Startup Hub Profile: Paris Comes of Age

The successors to Achchak and his classmates from the 2010s are today’s student hackers and vibecoders. As entrepreneurship becomes a more accepted career path, aspiring founders are following more structured ways into the startup world, including some overseen by the students themselves.

Unaite is a student-led federation between the AI clubs of several universities. The organizers have planned events in conjunction with the likes of Anthropic and Y Combinator.

“Students who are involved in AI clubs are seeking things that we don’t find in our own universities,” says Chakib Lahrach, the group’s president. That might be a chance to try new projects, or a way to meet like-minded peers and build their networks.

France’s startup scene has been bolstered by a series of high-profile funding roundes in recent years. Yann LeCun’s AMI Labs raised a $1bn seed round in March, just a few months after it was founded. H Company burst onto the scene in 2023 before raising a record $220m seed round the following year. Mistral, a French AI champion that is still only three years old, is reported to be fundraising at a $20bn valuation.

Despite these successes, Lahrach is hungry for more. “There’s not enough big startups that came out of France in comparison to the proportion of talent,” he says.

France’s power play

Away from the vibrant student and startup community scenes, Paris may have a key advantage in electricity. To potentially excel in the age of AI, one needs energy-hungry compute – and France generates around two thirds of its power from nuclear.

Just outside of the capital, in the tiny commune of Fouju, work is underway with the aim to build one of France’s key assets in the AI revolution. Campus IA, billed as Europe’s largest AI campus, is expected to ultimately reach a capacity of 1.4GW and be able to support everything from model training and inference to deployment of generative and applied AI systems. The project is the result of a collaboration between the French national investment bank Bpifrance, UAE investment fund MGX, chipmaking giant Nvidia, and Mistral.

CEO Thibaud Desfossés compares it to the physical infrastructure that supports trade in physical goods. “It’s like a harbor, right? What matters is what it enables,” he says.

“When you look at large harbor projects in France – such as what they’re doing in Dunkirk, for example – part of the magic happens when you use this core infrastructure to then aggregate and pool industrial and economic development through other related industries.”

That’s the plan for Campus IA as well. French and European AI developers will get privileged access to compute at scale. The site will also be part of efforts to get more European players selling into the AI value chain, linking those homegrown teams up with the cloud and AI giants to help them develop the right products. “We want for our project to make not a token but a meaningful contribution,” Desfossés says.

While other locations were considered, being close to Paris is advantageous from a fiber connectivity perspective – plugging it directly into one of Europe’s busiest data hubs.

“France has this critical resource of cheap decarbonated, abundant, stable nuclear energy,” says Desfossés. “And AI is very much the act of converting energy into intelligence.”

Going global

The convergence of these advantages in the past two or three years has moved the conversation from Paris catching up to Paris setting the pace in certain sectors, Cudonnec says. “That’s been driven by trends like an increase in the number of second-time founders and French companies raising larger seed rounds.”

It’s not just about growing the local scene either. Paris has a global outlook, in part enabled by practical advantages like its four high-speed rail lines which can take passengers across mainland Europe and directly into London. But it’s also part of the French founder mindset.

French startups often expand into Germany, Spain, Italy and the Benelux region relatively early – while also having a strong line into the U.S. market, notes Cudonnec.

“As the second-largest economy in the European Union, my view is that France offers startups a dense, lucrative domestic market before they scale globally,” agrees Rania Belkahia, a deal partner at EQT Ventures.

That was certainly the case for Achchak. “We do feel more like a European company,” he says of Qevlar. “We’ve always had, even from day one, customers outside of France. It has given us this depth.”

Some of Qevlar’s customers include huge multinationals such as Sodexo and U.S.-based market leaders like HubSpot. It’s been a rapid pace. But that’s what makes it exhilarating. Thinking about how Qevlar has gone from two engineers trying to crack a problem to a team of 75 in just a few years, says Achchak, gives him energy. “That just fuels you.”

Large French firms listed on the nation’s benchmark CAC 40 have demonstrated a willingness to be buyers of products from startups and scale-ups, according to Belkahia. These multinationals – in sectors such as luxury and automotive – are keen to work with smaller companies to modernize their business processes.

‘More success stories’

The next challenge is to make more of these fast-growing companies into global names that can continue channeling success back into the Paris ecosystem. The French scene appears to have entered its “flywheel” phase, with second- and third-generation founders recycling capital, experience, and talent back into early-stage ventures, according to EQT Venture’s Belkahia.

“We need more success stories and we need more proof points that our companies can get to scale and escape velocity,” says Campus IA’s Desfossés.

Roxanne Varza, director of Station F, Paris’s famous startup incubator and events hub, is hopeful that more French firms will break out in coming years. “There are a few companies that I think could be big candidates,” she said last year on a podcast. “These are still very young companies and a lot can happen.”