👋 ...to the Great French Tech Election Freakout!

If you're just tuning in, here's a recap of our last electoral episode: President Emmanuel Macron's party got its butt whooped in the recent European Parliament elections. Marine Le Pen's Far Right Rassemblement National did much of that butt-kicking under the leadership of Ultra-Right Cover Boy Jordan Bardella.

Two rounds of voting for a new legislature are scheduled with the RN leading in the polls (31.5%), followed by a coalition of left-wing groups dubbed The New Popular Front (29.5%), followed by Macron's party (19.5%). How that might translate into seats is complicated, depending on which combination of candidates advances to a second round and how people vote strategically.

Because there is a good chance no party will win a majority to form a new government, there will likely be some more wheeling and dealing after the 2nd round on July 7.

Still, none of the likely scenarios auger well for Macron, aka The Startup Nation Kid. Even as his positions have shifted since he was first elected in 2017, his support for entrepreneurship and innovation has remained steadfast. In the past 7 years, he has unleashed a tidal wave of workplace, economic, and financial reforms aimed at boosting innovation while also implementing countless programs and billions of Euros in government money to catalyze startups in just about every sector imaginable.

As such, the French Tech ecosystem remains one of his biggest bases of support. Given the massive support this ecosystem has received under Macron, it also potentially has the most to lose should a left or right coalition control the Assembly and force Macron to accept a prime minister from their respective ranks. As a Les Echos headline put it: "French Tech fears a hemorrhage of talent and foreign capital."

On the left, the Popular Front's platform (PDF) focuses on economic justice, climate action, and purchasing power. The 10-page program makes no mention of "entrepreneurs," "startups," or "innovation." Instead, the alliance blasts "the failure of politics, economic, fiscal, budgetary, and social policies of Emmanuel Macron." It adds: "The program of the New Popular Front marks an immediate and clear break with the policy implemented since 2017."

On the right, the RN's 8-page platform (PDF) does mention entrepreneurship, and indeed some of its proposals don't sound like such a radical departure from Macron's positions: "Root the economy and develop the entrepreneurial spirit in France," "Create a French Sovereign Fund to increase the remuneration of national savings national and direct it toward strategic sectors, industries, and innovation," "Exempt from corporate taxes for 5 years companies created by a young person under 30 years old." While there is much skepticism that the RN would make French Tech a priority in the same way Macron does, there is a greater fear that its anti-immigrant rhetoric (even if softened) will scare away foreign investors and talent.

And with both left and right heavily critiquing Macron's deficit spending, the billions of euros dolled out for innovation programs certainly would be in jeopardy. Maya Noël, president of the startup and VC association France Digitale, wrote a guest editorial in Les Echos that emphasized the contributions entrepreneurs and VCs have made to France's competitiveness and building the economy of tomorrow. She urged French voters not to turn their backs on the past decade of economic reforms and efforts to attract international talent.

"Let us not misunderstand: we must not fight either innovation or Europe," she wrote. "Neither foreign capital nor the legal immigration of international talents should be prohibited. We must believe in our ability to innovate, to continue to make France shine, beyond its borders."

For his part, Macron wrote an open letter to the French calling on them to reject the extremism of both left and right and endorse the continuation of his middle way to support work reforms and reindustrialization.

"This third way is the best for our country," he wrote. "Not only because it protects the French and prepares for the future. But because it is the only one that can certainly block the extreme right as well as the extreme left in the second round... Over the past seven years, a lot has been done: the renewed attractiveness, the reopened factories, the more than 2 million jobs created, the tax cuts, the salary increases."

He added: "I trust you: analyze the programs, decide, and go vote."

And so, while a nation holds its collective breath... here is your friendly reminder that this newsletter is free. 😉🥂 Upgrade to a paid membership to get full access to all the articles and archives. 🏆

🔎 Inside this week's newsletter:

• Deep Dive: While BeReal's fall from grace is now complete, the deal represents another milestone in the turnaround of Voodoo. The gaming company defied predictions of its demise and is now rumored to be on a path to an IPO. Resurrecting BeReal might be its biggest challenge yet. We break down the deal and what it reveals about both companies.
• Spotlight Interview: Mistral AI Co-Founder and CEO Arthur Mensch recently testified at the French Senate where he addressed concerns over the nation's competitiveness in AI, problems with fundraising and recruiting in France, and what drives him personally. Read this edited transcript of his Q&A.
• The Big Deals: Mistral AI (what else...?), YesWeHack, C12, Omi and more!

⬆️ 💸 Funds raising funds: Paris-based European VC fund Wind launched a new €130M impact fund. The fund, which hit €90M at first closing, will be used to finance European deep techs working in the climate adaptation sector. Early-stage VC Breega announced the first closing of its €75M Africa Seed I fund for African startups. The closing coincides with the opening of new offices in Lagos and Cape Town. 🌍

➡️ 👰‍♀️🤵‍♂️ With the official Boy Scout motto "Be prepared" seemingly in mind, serial entrepreneur, investor (Otium), vocal Catholic, and co-founder of Smartbox, Pierre-Edouard Sterin, is working on a marriage preparation App. The fervent father of five posted a call on LinkedIn to find entrepreneurs for the project which aims to provide "a turnkey solution for preparation for married life (life as a couple, arrival of a child) with the ambition to cover 75% of married or partnered couples within the next 10 years." 💒

➡️ 🕵️‍♂️ In the political arena, tech-savvy French Deputy Paul Midy is making waves ahead of the upcoming elections. He’s using LinkedIn, not for networking, but for a bit of fundraising to fuel his legislative campaign! According to Les Echos, he’s already raked in €25k, and the anti-extreme political war chest is growing. 💰

✅ Renowned tech collective Galion Project has just unleashed its new "Survival 101" guide for the brave souls venturing into tech entrepreneurship. Brimming with stories of triumph, tumble, and turnaround from seasoned tech entrepreneurs, this publication is set to be your ultimate source of battlefield-tested business wisdom. Among the gems, it reminds us that executive unemployment insurance is a thing and to never, ever give up. Move over, Churchill! 🤵‍♂️

RIP BeReal: Born January 29, 2020 – Acquired June 11, 2024.

The announcement that hypercasual gaming startup Voodoo had acquired BeReal in a €500 million deal unicorn came as a double surprise. That's because hearing the names of both companies provoked the same reaction that everyone has when they see Snake Plissken in Escape To New York:

As it turns out, that is only half right. While BeReal has conducted a masterclass in how to bungle every aspect of scaling, Voodoo has emerged as a case study in how to defy major market shifts and confound predictions of its demise by reinventing and restructuring its business (though not without some bumps along the way).

We look at how both companies got here, and what the deal means for Voodoo's future.

Just a couple of weeks after Mistral AI celebrated its first birthday, Co-Founder and CEO Arthur Mensch appeared before the French Senate's Economic Affairs Commission. For 90 minutes, he responded to a wide range of questions from members with Commission President Dominique Estrosi Sassone playing the role of moderator.

While Mensch was optimistic about France's AI ecosystem, he was also clear that the structure of the nation's venture capital firms had forced it to seek much of the massive early funding it needed in the U.S. In addition, the nation's labor rules were making it difficult to quickly recruit top talent, forcing the company to turn to the U.S. for expansion.

"We did an initial round which was roughly half American-European," Mensch said. "We did a Series A round where we had no revenues at the time and needed a lot of capital. European funds are not structured to write checks for €50 million to €100 million without seeing a company's revenue. That's what the Americans do for reasons of capital market structure. This means that the upside of the company...is going in part to the Americans, whereas it could be the Europeans."

First: the Mega deal...🔥

What: Mistral AI, an open-source developer of foundational models for AI solutions (art generation, content creation, chatbots, virtual assistants, language translation, and customer service).

Why: To provide an open approach to GenAI and create a credible alternative to Large Language Model platforms such as Open AI or Google AI.

Funding: €468 million (plus €132 million in debt) Series B
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Who: Co-Founders Arthur Mensch, Guillaume Lample, & Timothee Lacroix

‌Investors: DST Global, General Catalyst, Lightspeed Venture Partners, Andreessen Horowitz, Nvidia, Samsung Ventures Investment Corporation, Salesforce Ventures, Belfius, Bertelsmann Digital Media Investments, Bpifrance, Cisco Connected Devices, Eurazeo, Headline, Hanwha, IBM, Korelya Capital, Latitude, Millennium Technology Value Partners, Sanabil Investments, ServiceNow, and SV Angel.

‌What's Next: The new cash will go towards accelerating the development of their advanced GenAI models, scaling their research and engineering teams, and enhancing their computational infrastructure. Additionally, the funds will support efforts to expand their product offerings and increase accessibility to their AI technologies across various industries.

What: YesWeHack, a cybersecurity platform that specializes in crowdsourced security testing.

Why: To help companies enhance security measures, ensuring their digital assets are better protected against cyber threats by leveraging the skills of ethical hackers.

Funding: €26 million
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Who: Co-Founders Guillaume Vassault-Houlière, Romain Lecoeuvre, Manuel Dorne.

‌Investors: Wendel Growth, Adelie, Seventure Partners, Bpifrance, Open CNP, Eiffel Investment Group
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‌What's Next: The new funds will be used to expand their global presence, enhance their platform capabilities, and invest in research and development to improve their security offerings.

What: C12, a pioneer in the development of a carbon nanotube-based universal quantum computer

Why: to design and manufacture large-scale, error-tolerant quantum computers

Funding: €18 million
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Who: Co-founder twins Pierre & Matthieu Desjardins

‌Investors: Varsity VC, EIC Fund, Verve Ventures, 360 Capital, BNP Paribas Développement, Bpifrance

‌What's Next: The new funding will be used to fuel the startup's R&D efforts.

What: Omi, an AI-powered visual generation platform.

Why: To assist companies and brands in creating 3D visual assets.

Funding: €13 million
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Who: Co-founders Hugo Borensztein & Paul Borensztein

‌Investors: Dawn Capital, Founders Future & various Business Angels

‌What's Next: The new funding will be used to expand into the US market.

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