Stay informed with free updates
Simply log in to European companies myFT summary — delivered straight to your inbox.
In contrast to the gloomy mood in much of France today, optimism and ambition fill the air at the cavernous business incubator Station F in Paris. Since opening in 2017, the world’s largest start-up campus has nurtured 7,000 companies, including two unicorns: artificial intelligence company Hugging Face, now based in the US, and health insurer Alan.
Talk to the founders of AI companies at Station F and it’s hard to resist their enthusiasm for the potential of the technology and the appeal of France as a place to start a company. From the incubator 40 most successful start-ups34 have AI at the heart of their business. The rapid appearance of the Mistral, The Paris-based AI start-up, which is now valued at $6 billion and has developed one of the most impressive foundation models in the world, has also given them plenty to cheer about.
“Europe today can create competitive models of artificial intelligence”, Xavier Niel, French investor in Station F and Mistral, he recently told the FT. “I think we can create great things with a few hundred million euros.”
A lot is going right in the French start-up world. The country’s education system trains an endless chain of talented engineers. Paris competes with London as Europe’s top AI hotspot. French business culture has been transformed over the past two decades, making it acceptable, even fashionable, to become an entrepreneur. Venture capital is more available than ever before. Despite his problems elsewhere, President Emmanuel Macron has been an active supporter of the sector.
Unlike most large US AI companies, French AI start-ups prefer open-source models that encourage greater collaboration and wider access to technology. This, they hope, will give them a competitive advantage in the application of artificial intelligence in almost all sectors of the economy.
But the question remains: Can France’s vibrant tech sector overcome the political turmoil and economic uncertainty that is wreaking havoc on the rest of the country?
The young founders of the Station F startup have few doubts. Historically, French entrepreneurs have been far more successful in building companies in the US than in France itself, but that is now changing, says Thomas Le Corre, CEO of edtech start-up Rakoono. He studied at the HEC business school in Paris and the University of California, Berkeley. “I firmly believe in European technology,” he says.
The country’s rich technical skills are perfectly aligned with the AI industry, making France a great place to build a tech business, adds Joel Belafa, CEO of Biolevate, an AI-enabled therapeutics research company. “France has been building a culture of engineering for a long time,” he says. Similarly qualified engineers in the red-hot American market, he believes, could cost five to eight times as much.
However, momentum in France’s tech sector slowed last year, partly as a result of the political turmoil it caused divisive parliamentary elections. Data from Sievedsister publication of the FT, showed that French start-ups raised just €3 billion in the second half of 2024, down from €5.9 billion in the first six months. Latest Global Startup Ecosystem Index ranks France as the eighth most successful start-up nation in the world, up from 12th in 2020, but still behind the UK, Sweden and Germany in Europe.
No matter how advanced the French tech sector is, the US still has a powerful gravitational pull. Paris AI start-up road announced last month to move its headquarters to the USA to be closer to its biggest customers. “We need to be in the room where it’s happening — and it’s happening in the Bay Area,” said Zuzanna Stamirowska, co-founder of Pathway.
Rumors are circulating in Paris that Mistral itself will have to be sold to a giant American company if it wants the resources to become globally relevant, just as Britain’s DeepMind was bought by Google in 2014.
Unlike their competitors in the post-Brexit UK, French AI start-ups have to deal with the greater regulatory burden of the EU’s AI Law. But some entrepreneurs argue that the law can help build trust and encourage creativity. “This is not only negative for Europe. It can drive better innovation,” says Samuel Bismut, co-founder of Corma, a software license management company.
Little can be achieved without such optimism and ambition. But after benefiting from some beneficial tailwinds over the past few years, France’s tech sector is now facing stronger headwinds. This year will test French entrepreneurial courage like never before.
