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Business Other News 19 Sep 2019 France fights startu ...

France fights startup drain with $5.5 billion

AFP
Published Sep 19, 2019, 12:58 am IST
Updated Sep 19, 2019, 12:58 am IST
US laws also make it easier to give employees stock options, an attractive tool for young firms that are ramping up operations.
French President Emmanuel Macron
 French President Emmanuel Macron

Paris: How do you stop European tech firms from moving to the US once they start eyeing the big time? Part of the solution is finding them access to funding at home.

French President Emma-nuel Macron has made the continent's latest move to muster help for homegrown start-ups, promising five billion euros ($5.5 billion) of tech investments over the next three years.

 

The funds, pledged by banks, insurers and other big investors, include two billion euros earmarked for "late stage" projects requiring significant amounts usually out of reach to EU firms.

"The battle we're fighting is one of sovereignty," Macron told tech executives and venture capitalists at an Elysee Palace dinner on Tuesday.

“If we don't build our own champions in all new areas—digital, artificial intelligence—our choices... will be dictated by others,” he said.

Officials across Europe fear being left behind as American giants, and more recently Chinese firms, increasingly dominate the cutting-edge technologies crucial to future economic growth.

Young European start-ups generally have plenty of access to venture capital, with $23 billion (20.8 billion euros) invested last year, according to the investment firm Atomico.

The problem is that after getting an idea off the ground, firms often struggle to find the larger amounts of money needed to propel a business into the big leagues.

“There aren't any large funds with the capacity for putting up 50, 100 or 200 million euros,” Olivier Novasque of Sidetrade, a business software editor, told AFP.

“But in the digital realm, you have to be thinking right away about conquering the world” and quickly scaling up operations before a rival does, said Novasque.

US laws also make it easier to give employees stock options, an attractive tool for young firms that are ramping up operations.

“Policies that currently govern employee ownership across Europe are often archaic and highly ineffective. Some are so punishing that they put our startups at a major disadvantage to their peers in Silicon Valley and elsewhere,” the Notoptional collective of tech entrepreneurs wrote in an open letter in January.

As a result, European firms often jump the Atlantic to tap into the much deeper American capital markets, where pension funds and other institutional investors are more willing to make big bets on tech.

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