The problem is that it's very difficult to go from startup phase to mid-sized company phase in a system with as many regulations and taxes as France.
It means that your only shot is to get bought out by a larger conglomerate at some point.
It means that your only shot is to get bought out by a larger conglomerate at some point.
Taxes don't really play on this --> many startups don't make a profit ;-) . Social Security might, but a talented engineer in France still costs less overall than the same one in the Bay Area and employee loyalty is higher.
One issue is uncertainty over government intervention, there is a bad history of the French government weighing-in on M&A activity. But the real issue is raising funds - while Seed rounds are generally covered by, among other things, government loans/subsidies, the ecosystem is lacking funds financing Series A and B. Here the government tries to provide incentives but pension funds are not the right level of financing for these rounds...the VC ecosystem needs to grow and that is a challenge because of a risk-averse culture.
If I were a VC in the US, I would see France as an opportunity.
It isn't about the presence of some regulation. It is about the burdens and costs associated with it.
French regulations are very cumbersome and costly, especially when it comes to labour market. For example, every company with 50 or more employees needs to establish a works council (Comité d’Entreprise). This costs money and time. It is also one of many examples of regulation that brings about the culture of hostility between employees and employers.
Actually, not that much. You have one year to install it, and it mainly consists of an election you have to organize. If you can't organize that kind of stuff once every two year or so, I don't understand how you can face other business challenges.
> It is also one of many examples of regulation that brings about the culture of hostility between employees and employers.
In most of the companies, it only consists of giving money to employees and managers picked charities and giving perks like theaters tickets.
All of this is really manageable for startups with more than 50 employees, and most of the time, it is already done by them to attract employees.
I remember one organizer saying that a good matured dispute in the USA was one with no gunfire and that they had to carry for self protection.
That very much depends on your political ideology.
I don't know how you can say taxes don't play into this. I started my company 5 years ago and if I had to pay 50%+ in tax back then, I would have failed. Instead, I used that money to grow the company.
"If I were a VC in the US, I would see France as an opportunity."
Why? More of your money will go toward taxes and the regulations will restrict your ability to grow your money. VC want a return on investment (as do most investors).
Firing someone in a company over 10 people is a court case. There have been many cases where the company loses the court case and a person that should have been fired just sits and does nothing and is forced, by law, to be paid by the company.
This has become such a problem that many companies in France don't want to hire students..because it's too much of a risk.
France has had 10%+ unemployment for over a decade. You would think they would have changed something by now.