France is confronting a paradox. The country has a high number of outstanding IT specialists thanks to the excellent mathematical training in its schools – but these specialists prefer to work in California than at home. One reason is that, in France as well as in other European countries, young technology companies have great difficulty acquiring capital resources. While potential investors are willing to accept the risk of a start-up failing, they are scared off by the difficulties of getting a high return on investment if the start-up actually succeeds.
Enternext, a subsidiary of the Euronext stock exchange, is now seeking to help, in collaboration with the French Economics Ministry.
At a recent conference for start-ups, the head of Enternext, Eric Forest, announced several steps designed to make it easier for young, technology-driven companies to be admitted to the stock exchange – which should indirectly encourage risk capital providers to become financially involved in these firms.
Economics Minister Emmanuel Macron called for a “small business law,” like in the U.S. “The digital economy will be the most important lever for our growth,” he said. “But today, the largest impediment to innovation is insufficient financing.”
Enternext intends to introduce a new seal of approval, to be awarded each year to 50 small and mid-sized companies from the technology sector.
He said the government is aware of the problem and will do everything necessary to remove this obstacle to the expansion of technology-intensive companies. Mr. Macron intends to submit a draft law on growth aimed at numerous sectors in spring 2015.
As part of the Enternext initiative, its 320 registered technology stocks will receive enhanced support, according to Mr. Forest. This includes a special website, conferences tailored to their specific needs, and sector-wide financial analyses from Morningstar.
From the beginning of 2015, Enternext intends to introduce a new seal of approval, to be awarded each year to 50 small and mid-sized companies from the technology sector. A committee of experts will use both quantitative and qualitative criteria to select the candidates for the award. The recipients will have access to special services, to give them more prominence and visibility for potential investors.
Mr. Forest announced that Enternext will initiate a program offering not-yet-listed start-ups a partnership with academics, legal consultants, accountants, media representatives and financial experts. This support is intended to prepare them to go public.
Thomas Hanke is the Handelsblatt's Paris correspondent. To contact the author: [email protected].