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#France2030: the French strategy to support industrial startups

After the emergence of the industrial unicorn Exotec, the startup Verkor announced the construction of a gigafactory with the help of the Swedish fund EQT! Are these announcements the beginning of a shift towards reindustrialization by startups? The French strategy for 2030 is to accelerate the reindustrialization of its economy by focusing on the critical role of industrial and DeepTech startups. Among the €30 billion of the France 2030 plan, €2.3 billion will boost technological and industrial innovation! Besides, to help entrepreneurs and investors stop worrying about paperwork, the administrative procedures will be simplified. France created a single contact to set up and secure a project.

First positive premises of reindustrialization!

Europe “may have gone too far in relocating industry,” according to the French Economy Minister Bruno Le Maire, on 13 January 2022. “Not only does it make no sense to relocate production to earn a penny apiece, it makes no economic sense, but it is socially costly and environmentally exorbitant.” The French Presidency of the EU Council will strengthen this desire to repatriate industries in Europe as part of the European “strategic autonomy.”

The first projects are already visible! Estimated at around 1,500 in France, industrial startups have risen sharply in recent years. These industrial startups operate in strategic sectors, such as biotechnology, health, industrial digital technology, and robotics, and carry out projects with high added value. For example, Exotec is the first industrial unicorn of La French Tech! Founded in 2014, it designs and manufactures the “SKYPOD” solution, a robotic system for order preparation by a fleet of robots, applied to e-commerce, retail, and the industry.

At the same time, while the Swedish electric group Northvolt announced launching the production of its first “gigafactories” in Sweden, French startups in the sector also have great ambitions. Verkor, a Grenoble-based startup backed by Renault, Schneider Electric, and Arkema, has announced the construction of a gigafactory in the Hauts-de-France region (northernmost region).

The deal brings in Renault as a shareholder – which is taking a 20% stake in the company – and the Swedish fund EQT, owned by the Wallenberg family. By 2028-2030, this project represents a potential of nearly 2,000 direct jobs and 5,000 indirect jobs for an investment of €2.5 billion.

€2.3 billion for industrial and DeepTech startups

The three priorities of the government are:

Strengthening the financing of startups and first factories
Supporting deep tech startups in laboratories
Strengthen and simplify administration: to create a unique helpdesk

This strategy is based on several new mechanisms, operated by the public investment bank, Bpifrance, to strengthen the pool of industrial startups, finance their industrialization projects and support them in removing the obstacles to their development. A €2.3 billion fund has been mobilized to support the emergence of technology-intensive companies and facilitate the industrialization of innovative startups and SMEs in France. These projects, which will be financed via a European instrument called IPCEI, concern the fields of green hydrogen, health, the cloud, electronics (semiconductors), and electric batteries, as part of the ecological transition.

Financing French industrialization through innovative startups

The reinforcement of the financing of industrial startups in France and first factories will be achieved through:

The “First Factory” call for projects aimed at startups and innovative SMEs will be endowed with a total of €550 million over 2022-2026. It will finance projects to set up a first factory, an industrial demonstrator developed for commercial purposes, or shared production units in the country. The factories or platforms financed must be intended to produce innovative products in growth sectors. Projects must be submitted using the form available on the Bpifrance website. Applications must be submitted before 15 December 2026; within this timeframe, three annual updates in April, July and December allow regular processing of applications.
From 1 March 2022, new loans will be made available to finance innovative startups, SMEs, and ETIs in the industrial demonstrator or pilot plant phase, which allows for the transition from functional prototype to the production plant. While this critical stage aims to define, validate, and optimize all production options on an industrial scale, it is generally not economically viable. The government, therefore, wishes to support innovations!
Finally, with €1 billion, this fund will invest in the capital of young industrial startups in France in very variable amounts: from the million needed at the very beginning to the hundred million sometimes required for more mature projects. This fund, which succeeds the Société de projets industriels (SPI) fund, will be created in the first quarter of 2022. The objective set by the government is to invest in around 30 new plants and as many pre-industrialization projects.

New financial support for DeepTech startups

Accelerating the emergence of startups should make it possible to meet contemporary challenges, whether in the fields of health, energy, space, or decarbonization. These efforts will be amplified by a broader mobilization of researchers and an increase in DeepTech aid: €275 million to support 500 DeepTech startups per year by 2025. These efforts will also make it possible to increase the flow of startups with an industrial vocation.

In concrete terms, the envelope of aid paid by Bpifrance to DeepTech startups has been increased. Throughout the France 2030 investment plan, an additional €275 million will be allocated to the following schemes:

the French Tech Emergence grant (BFTE) with an overall increase in resources of €50 million for the next five years (2022-2026);
the DeepTech development aid, with a general rise of €150 million for the next five years (2022-2026) provides loan guarantees of between €3 and 15 million, over 10 to 15 years, to finance the demonstrator and pilot plant phases.

According to Agnès Pannier-Runacher, French Secretary of State for Industry, this program will be implemented “during the second half of 2022” in the Bpifrance aid program.

Enough bureaucracy, a single point of contact

The success of startups’ industrial projects depends on their ability to mobilize the relevant mechanisms. It also depends on the public power to offer them support from upstream (ideation, business model, industrial plan, etc.) to downstream (access to land, administrative authorizations, regulatory obstacles, tax authorities, recruitment, training, etc.).

The French Tech Mission sets up an industrial startup desk designed to identify companies’ projects and needs and then offer them information. This pathway will be provided in partnership with government services and their operators. A unique support system will be launched to help these startups in their administrative process, particularly all the problems linked to the physical establishment. This helpdesk centralizes information on available financing and, above all, directs the companies towards the official support mechanisms.

Companies will thus be able to access public support likely to facilitate the setting up of the industrial project, in particular: construction of the industrial site (site search, ready-to-use sites), administrative authorizations, recruitment, industrial property strategy, help from the Banque des Territoires, information on Bpifrance’s financing and support systems, integration into a local tech and industrial ecosystem (French Tech). This shared pathway will be open to all startups with industrial projects to adapt to the different degrees of maturity of the projects and to encourage and accelerate their industrialization.

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Article written by Samy Trabelsi