As indicated in my previous article, I preferred to cut out my summary of the workshop on the subject “Deeptech: are we ready to scale?” organized by Inria during the Vivatech trade fair

If the first round table spoke about bipeds, the second was about ecosystems, about “rain forests” more than “French gardens”!

Antonin Bergeaud, I listened to you when you received the award for the best young economist in France, particularly about technological innovation, on France Inter and France Culture and you said at one point that you were drawing a parallel between your childhood dream of being an astronomer and your situation as an economist by saying that you wanted to understand the complexity of the world but that in the economy, there is the human factor which there is not with the stars. Is that our challenge or are there other elements that interest you so that we have European Gafam tomorrow?

“We have the impression that the level of complexity is really in hard sciences but in the human sciences there are a lot of interactions that make things very complicated and in particular because we have little regularity so we have to deal with the fact that there are biases. Like what was mentioned that in Europe we are less enthusiastic than the Americans, but we don’t know how to measure this very well. There are a lot of features that we have to take into account and since the challenge is to try to inform and shed light on why we have such difficulties, for example having a Tech sector that is of the same magnitude as the one we have in the United States or why companies have difficulty obtaining financing in Europe, we are obliged to take into account all these dimensions and it is true that it is quite complicated, so that is a bit where the parallel ends, it is that it is complicated. I think that now there is a kind of consensus beginning on the structural difficulties that we have in France and in Europe, which does not mean that we are going to correct them but at least we are beginning to understand a little better what is happening.” […]
– we don’t have enough entrepreneurs and we don’t have enough engineers trained in France and Europe […] there’s a real training issue that needs to be addressed, largely because you have a lot of losses, a lot of entrepreneurs and engineers leaving for the other side of the Atlantic.
– the second difficulty in Europe, because all the French problems are quite real everywhere in Europe, is getting universities to connect with businesses. For example, all patents filed by all companies in the world must provide the academic references they use in the patent description, and what we see is that for certain technologies, where Europe is practically non-existent in terms of technology production and marketing, we are actually relatively dominant or at the same level as the United States in the production of ideas, except that these ideas are not cited by French or European patents; they are cited by Chinese or American patents. So, basically, we have scientists and researchers who produce very relevant ideas, including on very, very recent technologies, and ideas are supposed to circulate freely. They circulate freely, but they circulate a lot from Europe to other countries, and a little less in the other direction.
– the third problem is indeed financing, which was discussed a lot earlier. I think that in Europe we have a relationship with risk that is really specific to our continent. Perhaps it is not necessarily negative, and I don’t think we should necessarily give it up, but we must be aware that it poses a certain number of difficulties in growing companies quickly, particularly in disruptive technologies, because we tend to move more towards bank financing, because we have less venture capital funding, because we have a market that is very fragmented, particularly in terms of financing innovation, and because we have institutions and regulations that are much more restrictive, at least from a growth point of view, than what is done in the United States.

Paul Midy, I could call you Mr. Start-Up at the National Assembly. What would you like to add?

“I would put the issue of financing number 1 by far. Fundraising in Europe seems to be three times lower than fundraising in the United States, even though we are generally roughly the same size, we generate roughly the same GDP. When you put your money into a company like Mistral, a deeptech company, you don’t get it back the following year, it’s at least 20 years later that you get it back; it’s long-term capital. And this long-term capital exists mainly in retirement capital, and so I would say that the number 1 factor is the fact that we have a pension system in France, and many in Europe too, which is a pay-as-you-go system that is not a capitalization system. We don’t have pension funds or we have very few. We have to realize the enormous gaps that this generates in France. Long-term savings and what can look a bit like capitalization are 200-300 billion euros; if I take the whole European Union, it’s 6,000 billion and essentially it’s the democracies of northern Europe at 70%; if I take the United States it’s 42,000 billion. You can supply a New York Stock Exchange with 25,000 billion and supply a Nasdaq with 25,000 billion and on the other side in France you have Paris the Paris Stock Exchange 3,000 billion Frankfurt 3,000 billion London 3,000 billion so we have a stock of capital which is much less important and so for fundraising the result of all this is that our start-ups last year raised 50 billion in the United States it’s 150 billion. […] I call for us to make a CIP, a common innovation policy at least as ambitious as the CAP, the common agricultural policy. A third of the budget of the European budget is the CAP. Another third is the social cohesion funds. Very important. Innovation is less than 10% of Europe’s budget. It must at least be three times more immediately. […] I am a politician, so we are trying to change the system. Either we say to ourselves, it’s a culture, that’s how Europeans are, and they like risk less, they are a little more grumpy and everything, and so there is nothing to be done. I can’t accept that, so I’m trying to understand why the Americans are in a different situation; it’s not genetic. I think we need to set ourselves the goal of making Europe the richest, most prosperous continent in the world, therefore the most innovative, capable of defending itself, and then everything will flow from that.

Alexis Robert, you work for Kima Ventures, which is Xavier Niel’s fund, whose recent book “Une sacrée envie de foutre le bordel” (A Real Desire to Cause Trouble) I read, and which sometimes puts himself at odds with the system. Do you also, by working for the Kima Ventures fund, have a slightly more atypical view of these things, or how do you want to build on what we just shared?

“In fact, what happens when you are early stage, while what you mentioned is true in late-stage for Series B financing and above, but in fact today what we see is that in the seed rounds, preseed/seed there is in fact a little too much capital, and in fact today the VCs, the problem that there is and why we have difficulty finding GAFAMs is if we actually go back to the history of French venture capital, in fact they are spin-offs of banks and then over time they actually recruited the sons of their LPs [Limited Partners] or people who were in their network or people who thought like them who actually have a finance mindset. There are very few engineers, very few scientists who are actually in these VCs. […] To create GAFAMs, to create for example openAI, Sam Altman comes from the world of Computer Scientists, look at Elon Musk, he is a Computer Scientist, you look at Mark Zuckerberg, he is a Computer Scientist, and in fact to create the GAFAMs of tomorrow it will actually come from people who have a strong scientific culture or who have cultures that are different it can be people who perhaps did not graduate from engineering schools, people who are very different but the VCs are stuck in a mindset and the people in the ecosystem in general too. […] For example Mistral at the time when Arthur Mensch, Guillaume Guillaume Lample and Timothée Lacroix did their first fundraising, uniformly all the VCs all said ah yes what they do is great “yeah but hey they are researchers anyway”, they do not know how to break out of the mold of CEO who went to HEC.”

Mehdi, we supported you at the start-up studio, but before talking about business, we’ll come back to that later. I remember maybe you don’t want to talk about it too much, but you wrote a wonderful essay on what a functioning ecosystem is for entrepreneurship. I reread it two days ago, it was in 2017 I think. Do you have the same vision of the ecosystem’s weaknesses and what a country must do to promote people like you 8 years later?

“So yes, and even more unfortunately, even more so, and I’ll explain why. Yes, money is an issue, but even Sam Altman today, who is at the head of OpenAI, who has just made, who has just said that he has an annual turnover of 10 billion, has financing problems. But for me, the problem, the big problem in the ecosystem, is ambition, it’s the ambition of European entrepreneurs. In California, he would tell you, “I’m going to change the world,” they have an ambition that has no limits, and be careful, it’s not genetic, they are trained for that, they have accelerators like Ycombinator, they have advisors, they are often coached by other entrepreneurs who have had exits or who have made very large companies, and they are fueled by ambition, which I think we lack here. [What’s also missing] is investors who also work on feeling, who work on entrepreneurial ambition, who will go and fight for a billion or a hundred billion dollar case. Money is not the main problem for me because there is money, especially in seed funding in France with the BPI. After that, it is the ambition that must match, and the execution of course, the execution is not simple, but Arthur Mensch raised 100 million on slides in 3 months because he had an ambition at that time. “Unfortunately in Europe we are still in an ecosystem where we make technology with money where others make money with technology.” […] Sam Altman coached close to 1000 startups when he was at the head of Ycombinator, he saw an ecosystem, he saw innovators, he trained himself, that’s why today he says we will make a generative AI, an AI that will be a company that makes 1 billion, a person will be able to make a billion in value thanks to an AI and a only employee but because they are trained. Now look these are what Alain Damasio calls hyperstitions [https://en.wiktionary.org/wiki/hyperstition] we are beyond superstition sometimes, we fall into lies, we fall into ideology so we in Europe we are a little more careful. [In the USA we say] “go for it, go for it, we support you, we will go with you” but today I do not know anyone in Europe who would act like that because they are trained in the USA. It is really an INSEP of entrepreneurs that we need.” […] Entrepreneurship is like playing poker you have cards in hand and then there are cards that arrive and as you go you have to adapt. We need people who will free us up, not just as entrepreneurs!, but who will free up the bandwidth to be able to understand what is happening. For me, these are advisors who have made the Champions League.”

Alexis Robert: “I am very aligned with Mehdi […] there are [so many people who] reject you because in fact you do not speak in the languages ​​of the mold. In fact that is the problem today, is that in fact the entrepreneur feels alone and certain types of entrepreneurs who have a scientific and technical background do not know where to turn and today what is happening in San Francisco, what makes San Francisco great, is because in fact you get off the plane directly you have the feeling of being accepted as a geek, you have the feeling of being at the right place, you have “role models” who are there for you, who pull you up, you have the feeling that you too can be able to do this and in addition there is a sense of community which is extraordinary; you arrive, you are in the street, you speak with a VC, well, he listens to you or not, you have Sam Altman who passes in the street and you can say hello, you sit in a cafe and you talk, you have entrepreneurs to talk to, speaking is easy, introductions are easy and fluid, you can surround yourself with people who allow you to learn and improve because, as was said in the first panel, if you have understood general relativity, succeeding in pitching is not very complicated, you will succeed in doing it and in fact that’s what I wanted to say.”

I stop here and the people said much more. This is unfair not to share everything… But I think it gives you a feeling of what are challenges and opportunities are !

The Tour Triangle designed by Herzog and de Meuron, at the exit of Salon Vivatech, see also Instagram

During the Vivatech trade show, Inria organized a workshop on the topic “Deeptech: Are we ready to scale?”

The discussions were rich, in-depth, and fascinating. I’m obviously biased since I was a co-organizer, but I’ve rarely had such a pleasure discussing the topic. So, I’ll provide a subjective summary, adding my own comments on various topics that are dear to my heart. [They will be in brackets and italics.]

What is Deeptech?

This was the starting point for Théau Peronnin, founder and CEO of Alice & Bob. “Above all, it’s a technology that has two fundamental attributes: the first is it has very deep roots in science. If you can understand this technology straight out of business school, it’s perhaps because it’s not quite deeptech yet. […] Its second attribute is the ability to create companies, players, or products that will have a strategic impact on the economy.”

[During another roundtable, I heard that the term appeared when the internet, B2B/B2C, and SaaS had diluted the technology into the excesses of “pet.com”, but that fundamentally, the high-tech of the 1980s and the deeptech of the 2010s are two sides of the same coin. I would add that if something is patentable, it’s undoubtedly deeptech.]

Théau Peronnin then gave his perspective on the challenges facing the French ecosystem. “I can tell you very simply: in France, we are extremely strong on the initial opportunity, we have incredible talent. We are still tied for first place in the number of Fields medals with the Americans, even though we are five times fewer in number.” […] “And then we have an early-stage venture capital ecosystem that has managed to establish itself in recent years, perhaps even a little too much; we could finally say that it is slightly saturated.” […] “The weaknesses are really in the later stages of a deeptech’s life. We have a subject that is perfectly known but which is far from being cracked, which is that of financing the so-called growth stages, this moment when companies like Alice and Bob will seek to raise capital of several tens of millions of euros, several hundreds of millions of euros to continue this R&D race at the international level.” [This is a subject that will be addressed later and I am not sure that it is the main subject, but the debate undoubtedly exists. See below!] “There are no suitable European players, which creates an anticipation effect across the entire value chain and there is a certain reluctance among funds to really deploy this capital with intensity and audacity in deeptech.” […] “Silicon Valley takes its name from the deeptech of the 70s, 80s, 90s in silicon, which created generations of fortunes of individuals with a very strong appetite for this deeptech and who therefore subsequently directed their capital towards these investment funds which continue to invest in this field. In Europe, there are no such fortunes, they were made elsewhere, they are in other fields and therefore we do not yet have these good products, hence the important role of the State in priming the pump.”

“One last point to introduce the round table on the human factor, which is the relationship to risk-taking. France has a school in any case, a view of studies and the academic world very focused on excellence which is perhaps the downside, or rather the cliché, of saying that we have a certain fear of failure and this is seen in my opinion in certain systems which deserve to be rethought, notably that of the Pacte law for the part-time activity of researchers and there it is a very personal opinion that I wish to share with you which is that of saying that there is no entrepreneurship without risk-taking. You have to get your hands dirty, you have to put your career on the line somewhere, you have to have “skin in the game” as the Anglo-Saxons say and perhaps in this system there is therefore in this part-time activity, a comfort in knowing that you are still well protected within your research organization while trying to enjoy the pleasure of entrepreneurship. In my opinion, we have to go all out and that means being able to come back to the academic world after a startup failure and so perhaps the lever to allow more audacity is to make the academic world more attractive for profiles with hybrid careers that have gone through the world of entrepreneurship. That’s to launch this round table on the theme of the human factor, these men and women who are making the entrepreneurs of tomorrow.”

Deeptech is, above all, about bipeds!

Théau Peronnin returned to the subject of humans through a real problem: “A very difficult issue we have is that of parity, gender diversity, which is horribly difficult to crack because we arrive at the very end of the food chain for training these profiles. Above all, technical profiles, a lot of self-centeredness regarding the fact of going through the Grandes Ecoles with all the sociocultural bias there is in these Grandes Ecoles, and even with international diversity, we must have between 20 and 30 nationalities, 30% of non-French speakers in the team, so this gives you a little demography.”

Xavier Duportet amplifies this human aspect: “We have people who are a little crazy because to get started in deeptech [where] less than 2% of projects reach a mature product on the market […] to get started you have to be a little crazy, you have to be naive too, I think, and you have to think that what is impossible can become possible. There are lots of things we don’t know and so the unknown is part of our daily work.” […] “The most important thing for us is not necessarily experience, it’s above all curiosity and that people are enterprising because in deeptech you can’t just apply the principles, apply the things you’ve already learned, you always have to be ready to face failure almost every day and so you need people who are willing to question themselves and who deep down are truly enterprising people.”

Jean-Michel Dalle: “There are motivated bipeds who come to talk to us about the microbiome, or motivated bipeds who come to talk to us about quantum computers. Anyone who doesn’t see things from that perspective, that is, from the bipeds’ perspective, is missing something. Of course, we’re going to check that the quantum computer project isn’t just anything, that they didn’t invent it on a Sunday morning after the market. But if we don’t look at it through the eyes of the founders, in my opinion, we need to change careers.”

Théau Peronnin: “The real issue is that the researcher’s passion is to understand, but the problem with that is that we reap the rewards of the pleasure of our work very early in the product’s life. I understood what I had to break to bring this machine to market, but unfortunately, we only did 5 or 10% of the work to truly deliver the system.” Behind this, we need to strengthen, produce, distribute, reposition. There is a whole issue: how do we learn to take pleasure not in having understood but in making the other person understand, but even more than that, in making the other person adopt what we have cracked, and that is a muscle to develop which is quite different.

Xavier Duportet: “It’s not a technology, it’s not a science that’s going to change the world or save the world, but a product, and that’s often where it falls short. We still see a lot of researchers who only think about science, only technology, and who can’t make the switch in their minds, saying, ‘How come I’m not selling my science, but I’m making people dream, I’m making these serious people [investors] dream, that I’m going to be able to be that person who will transform science into a product that will generate added value for society, but above all, for investors.'”

Marie Paindavoine: “I was lucky at the beginning to be supported in entrepreneurship by structures from the academic world, first by INRIA and then by the University of Berkeley in the United States, which has an acceleration program, and it’s true that thanks to them, it allowed me to learn how to transform this scientific discourse into an entrepreneurial discourse; and moreover, at the acceleration program at the University of Berkeley, for six months, we just repeat the company pitch and learn how to convince, in fact, because ultimately, and they tell us, ultimately, you’ve done the hardest part, you have great technology, you’ve managed to write a thesis in cryptography, well, you’ve done the hardest part, Marie, now learning marketing will take you two months, but you have to get down to it for two months, and that’s where we need to surround ourselves, to have this ecosystem that allows people to train because, after all, if we’ve managed to do a doctorate, we’re able to continue to train in the profession of entrepreneurship, but we need to find those people who can see not the value of scientific technology as it can be presented today, but a sort of projected value of this technology.”

Xavier Duportet: “On people and the network and the ecosystem, I also had the chance to do a thesis between INRIA and MIT. At first I wanted to be a researcher and when I arrived at MIT, I saw all these people who were starting up, these professors who were becoming entrepreneurs, that’s when I understood I was inspired by this generation of entrepreneurial researchers saying to myself but in fact if we really want to change the world it’s not research it’s entrepreneurship and today in the US, there is Silicon Valley, it was created 20 years ago, 30 years ago as Théau said there is this whole generation now, not grandpas but slightly older people who have succeeded and so in fact there is a “network effect” in the US which is super important, it’s the generation of entrepreneurs who have already succeeded who are there to help and pass on they did it they made mistakes and they really serve as mentors and that’s where we have a pretty interesting opportunity, and in France we can’t want to put the cart before the horse, we have what the BPI has done, all the research institutes, the change that has been underway for 10 years, we are starting to have these companies which are becoming leaders on the international level.”

Matthias Schmitz: “What we have started to do recently is to invest in an entrepreneurial mindset much earlier in the education of our students so we are trying to roll out programs where we bring entrepreneurship into all the faculties. For example, the university of Saarland is investing €1.5M every year with the goal that every single student that we have, whether it is a business student, whether it is a Romanistic student or an engineering student has at least one time during his studies thought whether entrepreneurship can be a career option for himself and by doing that I think we try to solve the problem a little bit earlier, bring the mindset in the heads of the people and not having to have people jump into the too cold water at the moment where they are already at the PhD level.”

Marie Paindavoine on being a female entrepreneur: “do you want the version we hear in France or the United States? both! So we don’t hear the same thing in France and in the United States. In France, I was immediately asked if I intended to partner with “un” CEO, emphasizing the “un”. I was already asked after my presentation, well, anyway, I’m not going to do them all actually because it’s of no interest, but there is indeed a halo of suspicion, let’s put it like that. In the United States, then I’m not saying that they are better than in France because I arrived at the University of Berkeley, at the University of Berkeley accelerator, 2,000 applications, 30 start-ups selected, 2 women CEOs, so they are not much better. On the other hand, once we reach this level of selection, when I say I’m starting a business with children, people tend to congratulate me on the level of energy it requires instead of asking me how I’m going to arrange childcare and if my husband agrees with me starting a business with my children, something I’ve already been asked in France.

I’ll stop here and do a new post about the second roundtable!