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France’s maturing Tech market is creating a new European investment destination for international investors, says ICON Corporate Finance.

November 10, 2021 | News

With €8.9bn raised in 2021 YTD (+78% vs 2020), the French Tech VC ecosystem has matured, and Tech focussed investment bank ICON Corporate Finance predicts France will play a major role in creating European Tech champions such as Sorare, Alan, Ledger, Mirakl, Back Market, amongst others.

Average deal sizes have doubled, along with the number of Unicorns, as more international investors participate in funding rounds.

In its report, The Rise of French Tech, ICON highlights:

·         VC investment in France totalled EUR8.9bn in 2021 YTD, the highest figure in the history of the French tech market

·         Average deal size has doubled, reaching EUR15.9m in 2021 YTD vs EUR7.7m in 2020 

·         The number of French Unicorns doubled to 21 in 2021 YTD

·         Late-stage capital has continued to increase supported by international and local investors.

·         International interest in French tech start-ups grew dramatically, with investment from the US accelerating by 313% between 2020 and 2021 YTD. 

Report author Younes Benchaiba explains: 

“The cost of capital has been and remains cheap. That, combined with unexpected tailwinds created by the pandemic and the French government’s financial boost to the country’s start-up market, have contributed significantly to France’s Tech boom.”

Alan Bristow, CEO of ICON, commented: “France’s destination status for international investors underpins the interest we’ve seen in European tech investment this year. While London undoubtedly remains Europe’s leading hub for global investors, funding to European tech companies has reached record-breaking levels.”

New investors in the sector include Japan’s SoftBank which has invested in four French tech businesses in 2021: Sorare (Series B of $680m), Vestiaire Collective ($210m), ContentSquare (Series E $500m), Swile (Series D of $200m).

The French M&A market remains buoyant – 286 transactions have been completed to date in 2021 and the median value of a deal doubled from EUR 27.4m in 2020 to EUR 60m in 2021 YTD. Of these software companies accounted for 42% of Tech M&A in 2021.

France now lies third in European tech rankings, behind the UK and Germany, boosted by government investment of USD4bn, Brexit, and post-pandemic optimism among investors. 

Read The Rise of French Tech report here.