FRANCE Trends and Developments Contributed by: Nicolas Karmin and Anthony Magagnin, Sullivan & Cromwell LLP
announced that it will invest EUR10 billion to support the AI sector. In 2019 the French government also launched the first phase of its Tibi programme to increase institutional investments into funds dedicated to tech targets. According to the government, dur - ing the first phase, close to EUR30 billion was injected into the VC ecosystem following on from EUR6 billion of initial Tibi investments. After the success of the first phase, the second phase (Tibi 2) was launched in June 2023, under which more than 30 French institutional inves - tors, corporates and family offices have pledged to collectively invest around EUR7 billion in eligi - ble funds through to the end of 2026. Subdued Exits, Few IPOs In 2024, VC-backed exit activity fell significantly in terms of deal count, with about 138 exits com - pared to roughly 181 in 2023 and 187 in 2022, but progressed in terms of exit value (about EUR2.7 billion compared to about EUR1.3 billion in 2023 and about EUR1.9 billion in 2022). How - ever, only a very limited number of exits were completed via IPO (less than 1.5%), with M&A by far remaining the main exit route. French start-ups and their investors face the same significant headwinds in successfully completing an IPO as any other market play - ers at present. In particular, domestic political uncertainty and geopolitical tensions have led to market volatility, the knock-on effect being greater scrutiny of current and potential valua - tions. There is a backlog of IPOs that were origi - nally expected for 2022 and 2023 but that have now been postponed until after 2024/2025. Even for natural IPO candidates among the tech companies, there remain concerns over how
successful an IPO may be in the current climate, with some doubts regarding the potential of the French financial markets to match the start-up funding needs. The tender offer on French start- up Believe just three years after its IPO, followed by a proposed public buyout offer announced in April 2025, is an example that only serves to reinforce these concerns around company flota - tions. However, recent developments in French laws and regulations could support fresh momen - tum on the IPO market. Law No 2024-537 of 13 June 2024, known as the Loi Attractivité , was designed to make the Paris financial markets more appealing, in particular via the introduc - tion of multiple voting rights for newly listed companies and the simplification of share capi - tal increases without preferential subscription rights; the French market authority ( Autorité des marchés financiers ) regulation was also amend - ed in March 2024 to cancel the requirement for a retail tranche offering as part of IPO processes. A Shifting Fundraising Landscape for French Tech VC investment funds are becoming increasingly conservative, particularly in the later stages of start-up development, thereby delaying and reducing fundraising opportunities for tech com - panies. Hesitant to make additional investments into companies that risk seeing their valuation docked, they now more often favour smaller investments, with larger investments going to industries demonstrating greater resilience. Downrounds Many start-ups that still have access to VC equity financing are raising funds at lower valu - ations than previously. This trend began in 2022, and has continued through 2023 and 2024. Fundraising transactions carried out at lower
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