France to Double Startup Purchases by Next Year
As the 'market death valley' problem—where startups with cutting-edge technology fail to commercialize it—has emerged as a central challenge for France's tech ecosystem, the French government has reworked its innovation procurement policy to address it. Through the 'Je Choisis la French Tech' policy introduced in 2023, the government aims to double the amount that public institutions and private companies spend on startup products by next year.
According to a survey released last month by La Mission, a startup support organization under the French public investment bank Bpifrance, only 24% of pilot projects (proofs of concept testing products in real environments) jointly run by French large corporations and startups actually made it into day-to-day operations. The reality facing French tech startups, critics point out, is that they can raise funding with the latest technology yet find no one willing to buy. Romain Lavault, co-founder of the startup support platform ImpulseUs, highlighted the weakness of the domestic ecosystem, saying, "We are good at funding innovation, but bad at actually buying it." He explained, "French tech startups can spend three years with no real customers despite raising 1 to 3 million euros through grants, innovation loans, and seed investment," adding, "At the Series A stage, investors demand around 1 million euros in recurring revenue, but all these companies have are pilot project results worth a few thousand euros."
The internal structures of large corporations are also cited as a problem. Lavault noted that because the innovation departments in charge of technology validation and the business units that decide on purchases are separate, a startup can spend a year succeeding in a pilot program within an innovation program only to discover too late that the business unit never had any plans to buy in the first place.
The French government has stepped in with solutions. 'Je Choisis la French Tech' is a policy designed to encourage large corporations and public institutions to actively purchase startup products. According to the French government, more than 830 companies and over 90 public and private organizations have joined the initiative, and 23 large corporations have pledged a total of more than 2 billion euros toward purchasing startup products and services. Bpifrance is also running the DAPI program, which helps corporate procurement officers understand the characteristics of startups and improve purchasing and contracting procedures.
This effort is significant in that it expands the focus of support from companies that develop technology to those that buy it.
