France's start-up ecosystem is showing remarkable resilience in the face of mounting economic and political headwinds, but the golden age of explosive growth appears to be cooling, according to the latest barometer from France Digitale and EY.
The numbers tell a tale of two realities.
On one hand, French start-ups generated €11.5 billion in revenue during 2024, marking a solid 16% increase from the previous year. The ecosystem now employs 1.45 million people and has created an impressive 150,000 new jobs over the past year.
Yet scratch beneath the surface, and signs of strain emerge everywhere.
Emmanuelle Ratsimialavahoaka, Partner at EY & Associates, identifies the core struggles: "Faced with the economic slowdown and declining household consumption, raising funds and finding clients remain the primary challenges that start-ups say they must overcome in the coming months."
The Funding Drought
Perhaps nowhere is this more evident than in the venture capital landscape, where funding has plummeted dramatically. It should be noted that the massive Mistral AI funding announced this week is likely to heavily skew this year's numbers.
French start-ups raised just €2.78 billion in the first half of 2025, representing a stark 24% decline from the same period in 2024. The mega-funding rounds that once defined France's tech boom have all but disappeared, with deals exceeding 100 million euros dropping by a crushing 87%.
The report notes that VCs are becoming increasingly selective, prioritizing French and European limited partners over riskier international plays. The days of throwing money at ambitious but unproven concepts appear to be over, at least for now.
Elina Berrebi, founding partner at Revaia and vice-president of France Digitale, is cited in the reported as highlighting a critical structural issue that continues to limit the nation's VC ecosystem: "In 2025, individuals, corporates, family offices and private banks represent 64% of assets under management by French VCs, far ahead of public funds (20%) and institutional investors (13%). It is urgent to mobilize other sources of financing, such as assets from private pension funds, which are currently more invested in sovereign debt and international Private Equity than in the real European economy."
Profitability Takes Center Stage
Interestingly, this funding crunch may have forced start-ups to develop a healthier relationship with profitability.
A remarkable 80% of companies surveyed report they are either already profitable or expect to reach profitability within three years – the same percentage as in 2024, suggesting the ecosystem has maintained its focus on sustainable business models despite deteriorating external conditions.
This shift toward financial discipline is perhaps most evident among France's Next40 companies, where 50% are already profitable. The era of growth-at-all-costs appears to be giving way to a more measured approach focused on building lasting businesses.
International Markets as a Lifeline
With domestic demand uncertain, French start-ups are increasingly looking abroad for growth opportunities. International sales now account for 46% of total revenue, up 6 percentage points from the previous period. Europe, in particular, has emerged as a key growth driver, with sales across the continent surging 57% year-over-year.
This international focus isn't just about revenue diversification – it's become a survival strategy. As political instability grips France and public spending faces cuts, start-ups are betting that European markets offer more stability and clearer regulatory frameworks.
The Employment Paradox
Despite funding challenges, France's start-up sector had been a job creation machine.
The ecosystem now supports 1.45 million positions, including 500,000 direct employees within start-ups themselves. The 11.5% annual growth in employment far outpaces traditional sectors, with transport and logistics, environment and energy, and industrial deeptech leading the charge.
Despite widespread concerns about layoffs, start-ups have actually created more jobs than they eliminated over the past year. The data shows that job creation consistently outpaced job destruction from July 2024 through early 2025, with start-ups generating a net positive employment impact. However, a concerning trend emerged starting in February 2025, when job creation began declining notably across the start-up ecosystem.
The decline in job creation represents a significant shift from the robust employment growth that characterized the sector through most of 2024.
This downturn coincides with the implementation of France's 2025 finance law, which weakened several innovation support mechanisms, including the CIR (Research Tax Credit) and JEI (Young Innovative Enterprise) status – programs that previously enabled start-ups to recruit more easily.
Six months after its implementation, the effects are already visible: 24% of start-ups report treasury losses, 23% have reduced investments, and 16% have frozen hiring. The law's impact on research and development spending has been especially severe, with many companies abandoning or scaling back innovation projects.
Meanwhile, recruitment has become increasingly challenging.
Nearly 70% of start-ups plan to hire in the coming year, but finding talent remains difficult. The most sought-after profiles are tech and commercial roles, reflecting the sector's continued emphasis on product development and market expansion.
Looking Ahead
As France's start-up ecosystem enters a "maturation phase," the coming months will test whether the sector can maintain its dynamism without the tailwinds of easy money and government support that propelled its initial growth.
Perhaps most concerning for France's digital sovereignty ambitions is the ecosystem's continued reliance on American technology providers. Cloud computing alone accounts for 40% of start-ups' IT spending, with American providers dominating across all categories from artificial intelligence to digital marketing platforms.
The fundamentals remain strong. French start-ups are profitable, internationally competitive, and continue creating jobs at an impressive pace. But with funding scarce, political support waning, and global economic uncertainty mounting, the sector's next chapter will likely be defined not by exponential growth, but by the more prosaic virtues of resilience and operational excellence.
The question now is whether this new reality represents a healthy correction or the beginning of a more prolonged downturn for one of Europe's most vibrant tech ecosystems.
"In a tense economic and geopolitical context, French Tech demonstrates its strength," Véronique Torner, president of Numeum, says in the report. "This employment growth, which we observe every month in our barometer, is a strong signal that testifies to the resilience of start-ups and the necessary support from public and private actors in France and Europe. Our competitiveness and strategic autonomy are built through the commitment of an entire ecosystem and our ability to unite to support our innovative players."
