Key ingredients to building a strong European tech sector

I was both excited and honoured to attend the Scale-Up Europe event hosted at the Elysée Palace by French President Emmanuel Macron. The event launched the Scale-Up Europe Manifesto, a set of recommendations to create the next wave of tech giants in Europe. Scale-Up Europe is an initiative to accelerate the rise of global tech leaders born in Europe and consists of a group of 200 startup founders, investors, associations and government members. In order to achieve this ambition, Macron wants Europe to create 10 technology giants worth €100 billion each in valuation by 2030.

And in few days, France Digitale Day will gather 1000 C-Level startup executives, VCs, thought leaders and policy makers from the worldwide tech scene. The MAIN tech event in Europe!

But what are the key elements required to build a strong European tech sector?

[Picture of Frédéric Oudéa receiving several leaders of ‘Next 40’, the leading French Entrepreneurs in Technology]

Talent is critical

Tech startups translate into the very heart of prosperity of our economies and societies, generating millions of jobs across a range of skills and sectors. In order to construct a strong tech sector, the Scale-Up Europe Manifesto (of which Societe Generale is a signatory) focuses on four key drivers: investment; talent; deeptech; and, startup-corporate collaboration.

From my July LinkedIn poll,‘Talent’ was voted by far the most important key ingredient when it comes to building a great tech sector.

Out of 413 votes, 66% voted for talent, followed by investment at 23%, while tax relief and livability of cities tied at last place at 6%.

But how can we measure talent, and what will this mean for the ecosystem as a whole?

One simple indicator of depth of talent is by counting the number of unicorns put forward by respective countries or jurisdictions. According to PitchBook, the number of unicorns in Europe has increased 41 per cent, yet their aggregate value more than doubled to an impressive €198.3bn by the first half of 2021. Whilst the UK accounts for the most unicorns overall, the Financial Times reports that France is breeding unicorns at the fastest rate fron the main European tech hubs, with a total of 7 achieved in 2021 alone. Moreover, the number of startups valued at more than €1bn has trebled in France since 2018, against a rise of just 69 per cent in the UK and 44 per cent in Germany.

 At Societe Generale, we believe that talent is critical. This is why, for the past two years, we have been supporting the talent stream within the French tech ecosystem as one of the main partners of the French tech lobby, France Digitale.

[TALENTS AWARDS 2020 with teams, jury and startups with Marie-Christine Ducholet]

Indeed, our senior management team has long supported the teaching of tech and the encouragement of diversity in the talent base.

But where I think we will see things start to change is the growing cross-border nature of talent acquisition.

France, for example, has a wealth of data scientists and engineers, yet in the UK there are more people trained in design and creative skills. While previously it was difficult to hire somebody in France unless they spoke French, post-Covid has meant there are fewer issues concerning working remotely, and I believe we’ll see these barriers continue to break down.

 To extrapolate further, if talent from a region then becomes an irrelevance, tech ecosystems will have to strive to differentiate in other areas. As a result,

I think that the best ecosystems are going to be driven by values. It will no longer be sufficient for a startup’s mission statement to be driven by capitalist principles alone, but more along the lines of attempting to solve some of the biggest problems on the planet, like climate change.

At SG Ventures, we believe in primarily investing in a team rather than a business model, and the values of the startup team and its founders are of critical importance. One great example of this is Shine, the challenger bank acquired by Societe Generale. Shine was recently awarded the B-Corp label, which recognises the company’s environmental and social commitment after undergoing a rigorous evaluation process. Shine also holds the B-Corp accolade as one of the ‘Best For The World in Governance’ on corporate governance impact, acknowledged as fully committed to using business as a force for good. We are also proud of Lumo, another SG Ventures company, that holds the B-corp accolade as well. 

Money counts

When forming a strong tech sector, of course, money counts. As I stated in a recent interview in l’Opinion, we must encourage the entrepreneurial tech companies to return to the European continent with powerful incentive programs, as well as unlock much more ambitious investment and financing programs for Europe. And indeed, one of the main investment recommendations in the Scale-up Europe Manifesto is to create a favourable ecosystem for the listing of tech companies on European stock markets.

France - assuming the rotating presidency of the Council of the European Union on 1st January 202 - has clearly shown its commitment to making digital one of its priorities. France wants to replicate across the rest of Europe its model of more funding for start-ups, especially in their later stages of growth (based on the Tibi initiative). Societe Generale has been a key partner to the French government in helping decrypt these new tech business models, not only our traditional investors of listed companies, but also working with the wider ecosystem including trading venues and other important stakeholders.

The virtue of patience

But we need more than money, and even talent. Europe must also capitalise on its competitive advantages. By banking on its humanist and progressive values, it can stand out by creating innovative scale-up models.

The effort needs to be sustained, buy-in needs to occur from across the political map, as well as the time and dedication of industry participants. A blend of patience, with persistence, is key.  ✊