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👋 Welcome to our weekly recap of the big news + funding in the French tech ecosystem this week. In this week's French Tech Wire,

👀 Deep Dive: Riding a new round of funding at a €2bn valuation, Pennylane has already seen rapid growth. CEO Arthur Waller explains how new invoicing regulations and AI could catalyze the company's ambitions.

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Chris O'Brien + Helen O'Reilly-Durand

🤔 Edito 🤔

I'm optimistic about European and French tech. But I think it's hard to fully grasp the immense structural funding disadvantage that startups in Europe face compared to Silicon Valley.

Let me focus on one example: Public employee pension funds.

Every state in the U.S. has two of them. One for public employees at all levels of government (state and local), and one for teachers. Several of these pension funds are among the largest LPs in the world. In my former home state, the California Public Employees’ Retirement System (CalPERS) has $531 billion in AUM.

During Q3 2024 (so just one quarter), CalPERS invested $12 billion in VC and PE funds. Since 2023, CalPERS has committed $1.6 billion to a single fund: Andreessen Horowitz's Innovation Opportunities fund.

For a sense of scale, consider that the European Investment Fund invested €14 billion in 2024 to support European small businesses, including in 102 venture capital funds.

Overall, CalPERS and its sister fund, California State Teachers’ Retirement System (CalSTRS) - $353bn AUM, allocate about 15% of their assets to PE/VC.

There has been talk in Europe about different schemes to close this yawning funding chasm. France's TIBI initiatives have made some strides getting insurance funds into the game. There is talk of a TIBI for Europe, and even a proposal to tap into personal savings accounts.

All of this could be helpful at the margins. But Europe has to think on a much more massive scale to really make a dent here.

Chris O'Brien

🚀 Tech Talk 🚀

⬇️ 📉 The latest data from EY confirmed what we reported last month: Funding for French tech startups continues to slide in Q1 2025. Only 148 companies raised €1.4 billion, a decrease in value of 19% and 14% in volume terms compared to Q1 2024. Meanwhile, the US has seen investments boom with growth of 154% thanks to its AI leaders (OpenAI, Anthropic, and Groq), and even Europe is growing at just over 10%. In the European Union, France has lost its lead to Germany, where companies raised €1.65 billion (though that country saw a 20% decline 20% in value and a 14% dip in volume).

Maddyness drew the same conclusion (though with different data), reporting that 123 French start-ups raised €1.2 billion, a decrease of 26% compared to the first quarter of last year (€1.6 billion) but also compared to 2023 during the same period (€1.9 billion). That 123 is down from 164 for the same period one year ago. | Maddyness, EY

🛡️☁️ At a digital sovereignty event in Paris, France’s digital minister Clara Chappaz delivered a forceful critique of Europe’s dependence on US tech giants, urging EU nations to "hunt as a pack" to protect digital autonomy. She denounced US dominance in the cloud sector—where American firms control up to 80% of the European market—and called for stronger enforcement of EU tech regulations, even in the face of US trade threats. Chappaz also condemned “sovereignty washing,” where US cloud providers claim European legitimacy through partnerships, highlighting France’s strict SecNumCloud certification criteria. To reduce dependency, she announced new initiatives under the France 2030 plan, including funding sovereign cloud projects, creating an industry committee, and mapping tech dependencies. She noted growing demand for French cloud providers like OVHcloud and Scaleway, reflecting a broader shift toward secure, sovereign alternatives in Europe. | Euractiv

🥊 A conflict between the two partners of SistaFund, Tatiana Jama and Isabelle Gallo, has led to the temporary suspension of the fund, according to Les Echos' sources. SistaFund, which was launched at the end of 2022, was born out of the Sista collective with the goal of investing in startups where at least 30% of the capital is held by women. Isabelle Gallo is expected to leave the project soon, while Tatiana Jama says she intends to carry forward the fund’s original mission with renewed ambition. Despite the tensions, investors—including the European Investment Fund and several tech entrepreneurs—continue to support SistaFund. | Les Echos

🌴🪓 Welcome to the Jungle, a hiring and branding platform that has been a cornerstone of the French tech ecosystem for years, is laying off 60 of 260 employees in France, according to FrenchWeb. The editorial team is being shut down as the company seeks profitability after almost €70 million raised and €10 million losses over two years. | FrenchWeb

⛽ After a two-year delay, the French government has finally unveiled its revised national hydrogen strategy, which is more targeted but less ambitious than initially planned. The plan includes a €4 billion support mechanism to boost the competitiveness of low-carbon hydrogen, primarily produced via electrolysis from renewable or nuclear energy, to replace fossil-based "grey" hydrogen. The strategy focuses on key sectors like fertilizer production, refining, and intensive transportation (buses, utility vehicles, taxis), while scaling down its 2030 capacity goal from 6.5 GW to 4.5 GW. Critics blame government delays for the lost momentum, especially compared to Germany and Spain, which have already launched significant hydrogen infrastructure investments. To stimulate demand, France may also adjust fiscal tools like the renewable fuel tax incentive, though this remains politically sensitive. | Le Figaro

How Pennylane Plans To Become France's Accounting Superhero

The conventional wisdom over the past decade is that any truly ambitious French startup must think globally from Day 1. But the accounting complexities facing companies in France are such that Pennylane's founders believe their home market presents an opportunity to build a fintech giant.

Founded in 2020, Pennylane has experienced meteoric growth in just five years. The company has positioned itself as an "all-in-one" accounting platform that serves both accountants and the small to medium-sized businesses they support. Currently operating only in France, Pennylane has built an impressive customer base of approximately 4,500 accounting firms and more than 350,000 small and medium-sized enterprises (SMEs).

Earlier this month, the company announced a €75 million funding round co-led by Sequoia Capital, Alphabet's CapitalG, and Meritech, with participation from DST Global. This latest funding round doubled the company's valuation to €2 billion, up from €1 billion in early 2024 when it achieved unicorn status with a €40 million Series C round.

The latest funding comes as Pennylane anticipates another wave of growth driven by expansion into Germany, the upcoming mandatory electronic invoicing reform in France, and the rapidly evolving capabilities of generative AI. Arthur Waller, Pennylane's CEO and co-founder, is projecting the company will hit $100M ARR this year and break even by continuing to focus on primarily on France..

"It's a big market," he said. "We are convinced that just in France, there is probably an addressable market of a couple of billion euros. So you want to have the product right. And then the ambition is to go to continental Europe. But there is also no rush because we know it's a product game. We want to get France right before going too fast and extending and being defocused."

💸 Top Funding Deals 💸

📇 Company: Mila
🔍 Description: Rental platform offering fast rent payment (within 72 hours), extended eligibility for tenants, certified tenant files in 6 hours, and response to claims within 48 hours.
💻 Website: http://mila.direct
📍 HQ City: Puteaux, France
🧗 Round: Growth Equity VC
💰 Amount Raised: €12 million
🏦 Investors: Elevation Capital Partners
👨💼👩💼 Founders: Jean Boucher
🗞️ News: LinkedIn

📇 Company: Brink Therapeutics
🔍 Description: Biotech startup developing programmable recombinase-based genome editing technology that enables precise insertion of long DNA sequences without double-strand breaks, offering a safer and more efficient alternative to CRISPR-Cas9 for cell and gene therapies.
💻 Website: https://www.brinktx.com
📍 HQ City: Paris, France
🧗 Round: Seed
💰 Amount Raised: €3.5 million
🏦 Investors: Kurma Partners, Breega, Kima Ventures
👨💼👩💼 Founders: Jonathan Naccache (CEO), Harry Kemble (CTO)
🗞️ News: FrenchWeb

📇 Company: Circular
🔍 Description: Smart ring that analyzes body signals to help users improve sleep, activity, and overall wellness.
💻 Website: https://www.circular.xyz/
📍 HQ City: Paris, France
🧗 Round: Seed
💰 Amount Raised: €2.68 million
🏦 Investors: Kickstarter (crowdfunding)
👨💼👩💼 Founders: Laurent Bsalis, Amaury Kosman
🗞️ News: LinkedIn

📇 Company: Biom’Innov
🔍 Description: Developer of eco-friendly biostimulants and biocontrol solutions aimed at enhancing plant health and reducing reliance on chemical pesticides, promoting sustainable agriculture.
💻 Website: https://www.biominnov.com
📍 HQ City: France
🧗 Round: Seed
💰 Amount Raised: €1.5M
🏦 Investors: Agrilife Studio
👨💼👩💼 Founders: Antoine Coutant
🗞️ News: Les Echos

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