Q&A with Fleur Pellerin, French minister for SMEs

How would you describe the current relationship between the French government and the local private equity and venture capital communities?

I believe venture capital is a key issue if you want to create the right environment for innovation and innovative companies with high-growth potential. The diagnosis that we make in France, but also more broadly in Europe, is that the venture capital industry is too weak for worldwide champions to develop. It is something we need to tackle nationally but also at the European level.

My idea in France is to help the venture capital industry to consolidate and to become more powerful in terms of skills and figures. I think we've created a good dialogue with the venture capital ecosystem here. But we need to work on tax issues and how we can drive the abundant savings we have in France towards the financing of the economy, because we don't have pension funds. It's an essential part of the growth environment for our companies, so we're paying special attention to these issues.

The French minister delegate on capital gains tax, corporate venture and how to boost IPOs

With the creation of BPI France, the public bank for small business and innovation, we are creating a very good relationship between government, BPI France and the community. I think we have now aligned everything in terms of financing, the drive that we have in the government and a couple of tax issues, which were a bit difficult.

What was the thinking behind the various adjustments made to the capital gains tax for entrepreneurs and investors throughout 2012?

When we came to power, one of the government tax commitments was to align income tax rates, whether labour taxation or capital gain taxation. Our first proposals were followed by many discussions with the business community. Right after the industry became very vocal I organised a public consultation on entrepreneurship called the Assises de l'Entrepreneuriat. I gathered more than 300 people from venture capital, administrations, entrepreneurs, fiscal and tax lawyers. They told me it was the first time a French government, from either left or right, had organised such a large dialogue aimed at co-creating a policy that included tax issues. They were satisfied with the method and the outcome. So we adjusted these proposals to encourage risk-taking. For start-up companies under 10 years old, you pay capital gains tax on less than 15% of the gains in the best scenario.

BPI France recently renewed its commitment not to compete directly with local private equity funds. What does this show about the role of the government in supporting the local industry?

Some marginal competition issues may have arisen but the relationship between BPI France and the private equity market is one of partnership. It's a tool to boost the industry, that's why its policy is to co-invest and de-risk investment.

I think the fact that the CEO of BPI France comes from the private sector and has a full understanding of the role it should have, and a good relationship with the business community, will probably lift the fears that some observers may have. But it's a very young institution; it was created last year so it probably needs to prove its legitimacy and efficiency. I'm sure it will prove very efficient and not compete with the private sector. That is absolutely not its role.

What is the government's view on visas for entrepreneurs?

If you look at Silicon Valley, 50% of start-ups were created by immigrants, so obviously one of the ingredients needed for a successful ecosystem is the presence of foreign talent. And there is global competition for talent.

We're looking at two particular things at the moment. The first is visas for students, and the second is to have a special package for start-ups, entrepreneurs and investors. A law will probably be passed next spring. The idea is to have a full package, so the visa will be processed with shorter delays and it will probably be a long-stay visa. But there will also be visas for the families. I would like to implement a whole package where we can help entrepreneurs find a home, premises for their company, help with school registration – all the things that make things easier when you want to settle abroad.

I am working on how to adjust our education offer to meet the needs of sectors as they change over the next 10-20 years. With the explosion of big data, we will need more data scientists and data analysts. These are skills we need to adjust our education for, so that we don't find out in 20 years' time that we don't have the right skills.

How important a role does corporate venture play in France and how significant could it be?

At the moment it is insufficient. I think corporate venture, as well as exits through corporate acquisitions, is really important to foster innovation and help start-ups grow. Many entrepreneurs in France are sometimes deterred because they don't think they can achieve a good exit in France. The idea is to have more successful IPOs and more cases like Criteo and Business Objects. So we need to encourage corporate investments and exits.

We have good large companies in France that are in the Fortune 500, but they aren't committed enough to the environment and ecosystem, as you see in Israel or the US. So we decided to provide tax incentives for corporate venture. We are passing the bill in the budget, with five-year tax amortisation in the accounts of these companies to make it interesting to invest and reduce the cost of the investment.

What can be done to encourage venture capital-backed companies to pursue an IPO in Europe?

We are working on a European Nasdaq. It's something people have been working on for years and never achieved. I'm very happy to see the success of Criteo on the Nasdaq but we need an efficient marketplace for innovative companies in Europe. One country probably isn't enough because it wouldn't be deep enough, but at a European level there is a real need for that sort of market and many other member states share these views.

Which area of European venture capital needs most attention?

There was a European council in October with the heads of state and governments on digital economy and innovation. The idea is that the European Investment Bank could diversify its action policy and put venture capital on top of its actions. It could invest in funds-of-funds to have €2-3bn funds that could operate on a European level and take big tickets in late stage investments. We need to create funds that would be able to make investments of more than €10m.

Is the role of government to create the environment for the industry to flourish or to invest directly?

I think it's both. BPI France can invest in funds or in funds-of-funds and I think it's important that public money can also de-risk or help the constitution of strong venture capital funds. If you look back at what happened in Israel, that's exactly what the government did at the beginning with Yozma. It can also be a good way to attract foreign VCs; the success of Tel Aviv on the tech scene is largely due to the fact that it has been able to attract foreign funds. That's what we need to do in France.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• France
• Regulation
• Venture
• IPO
• tax
• France