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When Emmanuel Macron urged the world to counter Donald Trump’s rejection of the Paris climate change accord and “make our planet great again”, he did more than become the world’s most retweeted Frenchman. He gave an early boost to a high-profile campaign to bolster France’s appeal for foreigners with brains and money.
An accompanying website inviting US scientists and other concerned citizens to move to France was built not by the presidency or an NGO but by Business France, a national agency to drum up inward investment.
If President Trump’s withdrawal from the Paris deal offered France one new business opportunity, Brexit offers an even bigger one — challenging Britain for its title as Europe’s leading hub for science and technology-based business.
The scale of gains for Paris and risks to the UK will depend on two main factors, argue executives and analysts: how the UK replaces EU freedom of movement and funding for science and innovation, and the success of French labour and tax reforms.
The UK has already suffered a drop in inward investment from IT and software companies after last year’s Brexit vote, by 11.8 per cent, says Courtney Fingar, head of content at fDi Intelligence, an FT sister company. But as she points out: “London still has deeper pockets of VC money and a substantially deeper and wider tech talent pool. It also has a more flexible and easier business environment. So it still has the advantage.”
Where Brexit could “bite the UK tech sector”, she warns, is “further down the line, if new immigration policies make London less of a magnet for international talent, and if the finance sector takes flight”.
The risk to Britain’s science-based industry is more immediate, according to Ms Fingar, “because of the potential for the severing of research links between UK and European” institutions and the loss of EU bodies such as the London-based European Medicines Agency (EMA).
Half of Britain’s research collaborations involve EU countries, according to scientific publisher Elsevier.
A telling example of the importance of EU grants for research and innovation comes from a 26-year-old UK entrepreneur, Samantha Payne. “The entire robotics ecosystem in the UK relies on European funding to test and develop new technology,” said Ms Payne, co-founder of Bristol-based Open Bionics, which makes Star Wars and Disney-themed artificial limbs for children. “I have not seen that funding offered by this government,” she added, speaking to the FT at the Global Female Leaders 4.0 summit in Berlin in April. “It’s going to stifle innovation if we don’t have access to that funding.”
On the other side of the Channel, Mr Macron has vowed to reform cumbersome and unpredictable labour legislation by September. Current legislation “makes you nervous about hiring because you cannot adjust staffing to your level of business activity”, explains Philippe Tour, chief executive of Arkamys, a small French company that makes audio technology for carmakers.
Mr Tour also expects a softening of France’s punitive approach to stock options and other instruments “used in the Anglo-Saxon world to incentivise staff”.
“There are two things that slow us down,” says Frédéric Mazzella, the founder of BlaBlaCar, a French unicorn that offers long-distance carpooling. “Rules which change so you cannot predict them, and rules that you don’t understand because they are so complex.”
More than a decade of abortive pro-business reforms have only reinforced negative perceptions that Mr Macron — armed with a big parliamentary majority for his République en Marche movement — is working to reverse. “I want France to be the nation of innovation and start-ups,” the former banker announced at the Viva Tech conference in Paris, where he announced a fast-track visa for international tech founders, employees and investors to obtain a four-year work and residence permit.
“The first thought of foreign companies like Samsung seeking to expand in Europe is not to invest in France because they think it’s expensive,” says Fleur Pellerin(pictured above), who after stimulating the tech sector as a socialist minister under previous president François Hollande, set up a venture capital fund. “This is in spite of the fact we have first-class engineers and scientific talent.”
Paris remains more expensive than London, Berlin — the current number two European destination for IT investment — and Dublin, another rival which has the advantage of being English-speaking. In its favour it boasts good schools, healthcare, and quality of life.
A sign of the progress being made by newly-minted French entrepreneurs like Ms Pellerin came on the same day as President Macron’s Viva Tech appearance. Her venture capital company Korelya announced a Paris start-up incubator funded by its main investor, South Korean digital company Naver.
France already offers business some of the world’s most generous tax breaks for research and development, and French entrepreneurs accounted for the largest number of start-ups at the Las Vegas Consumer Electronics Show this year.
While deploring Brexit as bad for the pharma industry (and simultaneously pitching for the EMA to move to Paris), the French Pharmaceutical Companies Association noted that France’s attractions included “excellence in both academic and industrial research; a fully developed healthcare infrastructure with a dense hospital network; and a strong culture in terms of early access to innovation”.
“It’s early days,” says Philippe Lamoureux, the association’s director-general, but “the election of President Emmanuel Macron is clearly of enormous added value.”
Perhaps the most significant point of differentiation between France and the UK or Silicon Valley, for now at least, remains one of mindset. “When you drive down Sand Hill Road [the main artery of Silicon Valley], numbers stand out so you can easily find your destination,” says a London-based venture capitalist who previously worked as a banker in Paris. But in Sophia Antipolis, the south of France’s intended answer to Silicon Valley, the size of the numbers on buildings is governed by detailed rules, “so you still have to get out of your car to check you are at the right address”.