Startups: government sets course for 10 IPOs by 2025

Promote initial public offerings (IPOs) of technology players in Paris. This is a big challenge that the government wants to tackle. For this, it wants to propose support measures (including financial measures) and create a more flexible legal framework. “The goal is to create favorable market conditions and support companies for years to come. The IPO is an important step in the development of these innovative companies to accelerate their growth,” the government press release said. Although the range of French unicorns has grown over the past two years, it is still difficult for them to take the plunge into IPOs.

The government clearly relies on the French Technical mission to support startups at all stages of development. This ecosystem, which today helps young companies through various support programs (Next40/120, Green20, Agri20, DeepNum20, Health20), will now follow its patronage after the IPO. “So the relationship with the administration will continue with the listed tech companies over time,” at least that’s what Bersi hopes. Further coverage of IPO and Listed Technology is planned at events organized by French Tech across Europe. In addition, the Choose France initiative “invites foreign investment funds dedicated to ‘listed technology’ to next year’s summit in Versailles”. Finally, the Ministry of Finance wants to strengthen the Tibi initiative, launched in Bercy in 2020 and aimed at promoting the financing of technology companies, which has already enabled the recruitment of 60 IT professionals within the framework of the tagged funds.

IPO for 10 unicorns in 2025

A major project that should drive the success of the ambitious goal set by the government. “See 10 French unicorns complete IPO in Paris by 2025, including 2 valued at more than €5 billion”. Bruno Le Maire, Minister of Economy, Finance and Industry and Digital Sovereignty, stated: “The IPO is an important step in the sustainable financing available to growing companies. The 27 unicorn ecosystems of our country should have greater ownership of this important tool for the emergence of world champions. I am with them so that Paris, the leading financial center of Europe, becomes the leading place for funding startups.”

The message is full of hope. In practice, it can be more complicated. Pandemic, inflation, global geopolitical context are factors that make you think twice before embarking on an adventure like IPO. In the world of startups, where startups are considered more adventurous than other companies, one bad decision can change everything. The collection of venture capital this year has shown that now is not the time to finance these young structures. The market is tough and not many can compete with the US market. This is where financial support comes in. Bpifrance and Caisse des Dépôts et Consignations plan to allocate €500 million and €300 million respectively. These investments will go to technology companies as part of the IPO. Bersi notes that, “The government’s role is not to participate in all IPOs, but it can use the various tools at its disposal to support certain transactions when it deems appropriate.

A more flexible legislative framework to encourage IPOs

At the European level, the French government is knocking on the door of the European Commission and asking to support concrete measures in favor of startups in the IPO race. The European Commission is working on a “Listing Act” that aims to simplify listing and post-listing requirements “to make capital markets more attractive for EU companies and to facilitate access to capital for SMEs”. The first legislative proposal for this reform of the rules should also be published before the end of the year.

Finally, in France, the government wants to mandate legislative work to encourage companies to carry out IPOs in France. Specifically, a framework allowing multiple voting rights across listed companies could be introduced and “allow the management of French unicorns to retain effective control over their companies after listing (as is the case for unlisted companies)”. Through this proposal, France is trying to ease the rules to make it easier to list French roosters. The IPO procedure is difficult and expensive for companies, especially SMEs. This discourages some from raising funds in the capital markets and effectively deprives them of the benefits of a listing, such as access to a wider investor base and stronger growth that leads to job creation. However, the government is not fooled. Jean-Noël Barrot, Ministerial Representative in charge of Digital Transition and Telecommunications declared: “The current situation is deteriorating, this is really a long-term project that we have started with results that will be evaluated in a few years.”