The latter could have given more weight to green technology companies, which make up 30% of the Class of 2024, but this is roughly in line with the share of investments it attracted last year.
AI is another area where French startups have attracted large investments, even at the seed stage. What's happening in France with AI startups, and what does the French government want to support? The French Tech Next40/120 reflects this trend, including not only Mistral AI but also pharmaceutical tech AQEMIA and quantum computing startup Pasqal.
In addition to AI, deep tech ranked first, accounting for 23% of 120 companies. Again, this is not surprising. We have already reported that deep tech is seeing healthy growth in public funding in Europe.
The French Tech Next40/120 program also offers preferential treatment. There is no direct funding. The biggest benefit is that friction is reduced and “unnecessary institutional obstacles” are reduced. It's quite significant that this is being touted as a great gift and perhaps more companies could benefit from it. But to become a global champion, you have to start somewhere.
French Tech Next40/120 has already crossed the border. 88% of companies in the new class will have a physical presence or significant commercial activity abroad in 2024.
Being selected will give you more international visibility, but will also open doors more directly domestically. From 2023, the initiative called “Je Choisis la French Tech” will encourage public administrations and large companies to procure solutions from French startups. Now that the market cares more about profitability, this is much more evident than a unicorn horn.
