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 called Station F, the large complicated, which may 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 few 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 “Past the Valley” — which you’ll hearken to above — Tom Chitty and I travelled to Station F to speak to its director Roxanne Varza in regards to the development of the French tech scene over the previous few years.
In 2015, taxi drivers in France protested the rise of Uber and startup founders complained in regards to the nation’s burdensome labor legal guidelines that made it tough for younger tech corporations to be nimble. From the surface, France had a status of being anti-tech and innovation.
However varied governments through the years have championed the nation’s expertise ecosystem to push packages like Station F and reforms to legal guidelines to assist out startups. And with the tech world at present present process a increase in synthetic intelligence, France is trying to place itself as a number one hub.
French generative AI corporations have raised $2.29 billion so far, based on information from Accel and Dealroom, essentially the most of any European nation. This has been pushed by large investments in buzzy French AI startups akin to Mistral AI and H.
“France is the chief on synthetic intelligence in Europe,” Bruno Le Maire, France’s finance minister, informed me on the nation’s excessive profile occasion Viva Tech final month.
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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 group. When you like Chinese language or Vietnamese meals, you then’ll be joyful 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 corporations, it embodies France’s thrilling tech business. Within the second installment of our take a look at Europe’s main tech hubs, we’re in Paris to talk to the top of Station F about how the nation disregarded its status as being anti-tech, the success of its AI corporations, and the political and regulatory challenges it might 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 wonderful.
Tom Chitty
To explain to our listeners rapidly what it is like. It’s a little bit of an oasis. It appears to be like like an enormous plane hangar. And there is all these kind of transport containers which function kind of assembly rooms [which are] glass fronted so you possibly can type of see in them. Anyway, that is what it appears to be like like visually, however to know 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 goal 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 basically, the thought had type of come about a number of years earlier than. Clearly, we would been noticing that, particularly from overseas, when folks would take a look at the European ecosystem, they might know London and London has all these corporations that everybody is aware of, and all of the funds are based mostly there. Individuals really knew rather a lot about Berlin. I feel a few corporations fairly well-known had been based mostly there as properly. And France was simply type of not on anybody’s radar, regardless that there was really rather a lot happening. So the thought behind Station F was let’s make this type of large emblematic house, convey everybody to the ecosystem collectively, actually facilitate launching a enterprise as a result of that basically type of felt just like the hurdle was getting folks up and working. And in order that’s basically 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 referred to as the queen of tech amongst different titles, all very constructive. Nicely, I will allow you to determine 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 position?
Roxanne Varza
So many individuals ask me this, and I want I knew what was happening 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 position? Most likely, I’d say possibly simply my connection to the startup ecosystem, the worldwide startup ecosystem. I feel, additionally, in case you take a look at possibly individuals who do not know, our founder, his title is Xavier Niel, and he is received a giant telecoms firm in France and he is launched so many initiatives which have simply powered this ecosystem. However in case you take a look at the opposite initiatives that he is finished, he tends to gravitate in direction of folks that might 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 once I got here into this position. And possibly additionally the truth that [to] have a little bit of a world feminine profile is a bit interesting for right now’s ecosystem that should type of contemplate variety.
Tom Chitty
Now, earlier than we get again to it, now we have, in fact received 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 thought of 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 friends on this mini sequence that we have finished. 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 aren’t any brainers. So can I begin with these two? The third one, I feel is definitely actually exhausting. So yearly in the summertime, I take my total workforce to a brand new ecosystem. We have been to Amsterdam, we went to Berlin. This yr, 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 constructive issues. And I really feel like we have additionally received a really attention-grabbing French entrepreneur expat group 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 will 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 wished to begin with the kind of idea of Station F as a result of we at all times discuss these ecosystems round Europe. And, , in case you go to London, historically, it was kind of the East Finish of London round Previous Avenue roundabout that had these hubs, Shoreditch and kind of expanded. However there have been these kind of pockets in lots of cities, the place these startups, buyers maybe gathered. Is the thought nearly to only create this single big hub the place you need not have these type of disparate elements of cities. I do know, they’re single cities, however a few of them are nonetheless large one finish to the opposite, can take a little bit of time. So is that basically the thought behind Station F?
Roxanne Varza
You realize, I feel on the time, that was the thought, as a result of we thought that is so large, 1,000 corporations, that is going to be the entire ecosystem. However really, what we have seen is that even right now, Station F is absolutely not even that large anymore, given how large the entire ecosystem is. So we’re actually I feel, by way of early stage and getting began, that is the place you come. After which there’s totally different pockets, as you mentioned, for type of later stage and development stage corporations inside Paris.
Arjun Kharpal
And Roxanne, what yr did you’re taking? 2017?
Roxanne Varza
Was the launch in the summertime.
Arjun Kharpal
And is that whenever you took over the position right here?
Roxanne Varza
I began two years earlier than.
Arjun Kharpal
I feel we’re on so a few years now, I feel so many issues have modified. I keep in mind kind of visiting Paris on the time, and there have been protests from the taxi drivers round Uber. And, , many had from the surface checked out that and mentioned, properly, that is simply underscores at this level France’s broader kind of antithesis to expertise and alter and innovation. What’s modified since then, in France and Paris specifically, round expertise?
Roxanne Varza
I imply, a lot has modified. It feels actually like 180 diploma flip. Once we began Station F, it was extra like nearly a working joke. Are there actually 1,000 corporations in France to fill this house? Like are you guys even certain about what you are doing? Whereas right now, persons are taking a look at 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 energetic position. They usually have recognized which steps to take and taking the appropriate ones, as a result of authorities may also typically 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 via an enormous transformation, I feel, possibly partly powered by Station F. However we’re not the one gamers in that house. And it type of made entrepreneurship cool. It made it attainable for lots of people that simply have 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 intervening time 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 assume, folks having been skilled in a few of the large 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, now we have all of the college packages you may want, all of the sources that , tangible sources to construct an organization. I feel 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 rather a lot simpler to come up with. And we’re additionally simply seeing, I feel, with the worldwide possibly geopolitical shift, persons are trying much less in direction of the U.S. possibly much less in direction of conventional ecosystems, and now coming right here. So I feel that has performed undoubtedly an enormous position. After which by way of funding, it was once unattainable to get the tier one funds in your cap desk being based mostly 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 specific 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 feel in case you evaluate working in Paris to working with London, I feel, people who find themselves trying, for instance, for bilingual colleges, or for docs, that might be very comfy in English, like, there’s simply little issues like that, that I nonetheless assume are possibly nonetheless not the place they could possibly be. However in any other case, if we take a look at simply the ecosystem, and from a enterprise perspective, I feel working right here is pretty much as good as every other ecosystem if not higher.
Arjun Kharpal
I keep in mind one of many complaints a number of years in the past, have been issues like labor legal guidelines, the startup founders have been actually type of not joyful, they have been too inflexible, too strict. Have a few of these kind of teething points within the early levels of founding startups in France modified in any respect?
Roxanne Varza
100%. I would say the labor regulation, when folks convey that up now, I nearly really feel like, okay, you have not caught on top of things with the place we’re right now. There’s undoubtedly loads of methods to get across the hurdles. I imply, you possibly can’t evaluate, clearly, what now we have in France with what occurs, for instance, within the U.S. with how straightforward it’s to rent and hearth. They’re simply totally different markets. But it surely’s not creating the headlines that we have been seeing 10 years in the past of, , unattainable to fireside the groups and issues like that.
Tom Chitty
Once we discuss in regards to the U.S, clearly, loads of the European markets are at all times going through the problem of U.S. large tech, , eager to get into these markets and, , flex their muscle groups, if you’ll. How a lot do you are worried about that? Is that one thing that retains you up at night time?
Roxanne Varza
Massive tech coming right here?
Tom Chitty
U.S. Massive Tech.
Roxanne Varza
Under no circumstances, as a result of they’re all Station F companions. You may see their logos behind me. I feel that is an ecosystem that wishes 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., , whoever they’re, I feel the entrepreneurs right here need to work with these corporations. And all the U.S. leaders are current and have been current for a very long time.
Arjun Kharpal
It is a good probability, I feel, then to speak about synthetic intelligence, very tough to have a dialog lately in tech with out speaking about that buzzword. However , France, for certain has been within the headlines with corporations like Mistral and H and all of those totally different corporations as properly elevating very giant sums of cash, as properly. Look, Europe simply extra broadly, misplaced out, for example 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 increase in AI we’re seeing current for French corporations and for European corporations extra broadly, to compete on the worldwide stage?
Roxanne Varza
I feel you are completely proper. I imply, you simply put your finger on it. So I feel there was this sense of we missed out from type of that first era of the web basically. Despite the fact that there have been many glorious corporations that have been constructed right here, they only did not compete on the identical degree. And I feel right now there’s a little bit of this race to be aggressive on that degree. And after we had Mistral’s mega first spherical, everybody thought OK, that is fantastic, but it surely’s one spherical, it is one firm. And right now we have had Poolside who’s additionally, , come over from the U.S. We simply H. And now persons are beginning to surprise, is that this a development? Is that this one thing we will really actually construct into our ecosystem long run? And I feel the reply is doubtlessly, sure.
Arjun Kharpal
I feel to Tom’s level, although, as properly, in regards to the kind of affect of the U.S. tech giants. One of many attention-grabbing issues has been how concerned they have been very early on in these corporations, the likes of Mistral getting backing from Microsoft and a few of the different giant tech giants. I keep 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 in regards to the affect doubtlessly, as Europe tries to essentially develop its homegrown expertise corporations within the on the earth of AI in regards to the position of the U.S. tech giants. And I feel his was considered one of there must be a balanced, we’re joyful to kind 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 stability wanted to be struck?
Roxanne Varza
It is attention-grabbing as a result of right here we’re speaking about nations and nearly there is a degree of sovereignty that is in all probability concerned in that dialogue. However I additionally assume simply from, lets say that everyone desires to workforce up with a few of these large gamers, we additionally need to keep away from having them have a lot energy that they will dictate tomorrow’s improvements. And so I feel these are in all probability matters, I imply, France would be the subsequent nation that may host the subsequent AI summit in February of 2025, and I feel these are going to be very, very key matters. However I do assume there is a very clear sovereignty angle that ought to be a priority for a lot of governments.
Tom Chitty
Once we discuss 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, rather a lot may change. I feel extra will change when now we 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 will 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 fully deprioritized, which is basically 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 degree. And it might take extra months and weeks to see the motion. So I imply, I’ve to say we’re making an attempt to be as constructive as we will.
Arjun Kharpal
One of many considerations I learn was that if there’s, , this kind of resurgence of the far proper, and there is a unfavorable impression on issues like immigration coverage, that might have an effect on entry to expertise from overseas, proper?
Roxanne Varza
100%. I imply the true concern is in case you look on each excessive sides of the spectrum, they ship not nice messages to international expertise, to international buyers. So I feel 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 instances. However sure, I do assume within the case that now we have each excessive sides, one or the opposite win, it is not going to be pretty much as good as we’re right now. It’s totally clear.
Arjun Kharpal
You talked about the push from the French authorities, significantly beneath Macron, and his authorities to spice up the French tech scene as properly. Once more, one other kind of status Europe extra broadly has had is considered one of regulation over innovation. And to some extent, that also reigns. We noticed the large EU AI Act cross as properly. But it surely looks like President Macron specifically has tried to convey the narrative again to, no, we will 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 feel he is finished rather a lot for worldwide visas. The visa scheme was overhauled, I feel it was the identical yr that we launched Station F and we noticed the impression instantly. Late stage funding, I imply, the funding panorama has simply remodeled. Earlier than we used to really feel like there is no early stage funding, and there is no late stage funding. And right now, 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 feel, they’ve actually gone out and tried to work on both implementing insurance policies that might encourage folks to spend money on early stage, whether or not or not it’s via tax breaks, and different issues like that. These are more moderen. However he is really gone out and basically 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 regulation 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 concern as properly. The place do you see this kind 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, after we’re not on the quantities, and even the variety of rounds that we ought to be possibly even almost about constructing these corporations. So I’d say late stage remains to be a giant factor. However I feel the true piece that now we have to crack in Europe, throughout the board is exits. And I am certain you have heard this many occasions earlier than. However I feel we will undoubtedly do rather a lot to encourage extra of an acquisition tradition in Europe with our European corporates, which appear fairly absent, in case you evaluate with all of the People that come over and need to purchase corporations. The IPO market is absolutely the place I do not know the way you repair
Arjun Kharpal
I used to be on the roof of the London Inventory Trade. When was this? Final week? … But it surely was the IPO of an organization referred to as Raspberry Pi, the computing startup that is been round for , I feel, greater than a decade now. And there was large fanfare, confetti cannons and plenty of noise for an IPO I feel that valued the corporate, simply over about $500 million. And I feel that basically underscores the problems with the market in the intervening time or the considerations in regards to 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 feel in London specifically, there’s numerous 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 related 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 feel on the subject of itemizing a expertise firm, folks simply routinely assume I imply, now we have had some right here, I should not say we’ve not as a result of a number of years in the past, we had fairly a number of, two or three. However I feel right now simply anyone who desires to go public simply is not going to take a look at this market, given what the observe report that we have had.
Arjun Kharpal
And it looks like a pivotal time as a result of in case you’ve received corporations 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 facet of issues. So European corporates not as energetic by way of shopping for or buying expertise corporations?
Roxanne Varza
Sure. And I feel I imply, I can actually converse to the French market once 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 now we have a ton of early stage corporations. 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 feel it simply factors to the truth that culturally, they’re in all probability much less aggressive in that house. In some instances, they do not even have corp dev groups. So I feel that is undoubtedly one thing that we will work on constructing.
Tom Chitty
Simply to convey it again to the kind 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 long run for Station F and are you targeted on type of what’s taking place elsewhere and ensuring you are still main in these areas? Or do you very a lot take a look at your self and simply fear about you? How do you see the subsequent kind of couple of years panning out?
Roxanne Varza
Nicely, as I discussed, now we have this looming election, so ask me once more in a number of weeks. I feel it is a stability, as a result of we undoubtedly look overseas and we get impressed by loads of what’s taking place elsewhere. And we attempt to typically take 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, , did you basically reduce and paste one thing that exists elsewhere? Completely not. We requested all of the entrepreneurs round us basically, 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’d by no means see it outdoors of France.
Arjun Kharpal
Has the profile of startups in right here modified as tech developments have modified, whether or not it is the crypto increase into the AI increase?
Roxanne Varza
Excellent query. Yeah, we really refresh the whole lot on a yearly foundation. So two years in the past, crypto, we launched our crypto Web3, program. Final yr, we did quantum computing, two AI packages, I feel this yr, we’ll proceed to see AI. I am hoping we will increase local weather tech a bit extra. I feel 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, recent out of college. At present, we’re seeing an increasing number of repeat entrepreneurs. I feel over 50% of the entrepreneurs now we have on campus have already created a enterprise and I feel it factors to the mature maturity of our ecosystem,
Arjun Kharpal
And also you’re constructing a lodge.
Roxanne Varza
We launched housing in 2019. So now we have 600 people who dwell in our housing part. And we’re type of ending that now we have a restaurant there, we will have a sports activities facility. So there’s another issues that now we have on website, it is about quarter-hour away. Later this yr, we’re launching, it is proper outdoors the constructing but it surely’s basically 12 areas that may full the provides that now we have for entrepreneurs so that they wished extra more healthy meals choices, bike restore, smartphone restore, podcast studio. So these sorts of companies might be accessible subsequent to us and the lodge in fact in two-to-four years.
Tom Chitty
Improbable. Nicely that’s all now we have time for however now we have in fact received to do stat of the week. Have you ever been desirous 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 for the reason that starting of the yr?
Arjun Kharpal
Shut. I will do yet one more spherical of guesses.
Roxanne Varza
It will possibly’t be how a lot we raised as a worldwide quantity for the primary half of the yr?
Arjun Kharpal
You are knocking on the door. I will 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. A number of 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%. Despite the fact that Paris is fourth by way of GenAI startup creation, it has the very best ranges of funding due to a few of these aforementioned corporations there.
Tom Chitty
Okay. That’s all now we have time for. If you want to observe and subscribe to the present, you possibly can. And you too can fee the podcast which might be nice, 5 stars if you need. Thanks, Arjun.
Arjun Kharpal
Thanks, Tom.
Tom Chitty,
Thanks, Roxanne.
Roxanne Varza
Thanks.
Tom Chitty
We’ll be again subsequent week for an additional episode of Past the Valley. Goodbye.