Bankruptcies in France's tech start-up sector are on the rise, as indicated in a survey published on Tuesday that could challenge President Emmanuel Macron's vision of Paris as a top European tech hub and a major driver of the French economy.
During his initial presidential term, Macron praised France's growing tech start-up industry and in February secured significant investment commitments. However, research from ScaleX Invest suggests that French tech start-ups are facing bankruptcy amid fears of a global economic slowdown impacting financial markets.
According to ScaleX Invest, 10.4% of the 1,487 tech start-up companies analyzed are at a high risk of bankruptcy, surpassing the number of new Series A initial fundraising rounds. Notably, there are concerns about well-established companies facing insolvency, including one that leverages robotics to manufacture insect-based ingredients.
Edouard Thibaut, the Chief Operating Officer of ScaleX Invest, highlighted, "Insolvency is increasingly affecting mature companies. On average, firms facing insolvency had secured 32.5 million euros ($35.4 million) in funding, twice as much as in previous years, yet still faced failure."
Thibaut added, "This underscores how tighter funding conditions and decreasing valuations are making it challenging to secure capital, even for well-funded start-ups."
Please note: The exchange rate at the time of writing was $1 = 0.9174 euros.