In January 2023, Prime Minister Elisabeth Borne launched a six-month mission called Midy with the aim of supporting investment in startups and innovative SMEs. The mission’s goal was to present a report (Read the Midy Report) with concrete proposals for effective implementation starting in 2024, as the French government recognizes the importance of fostering the creation and financing of more startups.
President Emmanuel Macron, during his presidential campaign in 2022, highlighted the need to strengthen early-stage funding for startups, and he appointed Deputy Paul Midy to work on this issue. The plan is to make the French tax system more attractive for financing innovative companies, drawing inspiration from successful schemes implemented by neighboring countries like the United Kingdom’s EIS/SEIS.
According to the Midy Report, startups, innovative SMEs, and growing SMEs have played a crucial role in reducing unemployment over the past decade. Since 2017, these enterprises have contributed significantly to the creation of 1.5 to 2 million jobs, with several hundred thousand jobs being created by the French Tech, startups, and innovative SMEs. With the goal of reducing the unemployment rate to below 5% by 2027, the government recognizes the necessity of continuing, facilitating, and accelerating the financing of startups.
These enterprises are also essential for the country’s reindustrialization efforts. The disruptions caused by the COVID-19 pandemic and supply chain vulnerabilities have emphasized the need to relocate and rebuild production capacities, particularly in strategic sectors. France already boasts 1,800 deep tech startups, with 62% choosing to establish themselves outside of the Paris region.
Supporting startups and innovative SMEs is also crucial for the ecological transition as France has committed to achieving carbon neutrality by 2050, but nearly half of the necessary technologies to reduce carbon emissions are still under development or in the prototype stage, according to the International Energy Agency. The proposed measures in the Midy report also foster green innovation through deep tech and green tech companies, building upon the initiatives like “France Relance” and “France 2030.”
Furthermore, strengthening economic and technological sovereignty seems to be a major focus for the coming years as France is willing to guarantee its autonomy and address future strategic challenges. Investing in entrepreneurs and their companies is key to preempting future disruptive innovations as President Macron has expressed the desire for France to become Europe’s leading digital ecosystem, with the aim of developing 10 European tech giants, achieving 100 French unicorns, and creating 500 deep tech startups annually by 2030.
The proposed measures outlined in the Midy report, including the creation of a unified and simplified “Jeunes Entreprises” scheme, mobilizing large companies and institutional actors, and redirecting French savings toward startups and innovative SMEs, aim to actively supporting these enterprises as France believes it has the ressources to drive innovation, address environmental challenges, and foster economic growth.
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