Within the thirteenth arrondissement of the French capital Paris is an previous rail freight station that has been transformed into the world’s largest startup campus.
Often known as Station F, the large complicated, which might home 1,000 startups and has company companions together with U.S. tech giants like Meta and Google, underscores France’s push over the previous couple of years to reinvent itself as one of many world’s main tech hubs.
Within the second episode of our European tech hubs mini-series for CNBC Tech’s “Beyond the Valley” — which you’ll be able to take heed to above — Tom Chitty and I travelled to Station F to speak to its director Roxanne Varza concerning the progress of the French tech scene over the previous couple of years.
In 2015, taxi drivers in France protested the rise of Uber and startup founders complained concerning the nation’s burdensome labor legal guidelines that made it tough for younger tech companies to be nimble. From the skin, France had a reputation of being anti-tech and innovation.
However varied governments over time have championed the nation’s expertise ecosystem to push applications like Station F and reforms to legal guidelines to assist out startups. And with the tech world presently present process a growth in synthetic intelligence, France is looking to position itself as a leading hub.
French generative AI firms have raised $2.29 billion thus far, in response to knowledge from Accel and Dealroom, probably the most of any European nation. This has been pushed by huge investments in buzzy French AI startups such as Mistral AI and H.
“France is the chief on synthetic intelligence in Europe,” Bruno Le Maire, France’s finance minister, advised me on the nation’s excessive profile occasion Viva Tech final month.
If in case you have any ideas on this or earlier episodes, please e-mail us at [email protected].
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Here’s a transcript of the “Past the Valley” episode launched on June 20, 2024. It has been edited for readability and brevity.
Tom Chitty
The thirteenth Arrondissement in Paris is residence to a thriving nightlife scene and town’s principal Asian neighborhood. Should you like Chinese language or Vietnamese meals, you then’ll be blissful right here. It additionally occurs to be residence to Station F, the world’s largest startup campus. Brimming with entrepreneurs and round 1,000 startup firms, it embodies France’s thrilling tech business. Within the second installment of our have a look at Europe’s main tech hubs, we’re in Paris to talk to the pinnacle of Station F about how the nation disregarded its repute as being anti-tech, the success of its AI firms, and the political and regulatory challenges it could face. Arjun, have you ever been to Station F earlier than?
Arjun Kharpal
That is my first time. I have been wanting to go to for therefore a few years. So fairly excited to be right here. It is superb.
Tom Chitty
To explain to our listeners shortly what it is like. It’s a little bit of an oasis. It seems like an enormous plane hangar. And there is all these type of transport containers which function type of assembly rooms [which are] glass fronted so you may type of see in them. Anyway, that is what it seems like visually, however to grasp what really goes on right here, with the work that occurs and the businesses which are positioned right here, we have to converse to the Director of Station F, Roxanne Varza. Thanks for becoming a member of us on Past the Valley, Roxanne.
Roxanne Varza
Thanks a lot for having me.
Tom Chitty
First off, give us a little bit of a backstory of this place. What is the function of it? And the way did it begin?
Roxanne Varza
So we opened in 2017 and it was proper after President Macron had been elected for his first presidency. And primarily, the concept had type of come about a number of years earlier than. Clearly, we would been noticing that, particularly from overseas, when individuals would have a look at the European ecosystem, they’d know London and London has all these firms that everybody is aware of, and all of the funds are primarily based there. Folks really knew lots about Berlin. I believe a few firms fairly well-known had been primarily based there as properly. And France was simply type of not on anybody’s radar, despite the fact that there was really lots occurring. So the concept behind Station F was let’s make this type of massive emblematic area, convey everybody to the ecosystem collectively, actually facilitate launching a enterprise as a result of that actually type of felt just like the hurdle was getting individuals up and working. And in order that’s primarily what we have been doing.
Tom Chitty
Let’s discover out somewhat bit about your self, as a result of I do know that in some French media, you’ve been known as the queen of tech amongst different titles, all very optimistic. Nicely, I am going to allow you to resolve that. However you are additionally scout investor for Sequoia Capital, which we would like to speak somewhat bit about. However what makes you the appropriate individual to be director right here? How did you get chosen for that function?
Roxanne Varza
So many individuals ask me this, and I want I knew what was occurring in our founder’s head when he picked me. I grew up within the U.S. in Silicon Valley. I used to be born and raised in Palo Alto. I moved out to Europe about 15 years in the past, on the time, it was to do a grasp’s diploma and I simply fell in love with this ecosystem. Having come from the Bay Space, it felt like so many issues existed over there. And right here, there was a lot alternative to construct and to have an effect. So what makes me the appropriate individual for this function? In all probability, I’d say possibly simply my connection to the startup ecosystem, the worldwide startup ecosystem. I believe, additionally, in case you have a look at possibly individuals who do not know, our founder, his title is Xavier Niel, and he is bought a giant telecoms firm in France and he is launched so many tasks which have simply powered this ecosystem. However in case you have a look at the opposite tasks that he is completed, he tends to gravitate in the direction of individuals that will be what he calls much less formatted, younger and possibly not too influenced by a big company profession. And that was very a lot my case after I got here into this function. And possibly additionally the truth that [to] have a little bit of a global feminine profile is a bit interesting for at the moment’s ecosystem that should type of take into account variety.
Tom Chitty
Now, earlier than we get again to it, we now have, in fact bought to do stat of the week. Have you ever heard about stat of the week?
Roxanne Varza
I’ve not. Ought to I be nervous?
Tom Chitty
Very a lot, I get nervous each week to play it. It is a sport we play, the place Arjun has a stat, which he is considered extensively within the lead as much as this episode, and it refers to what we will be speaking about. However he’ll simply give us a stat and also you and I are going to go head-to-head. And whoever will get it proper or closest to what it refers to, then we win. However I do have a fast query, which I’ve requested all of our company on this mini sequence that we have completed. So in case you may rank Europe’s tech hubs, what can be your prime three?
Roxanne Varza
That is nearly imply. I imply, I lived in each Paris and London and I really feel like these are not any brainers. So can I begin with these two? The third one, I believe is definitely actually arduous. So yearly in the summertime, I take my total staff to a brand new ecosystem. We have been to Amsterdam, we went to Berlin. This 12 months, we will Lisbon. And I really feel like I do not know sufficient hubs to essentially have a good viewpoint. However I am actually enthusiastic about Lisbon really, I do know the Mayor of Lisbon fairly properly, have been listening to actually optimistic issues. And I really feel like we have additionally bought a really fascinating French entrepreneur expat neighborhood that is rising there. In order that’s an ecosystem. I am fairly enthusiastic about.
Tom Chitty
Okay, however simply to push you, which might be primary?
Roxanne Varza
Paris, what do you imply, you are pushing me?
Tom Chitty
Arjun, I am going to allow you to take it away.
Arjun Kharpal
Stat of the week. $2.29 billion {dollars}.
Tom Chitty
Arjun, you had a query.
Arjun Kharpal
I needed to begin with the type of idea of Station F as a result of we at all times speak about these ecosystems round Europe. And, you understand, in case you go to London, historically, it was type of the East Finish of London round Previous Road roundabout that had these hubs, Shoreditch and type of expanded. However there have been these type of pockets in lots of cities, the place these startups, traders maybe gathered. Is the concept nearly to only create this single large hub the place you needn’t have these type of disparate components of cities. I do know, they’re single cities, however a few of them are nonetheless massive one finish to the opposite, can take a little bit of time. So is that actually the concept behind Station F?
Roxanne Varza
You understand, I believe on the time, that was the concept, as a result of we thought that is so massive, 1,000 firms, that is going to be the entire ecosystem. However really, what we have seen is that even at the moment, Station F is basically not even that massive anymore, given how massive the entire ecosystem is. So we’re actually I believe, by way of early stage and getting began, that is the place you come. After which there’s completely different pockets, as you mentioned, for type of later stage and progress stage firms inside Paris.
Arjun Kharpal
And Roxanne, what 12 months did you are taking? 2017?
Roxanne Varza
Was the launch in the summertime.
Arjun Kharpal
And is that if you took over the function right here?
Roxanne Varza
I began two years earlier than.
Arjun Kharpal
I believe we’re on so a few years now, I believe so many issues have modified. I bear in mind type of visiting Paris on the time, and there have been protests from the taxi drivers round Uber. And, you understand, many had from the skin checked out that and mentioned, properly, that is simply underscores at this level France’s broader type of antithesis to expertise and alter and innovation. What’s modified since then, in France and Paris particularly, round expertise?
Roxanne Varza
I imply, a lot has modified. It feels actually like 180 diploma flip. After we began Station F, it was extra like nearly a working joke. Are there actually 1,000 firms in France to fill this area? Like are you guys even positive about what you are doing? Whereas at the moment, persons are this ecosystem and going is that the main ecosystem in Europe? Is everyone constructing an AI firm in Paris? Which I simply assume is simply not one thing that we’d have imagined so way back. So loads of issues have modified. I’ve to say the federal government has undoubtedly performed a really lively function. And so they have identified which steps to take and taking the appropriate ones, as a result of authorities may generally overstep and attempt to do issues that does not essentially make sense for the federal government to do. After which I additionally simply assume culturally, we have actually been by way of an enormous transformation, I believe, possibly partly powered by Station F. However we’re not the one gamers in that area. And it type of made entrepreneurship cool. It made it attainable for lots of people that simply had been nearly ashamed to inform their households, I did this diploma, and now I will begin a enterprise.
Arjun Kharpal
And so what would you say are a few of the core strengths in the meanwhile of the of the French expertise scene? I do know, the college type of path has been fairly robust with a few of these technical universities. There’s additionally I suppose, individuals having been skilled in a few of the massive U.S. tech giants as properly. The place are the core strengths?
Roxanne Varza
I’d say like by way of infrastructure, we’re up there with any main tech ecosystem, I imply, locations like Station F, we now have all of the college applications you might want, all of the assets that you understand, tangible assets to construct an organization. I believe the expertise is the piece that we have type of cracked somewhat bit over these previous few years with worldwide expertise now coming right here. The French authorities made the visas lots simpler to come up with. And we’re additionally simply seeing, I believe, with the worldwide possibly geopolitical shift, persons are trying much less in the direction of the U.S. possibly much less in the direction of conventional ecosystems, and now coming right here. So I believe that has performed undoubtedly an enormous function. After which by way of funding, it was once unimaginable to get the tier one funds in your cap desk being primarily based in Paris. Now they’re right here each week.
Tom Chitty
And by the identical token, the problem is that France, Paris, Station F has, are they the identical as any European tech hub? Or are there any explicit ones that you’ve got discovered right here?
Roxanne Varza
Nicely, I do assume I imply, it isn’t an English talking market. So I believe in case you examine working in Paris to working with London, I believe, people who find themselves trying, for instance, for bilingual colleges, or for docs, that will be very comfy in English, like, there’s simply little issues like that, that I nonetheless assume are possibly nonetheless not the place they might be. However in any other case, if we have a look at simply the ecosystem, and from a enterprise perspective, I believe working right here is pretty much as good as some other ecosystem if not higher.
Arjun Kharpal
I bear in mind one of many complaints a number of years in the past, had been issues like labor legal guidelines, the startup founders had been actually type of not blissful, they had been too inflexible, too strict. Have a few of these type of teething points within the early levels of founding startups in France modified in any respect?
Roxanne Varza
100%. I would say the labor legislation, when individuals convey that up now, I nearly really feel like, okay, you have not caught up to the mark with the place we’re at the moment. There’s undoubtedly loads of methods to get across the hurdles. I imply, you may’t examine, clearly, what we now have in France with what occurs, for instance, within the U.S. with how straightforward it’s to rent and hearth. They’re simply completely different markets. But it surely’s now not creating the headlines that we had been seeing 10 years in the past of, you understand, unimaginable to fireplace the groups and issues like that.
Tom Chitty
After we speak concerning the U.S, clearly, loads of the European markets are at all times going through the problem of U.S. massive tech, you understand, desirous to get into these markets and, you understand, flex their muscle tissue, if you’ll. How a lot do you are concerned about that? Is that one thing that retains you up at evening?
Roxanne Varza
Huge tech coming right here?
Tom Chitty
U.S. Huge Tech.
Roxanne Varza
Under no circumstances, as a result of they’re all Station F companions. You may see their logos behind me. I believe that is an ecosystem that desires to work with worldwide leaders. In the event that they be French, in the event that they be Chinese language, in the event that they be from the U.S., you understand, whoever they’re, I believe the entrepreneurs right here wish to work with these firms. And all the U.S. leaders are current and have been current for a very long time.
Arjun Kharpal
It is a good likelihood, I believe, then to speak about synthetic intelligence, very tough to have a dialog today in tech with out speaking about that buzzword. However you understand, France, for positive has been within the headlines with firms like Mistral and H and all of those completely different firms as properly elevating very massive sums of cash, as properly. Look, Europe simply extra broadly, misplaced out, for instance within the web age to the large U.S. tech giants when it got here to social media, search, all of these sorts of issues. What sort of alternatives does the growth in AI we’re seeing current for French firms and for European firms extra broadly, to compete on the worldwide stage?
Roxanne Varza
I believe you are completely proper. I imply, you simply put your finger on it. So I believe there was this sense of we missed out from type of that first era of the web primarily. Regardless that there have been many glorious firms that had been constructed right here, they only did not compete on the identical stage. And I believe at the moment there’s a little bit of this race to be aggressive on that stage. And once we had Mistral’s mega first spherical, everybody thought OK, that is great, nevertheless it’s one spherical, it is one firm. And at the moment we have had Poolside who’s additionally, you understand, come over from the U.S. We simply H. And now persons are beginning to marvel, is that this a pattern? Is that this one thing we are able to really actually construct into our ecosystem long run? And I believe the reply is doubtlessly, sure.
Arjun Kharpal
I believe to Tom’s level, although, as properly, concerning the type of affect of the U.S. tech giants. One of many fascinating issues has been how concerned they have been very early on in these firms, the likes of Mistral getting backing from Microsoft and a few of the different massive tech giants. I bear in mind I used to be at Viva Tech just some weeks in the past, French Finance Minister Bruno Le Maire was there and I requested him, are you involved even nonetheless concerning the affect doubtlessly, as Europe tries to essentially develop its homegrown expertise firms within the on this planet of AI concerning the function of the U.S. tech giants. And I believe his was one in all there must be a balanced, we’re blissful to type of have them right here. However we additionally must champion our personal homegrown. Once more, we’re nonetheless very early stage, however as you see this growing, how is that steadiness wanted to be struck?
Roxanne Varza
It is fascinating as a result of right here we’re speaking about nations and nearly there is a stage of sovereignty that is in all probability concerned in that dialogue. However I additionally assume simply from, lets say that everyone needs to staff up with a few of these massive gamers, we additionally wish to keep away from having them have a lot energy that they will dictate tomorrow’s improvements. And so I believe these are in all probability subjects, I imply, France would be the subsequent nation that may host the subsequent AI summit in February of 2025, and I believe these are going to be very, very key subjects. However I do assume there is a very clear sovereignty angle that must be a priority for a lot of governments.
Tom Chitty
After we speak about governments and nations, France is going through an upcoming election. Are you involved about the place you is perhaps in six months time,
Roxanne Varza
I imply, very, very clearly, lots may change. I believe extra will change when we now have the subsequent presidential election. So clearly, my thoughts was there. However we may see issues change forward of time. I do not assume they’re going to be as dramatic, hopefully, I imply, it may go all the way down to not having a minister for digital. I imply issues like that might simply be utterly deprioritized, which is actually what has been serving to us transfer issues ahead in France. So issues may change very dramatically. However lots of people are fairly assured that that won’t change, it’ll possibly be extra on a coverage stage. And it could take extra months and weeks to see the motion. So I imply, I’ve to say we’re making an attempt to be as optimistic as we are able to.
Arjun Kharpal
One of many issues I learn was that if there’s, you understand, this type of resurgence of the far proper, and there is a detrimental influence on issues like immigration coverage, that might have an effect on entry to expertise from overseas, proper?
Roxanne Varza
100%. I imply the true situation is in case you look on each excessive sides of the spectrum, they ship not nice messages to international expertise, to international traders. So I believe these are the dangers. However there’s additionally individuals who really feel that possibly it’ll go so poorly that within the subsequent upcoming election, issues will return to the place they need to be. So there could also be a silver lining in each circumstances. However sure, I do assume within the case that we now have each excessive sides, one or the opposite win, it is not going to be pretty much as good as we’re at the moment. It’s extremely clear.
Arjun Kharpal
You talked about the push from the French authorities, significantly below Macron, and his authorities to spice up the French tech scene as properly. Once more, one other type of repute Europe extra broadly has had is one in all regulation over innovation. And to some extent, that also reigns. We noticed the large EU AI Act go as properly. But it surely seems like President Macron particularly has tried to convey the narrative again to, no, we are able to innovate, however we additionally do want to manage as properly. Beneath Macron what have been for you the large positives which have come out of his presidency and tech push extra broadly.
Roxanne Varza
Oh, wow, there’s been so many. I’ll say that I believe he is completed lots for worldwide visas. The visa scheme was overhauled, I believe it was the identical 12 months that we launched Station F and we noticed the influence instantly. Late stage funding, I imply, the funding panorama has simply remodeled. Earlier than we used to really feel like there isn’t any early stage funding, and there isn’t any late stage funding. And at the moment, I simply really feel prefer it’s all of the gaps have been crammed.
Arjun Kharpal
And why is that although?
Roxanne Varza
The federal government, I believe, they’ve actually gone out and tried to work on both implementing insurance policies that will encourage individuals to spend money on early stage, whether or not it’s by way of tax breaks, and different issues like that. These are newer. However he is really gone out and primarily gathered up the capital wanted for a few of these late stage funding initiatives. So I’d say these are in all probability the 2 largest ones. However then there have additionally been little changes to type of labor legislation and issues like that, that we talked about earlier, which have simply type of cleaned issues up fairly a bit. So I’d say simply throughout the board, we have simply felt issues at all times going ahead, by no means going backwards, which had undoubtedly been the case beforehand.
Arjun Kharpal
That funding hole with the U.S. does nonetheless stay not simply right here in France, this can be a broader European situation as properly. The place do you see this type of subsequent steps required to shut that hole additional?
Roxanne Varza
Oh, wow, that is a very good query. So I do assume we nonetheless have late stage funding points. I imply, once we’re not on the quantities, and even the variety of rounds that we must be possibly even as regards to constructing these firms. So I’d say late stage remains to be a giant factor. However I believe the true piece that we now have to crack in Europe, throughout the board is exits. And I am positive you have heard this many occasions earlier than. However I believe we are able to undoubtedly do lots to encourage extra of an acquisition tradition in Europe with our European corporates, which appear fairly absent, in case you examine with all of the People that come over and wish to purchase firms. The IPO market is basically the place I do not know the way you repair
Arjun Kharpal
I used to be on the roof of the London Inventory Alternate. When was this? Final week? … But it surely was the IPO of an organization known as Raspberry Pi, the computing startup that is been round for you understand, I believe, greater than a decade now. And there was massive fanfare, confetti cannons and plenty of noise for an IPO I believe that valued the corporate, simply over about $500 million. And I believe that actually underscores the problems with the market in the meanwhile or the issues concerning the market that even for such a small, or comparatively small IPO within the tech world, there was loads of pleasure, as a result of it simply hasn’t been these exits on the IPO entrance. And there is, I believe in London particularly, there’s plenty of points round issues like founder shares, and twin class share constructions, and all of those varied issues which should be reformed and entry to a few of these startups within the earliest levels from pension funds and different areas. Are these comparable points prevalent right here in France?
Roxanne Varza
100%. And I’d say in all probability we even have simply, how can I say this? The market simply would not exist. So I believe in the case of itemizing a expertise firm, individuals simply mechanically assume I imply, we now have had some right here, I should not say we have not as a result of a number of years in the past, we had fairly a number of, two or three. However I believe at the moment simply anyone who needs to go public simply is not going to have a look at this market, given what the observe file that we have had.
Arjun Kharpal
And it seems like a pivotal time as a result of in case you’ve bought firms like Mistral elevating these sums at astronomical valuations, pondering, even 2, 3, 4 years’ time, what they’ll be valued at, the market would not exist for them to go on an IPO of possibly $100 billion valuation, doubtlessly in a number of years … The opposite level you introduced up was the M&A aspect of issues. So European corporates not as lively by way of shopping for or buying expertise firms?
Roxanne Varza
Sure. And I believe I imply, I can actually converse to the French market after I say that, I do not know if it is the case throughout Europe, however it’s a feeling that I’ve. I imply, at Station F we now have a ton of early stage firms. And we have all of the American corp dev groups that come present up right here. And we have had only a few of their French counterparts. And I believe it simply factors to the truth that culturally, they’re in all probability much less aggressive in that area. In some circumstances, they do not even have corp dev groups. So I believe that is undoubtedly one thing that we are able to work on constructing.
Tom Chitty
Simply to convey it again to the type of what we talked about proper on the prime with the place Paris and France is as a tech hub. What do you see is the longer term for Station F and are you targeted on type of what’s occurring elsewhere and ensuring you are still main in these areas? Or do you very a lot have a look at your self and simply fear about you? How do you see the subsequent type of couple of years panning out?
Roxanne Varza
Nicely, as I discussed, we now have this looming election, so ask me once more in a number of weeks. I believe it is a steadiness, as a result of we undoubtedly look overseas and we get impressed by loads of what’s occurring elsewhere. And we attempt to generally have a look at these concepts and do they work regionally. However Station F was really actually constructed for native demand, native wants. So lots of people have requested us, you understand, did you primarily reduce and paste one thing that exists elsewhere? Completely not. We requested all of the entrepreneurs round us primarily, not simply entrepreneurs, however everybody in our ecosystem, what works properly? What’s wanted? The place do you’ve difficulties? And a few of the stuff we have constructed you’ll by no means see it exterior of France.
Arjun Kharpal
Has the profile of startups in right here modified as tech traits have modified, whether or not it is the crypto growth into the AI growth?
Roxanne Varza
Excellent query. Yeah, we really refresh every part on a yearly foundation. So two years in the past, crypto, we launched our crypto Web3, program. Final 12 months, we did quantum computing, two AI applications, I believe this 12 months, we’ll proceed to see AI. I am hoping we are able to enhance local weather tech a bit extra. I believe that is one other place the place Europe actually has a risk to shine. However what have I seen by way of type of evolution of entrepreneurs? It was once loads of first time entrepreneurs, very younger, contemporary out of college. At the moment, we’re seeing an increasing number of repeat entrepreneurs. I believe over 50% of the entrepreneurs we now have on campus have already created a enterprise and I believe it factors to the mature maturity of our ecosystem,
Arjun Kharpal
And also you’re constructing a resort.
Roxanne Varza
We launched housing in 2019. So we now have 600 those that dwell in our housing element. And we’re type of ending that we now have a restaurant there, we will have a sports activities facility. So there’s another issues that we now have on web site, it is about quarter-hour away. Later this 12 months, we’re launching, it is proper exterior the constructing nevertheless it’s primarily 12 areas that may full the affords that we now have for entrepreneurs in order that they needed extra more healthy meals choices, bike restore, smartphone restore, podcast studio. So these sorts of companies can be out there subsequent to us and the resort in fact in two-to-four years.
Tom Chitty
Unbelievable. Nicely that’s all we now have time for however we now have in fact bought to do stat of the week. Have you ever been fascinated about it?
Arjun Kharpal
So that’s the stat of the week. $2.29 billion. Any guesses?
Tom Chitty
The worth of France’s AI market in 2025 projected.
Arjun Kharpal
On the right-ish tracks however no cigar.
Roxanne Varza
Quantity invested in AI because the starting of the 12 months?
Arjun Kharpal
Shut. I am going to do yet another spherical of guesses.
Roxanne Varza
It may’t be how a lot we raised as a world quantity for the primary half of the 12 months?
Arjun Kharpal
You are knocking on the door. I am going to give this one to Roxanne, as a result of she was tremendous shut. So it was the quantity French generative AI startups have raised to-date …In order that’s fairly astronomical. Just a few different enjoyable stats. So the highest 5 cities for generative AI startup creation throughout the area, London primary, 27% of GenAI startups from London. Tel Aviv 13%, Berlin 12%, Paris 10% and Amsterdam 5%. Regardless that Paris is fourth by way of GenAI startup creation, it has the best ranges of funding because of a few of these aforementioned firms there.
Tom Chitty
Okay. That’s all we now have time for. If you need to observe and subscribe to the present, you may. And you too can price the podcast which might be nice, 5 stars if you’d like. Thanks, Arjun.
Arjun Kharpal
Thanks, Tom.
Tom Chitty,
Thanks, Roxanne.
Roxanne Varza
Thanks.
Tom Chitty
We’ll be again subsequent week for one more episode of Past the Valley. Goodbye.
