The Future of French Tech: Why Startups Are Optimistic Despite Economic Gloom and Cyber ​​Attacks

Although the current difficult economic situation, Amid job cuts in the tech sector and the recovery from the COVID-19 pandemic, French startups are optimistic about the future, a new survey shows.

According to the survey conducted by EY and France Digitale, 40 percent of French startup CEOs believe their revenue will at least double this year.

French tech startups have been a force behind the UK and Germany in terms of funding. France has 26 unicorns, companies valued at more than €1 billion, and aims to have 100 of them by 2030.

While French startups are showing plenty of promise in these uncertain economic times, the survey shows there are warning signs of slowing growth.

What did the study find?

The study asked nearly 600 French startups over the past 10 years about their ecosystem and their expectations for the future.

French technology has shown resilience after the Covid-19 pandemic. Between 2021 and 2020, the company’s revenue has grown by 23 percent, reaching 8 billion euros.

Revenue collection, on the other hand, has grown significantly in 2021; It has grown to 32 million euros.

“Essentially, we have hyper-growth – the more we grow, the more growth we have. So that’s a very important element in this segment,” Franck Sebag, a partner at EY France and member of the Digital Advisory Board in France, told EuroNews Next.

However, the study indicated that this year’s income from abroad has decreased slightly, reaching 31 percent compared to 36 percent last year.

One reason for this optimism is that startups, such as education or health tech, tend to target consumer needs, Sebag said.

“There are companies that can answer to a specific consumption for purchasing power and also respect for the planet,” he said.

Sectors he expects to thrive in the future are: software as a service, deep technology, fintech, blockchain and companies that matter to the planet.

Besides being more targeted to consumer needs, startups can be more optimistic because they are founded by young entrepreneurs.

“I think startups face economic realities like any business. Today, all of society is asking questions and thinking about what will happen in the coming months,” Maya Noel, French Digital Director of the Association of French Startups, told EuroNews Next.

“The figures confirm that we are facing companies that are probably mostly young and in tune with the current needs of customers and consumers”.

Fear of cash flow

However, the future is not entirely bright. The survey revealed that 71 percent of the respondents considered getting financing through a bank loan.

A number of economic factors, such as material inflation and inflation, have been shown to have a significant impact on how long a company can last before running out of cash.

More than 62 percent of startups stated that their cash flow was shorter than or equal to 12 months. This mainly applies to startups with revenues of less than €5 million.

What are the problems for beginners?

The study again indicated that the main challenge is recruiting in France.

75 percent of French startups employ foreigners. However, of the more than 6,000 jobs created by survey respondents, 87 percent were employed in France.

Noel says recruitment is key for French startups to continue their upward trajectory. She said training is critical to doing this.

“You have to continue education to retrain people, students younger than elementary or high school, as well as older people,” she said.

“What France can do, especially in Europe, is to allow these trainings to be created and to be created quickly”.

The second point, she added, is that startups should still be able to easily hire talent from abroad, especially from the EU.

“Standing in Europe is one of the challenges today for any emerging company that decides to hire from other European countries. Diverse management is a real headache, which makes attracting talent even more difficult.”

According to the study, 98 percent of respondents plan to hire within the next year, saying 2022 will create new opportunities for employees.

The most sought-after profiles are sales, marketing and customer success roles, according to 44 percent of respondents. The hardest to find are programmers and developers, according to 58 percent of respondents.

Weak points: diversity and cyber security

Gender diversity is a key focus for startups, although 14 percent of CEOs surveyed this year are women, a slight improvement from last year’s 11 percent.

Additionally, 31 percent of respondents said they are hiring people over the age of 55, and 21 percent are hiring people with disabilities.

One of the biggest technical challenges for startups in the past year has been cyber security.

Nearly 40 percent of startups surveyed experienced a cyber attack in the past year, up from 13 percent in 2020.

Since then, a third of companies have implemented new cybersecurity protocols since the war in Ukraine began in late February.

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