It’s no secret that France has grown to be an important AI hub – not just in Europe, but globally. Its roots in AI trace back to a strong education system focused on math and engineering, and top tier academic institutions that have created a breeding ground for world class research. This motivated major tech companies to establish research labs here –- Yann LeCun at Meta set up FAIR in 2015, Remi Munos returned to Paris in 2018 to open Deepmind’s first global office, and others like Microsoft, Samsung, IBM, and Fujitsu have followed suit. In fact, back in 2018, long before the current GenAI wave, President Macron presented his first national AI Strategy for France, “AI for Humanity” – the first of its kind in Europe – dedicating €1.5B(1) to development of AI, establishing an open data policy, developing an ethical AI framework, and improving AI education to better develop and retain top AI talent.
Today, France is home to over 500,000(2) researchers and the ecosystem is thriving. The government recently committed almost €2.5B to AI as part of its French 2030 economic plan(3). Additionally, at this year’s Choose France Summit in May, companies from around the world pledged over €15B of investment to France, including a €400M strategic commitment from Microsoft and €1.2B from Amazon for cloud and AI infrastructure development(4). Xavier Niel, Eric Schmidt, and Rodolphe Saadé also invested~ €300M to build Kyutai(5), France’s first independent AI research lab.
With such history in AI, it is unsurprising that France has emerged as a leader in this most recent wave of GenAI. Over 600 startups in France are currently specialized in AI, of which 76(3) are GenAI native. To date, $2.3B has been invested into the GenAI ecosystem in France, almost 2x that of the UK ($1.2B) and far more than others like Germany ($636M), Sweden ($156M), the Netherlands ($119M) and a long tail of others (6). The most well capitalized GenAI business in Europe, Mistral, was founded in France, along with three of the other top five: Hugging Face, Owkin, and H(7).
At the recent Gathering of France’s Top AI Talents, the general sentiment across key stakeholders–from company founders to academics to policymakers–was that AI is the next revolution of our time. Looking ahead, France’s ambition is to be an “AI powerhouse,” with the government outlining key initiatives around five areas: talent, infrastructure, use cases, investment, and governance. France’s AI future is underpinned by the country’s existing footprint of nuclear energy to support AI energy needs, creation of 9 “AI Clusters” for top AI research and training, meaningful investment into domestic schools to democratize education and training for AI, and the government’s continued encouragement to adopt AI across ministries. Paris is also set to host the global “AI Action Summit” in February 2025, bringing together top minds from around the world to exchange perspectives on the rapidly developing technology and how its applications may shape the future of humanity.
Mapping the Ecosystem
With this as a backdrop, we believe there is great excitement around the new wave of companies that are being built in France–from the next generation of foundation models, to builders of AI infrastructure tooling, and disruptive new applications across both horizontal and vertical use cases – as illustrated below. Beyond these, we are equally thrilled to see the continued creation of new GenAI companies, many of which still in stealth. Several of these businesses are spinning out of leading research labs and other French businesses, reflecting the healthy trend of talent recycling in the ecosystem.
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ICONIQ Growth’s Activity in France
While we at ICONIQ Growth have our roots in Silicon Valley, our perspective on emerging technology has always been global. Our first investment in Europe was Adyen in 2015, and a key part of our thesis for establishing our formal European office in 2022 was the recognition that global talent would increasingly return home, facilitated by the rise of remote work and the interconnected nature of tech hubs worldwide, from San Francisco and New York to London and Paris. ICONIQ Growth has had the privilege of partnering with many French businesses including AdaptiveML, Datadog, Dataiku, and Pigment(8), whose core R&D teams have remained in France despite global expansion.
While there is a lot of excitement around GenAI and the pace of innovation feels unprecedented at times, we also recognize that the technology and use cases remain nascent. Our team recently gathered a group of top minds in Paris - from AI founders to enterprise CEOs of F500 businesses and other luminaries – to discuss what could be on the horizon and our collective roles in shaping it. The conversation ranged from how companies can compete on technological differentiation to perspectives on regulation and security to insights around commercial use cases and enterprise adoption. While there was excitement and optimism about AI's potential, the general sentiment was more measured, reflecting nascency of adoption and the technological capabilities today relative to what the future holds. It’s evident to us that by the next time we host an event like this, the discussion around the technology, applications, and adoption will have already progressed, and we’re excited about the role France will play in these advancements.
We believe AI will continue to amplify human potential in profound ways, accelerating time to value across many different use cases. France’s history and long-term commitment to AI have positioned it well to remain a leader in this field, so we’re eager to continue investing into the ecosystem!
Published:
July 31, 2024
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