Policy analysis for the development of venture capital and entrepreneurship in France

Abstract

Innovation and high growth technological companies have been set as a priority in Europe. Recently, the European Union declared "Entrepreneurship and Innovation are central to the creative process in the economy and to promoting growth, increasing productivity and creating jobs. Entrepreneurs sense opportunities and take risks in the face of uncertainty to open new markets, design products and develop innovative processes.'' The most innovative firms, which seek early-stage, external financing, have the potential promise of substantial returns but a concomitant high level of risk. It is within the context of such firms that the potential of venture capital, as a source of entrepreneurial support, appears most relevant. However, many barriers hinder the development of venture capital in Europe, and in particular in France. Innovators are not only vulnerable at the outset but are faced with an interminable series of obstacles to creativity. The main handicaps and obstacles are those affecting the coordination of efforts, human resources, private or public financing and the legal and regulatory environment. This thesis analyzes the current situation of venture capital and entrepreneurship in France, compares it to the overall situation in Europe and in the United States. It eventually delvers some policy recommendations aimed at fostering both the supply and demand of venture capital in France. The main challenge is probably best summarized as one of flexibility. Regulations and procedures of all sorts need to be re-engineered to encourage and promote the fluid development of businesses. Flexibility to adopt new cultural mindsets: risk-taking behavior, different attitudes towards initiative, success and failure. Flexibility to adopt a lifelong learning attitude and regularly retrain. Ultimately, entrepreneurship and the development of venture capital in France is about action rather than analysis, and, despite its high potential, France has still much to achieve.