The French hope that incubator spaces bring more than hype

PARIS – French entrepreneurs gussied up to flaunt their ideas in February as Paris's mayor visited Innovation Boucicaut, the city's newest incubator. Dressed in suits, some in jeans as if they already worked at Google, these innovators eagerly awaited the mayor's arrival, announced by the paparazzi-like clicking of cameras. 

"It's great that these small businesses can find conditions that will permit them to take flight," Paris Mayor Bertrand Delanoë said, before leaving the crowd to sip Champagne and nibble on macarons. 

The conditions he was referring to were actually Innovation Boucicaut, a new digital incubator housed in a renovated 19th-century hospital that closed in 2000 and is now the final touch on Mayor Delanoë's 2008 initiative to open 100,000 square meters of new incubator space. This campaign, as well as private plans to set up the world's largest incubator in Paris, are all aimed at combating France's 16-year unemployment high. 

However, some say France's entrepreneurial environment needs to change before such efforts will be successful. Critics cite lower venture capital ($6.1 billion) compared to the United States and United Kingdom (roughly $27.2 billion and $20.2 billion respectively) as one of several hindrances in France. A 2013 report by the University of Pennsylvania's Wharton School of Business explained that entrepreneurship still has a negative connotation in France, compared to prestigious corporate jobs. Moreover, in 2013 a French minister blocked Yahoo from buying a majority stake in French online video platform Dailymotion, chilling the excitement of entrepreneurs hoping to attract international attention.

The government, however, is now taking positive steps, including public investments, organization of incentives to invest, and a campaign entitled La French Tech to stimulate French business growth internationally. And the Yahoo debacle didn't repeat when U.S.-based Adobe acquired a French startup, Neolane in June. 

Innovation Boucicaut is the second-largest Parisian incubator featuring 6,000 square meters, rehabilitating structures from the hospital. It is part of 33 operational startup sites, with nine nearing completion. Many, including Boucicaut, are managed by the city-run Paris Region Lab. Anne Gousset, director of the Lab's incubators, told SmartPlanet that these offices are essential for entrepreneurs who started out in their apartments.

"These spaces become centers of life where startups exchange ideas with each other and their ecosystems, a vital step for them," Gousset said.

French companies like journalism outlet Rue89 and Pretty Simple, responsible for the popular Facebook game Criminal Case, attribute their success to incubators during their formative years. Still, it's difficult to weigh the effects of these centers on new businesses. While incubated startups do fail, it's not always a negative sign, but a way to prevent doomed businesses from losing too much.

But the public sector is not alone when it comes to French startups. Private investments are adding additional space to the now-symbolic 100,000 square meters.

Xavier Niel, the entrepreneurial French innovator and world's 179th-richest man according to Forbes, is revitalizing a 19th-century messenger hall. The Halle Freyssinet, once a warehouse for delivering parcels, closed in 2006, was recently purchased by Niel, founder of French telecommunication giant Free.

Reportedly 30,000 square meters within the hall will welcome 1,000 start-ups, dubbed the world's largest digital incubator, set to open in 2016. In one French interview, Niel said the project was not a financial investment, but a way to offer young entrepreneurs the best possible chance to succeed.

For the Paris Region Lab, private startup incubators are by no means competition, but complementary to the city's offerings.

According to Liam Boogar, author of Rude Baguette, France's Startup Blog, the Halle Freyssinet is a significant step. "The initiative is indicative of a bigger change in France – an understanding in both the private and public sector that the future of the economy, digital or otherwise, is in startups," he said.

Putting startups closer to corporate contacts could increase chances for investments, like the 2.8 million euro private investment that launched Pretty Simple on the global scene. In 2012, private investments created 80,000 jobs in France, according to one study, though over three million people still lack jobs.

And despite criticism that French entrepreneurs are too locally focused, companies at Innovation Boucicault were already implanted overseas. Success stories like Criteo, an online advertising company that debuted on Wall Street in 2013, prove that French startups can both be French and international. But they need to start somewhere, and incubators are giving this new breed of French entrepreneurs a chance.

Like the very buildings these incubators are occupying, the country is reinventing itself, if slowly. With Google and Microsoft collaborating on similar incubation projects like the Halle Freyssinet, backed by Free, the mix of big name companies with fresh entrepreneurs could be exactly the sort of dynamism that Mayor Delanoë hoped to create, just as he steps down from public office this year.

Image: Wilmotte and Associates

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This post was originally published on Smartplanet.com