France Ramps Up Startup Support A 2024 Funding Facelift

Bonjour to new opportunities in the French startup scene! France’s 2024 budget just rolled out a promising boost for budding businesses and the investors behind them. The country’s fresh fiscal plans are set to infuse an additional €500m annually into French startups. And how? By offering tempting tax breaks for private individuals diving into the early-stage investment pool.

Now, let’s dial it back a bit. The excitement was palpable in the entrepreneur community, with many wishing for tax breaks on a grander scale that might have driven investments reaching the billions. But hey, half a billion euros annually isn’t too shabby either!

The heart of this initiative beats similarly to some familiar UK schemes. Think of the UK’s Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These have a proven track record of applauding private investors with tax relief for their brave backing of budding, high-stake businesses. France, not wanting to be left behind, has now created its own version.

Here’s the breakdown: Startups will either get stamped as “high-growth” (called JEIC) or earn the cool title of “disruptive” (dubbed JEIR). So, for individuals with an entrepreneurial twinkle in their eye and cash in their wallets, investing in these categories will score them some nifty income tax cuts. The word on the rue is that a whopping 1,600 startups could get their golden ticket to JEIC and JEIR designation.

So, who’s the brains behind this operation? Step forward, Paul Midy. This parliamentarian got the nod from Prime Minister Elisabeth Borne at the year’s start. His mission? Dream up reforms that could rev up startup funding in the French realm. Midy did his homework, and by June, he was proposing tax breaks of up to €250k per individual for investments in JEICs and JEIRs. His calculations whispered of a potential €1.3bn windfall for early-stage startups annually. Impressive, right?

Of course, when President Emmanuel Macron caught wind of this, he was all ears (and applause). But, as with all things budget-related, there were tweaks. The final legislation offers individual investors a tax relief of up to €45k for “high-growth” startup investments and €50k for those labeled “disruptive.” While it might not be the €1.3bn dream Midy envisioned, it’s still a neat €500m yearly boost. Midy, being the champ he is, celebrated this move, predicting the creation of 30k to 50k new jobs by 2027 thanks to the scheme.

But how does this stack up globally? Looking over at the neighbors, the UK’s EIS and SEIS initiatives helped a stellar 6,750 startups scoop up more than £2.5bn just in 2022. Marc Menasé, the brain behind VC fund Founders Future, tips his hat to the UK’s success. He believes France’s new measures are vital keys to unleashing French savings and turbocharging their startup scene, especially given that in 2023, French startups attracted a concerning 50% less funding than the previous year.

All said, the consensus is clear. While the French budget didn’t unveil a parade of tax reductions, its commitment to buoying startups through this new scheme is a win in many books. In a world where startups jostle for every euro, this fresh French focus is a welcome lift.