France’s digital economy: a growing ecosystem needs the right infrastructure

France’s digital economy: a growing ecosystem needs the right infrastructure

The digital economy has the wind in its sails. In France, it already contributes an estimated 5% to GDP, and the number of digital businesses is estimated at 115 000. To reinforce the booming web economy, government policy makers are now focusing their attention on how to structure the industry and support key players.

One of the more visible public initiatives, dubbed French Tech, was launched in December of 2013 under the patronage of Fleur Pellerin, then Secretary of State for Innovation and the Digital Economy. The idea was to federate, support, and promote; in other words, to bring together the various components of the French digital ecosystem. More recently still, the idea has set in that France’s strong reputation and attractiveness in this regard makes attracting young entrepreneurs from around the world the logical next step.

Launched jointly in May 2015 by the French government and the City of Paris, the French Tech Ticket aims to attract foreigners wishing to create or develop their start-up in Paris. Unveiled on March 2, 2016 by François Hollande, the first wave of the winners will benefit from financial support and a mentoring program, as well as a place in a Parisian incubator, and a renewable scholarship of 25 000 euros – in addition to help obtaining residence permits. An international battle has begun and will be fought between countries from around the world, as well as between regions within these countries: who will be able to attract the best young entrepreneurs?

One might argue that France has been able to create several different, more or less specialized incarnations of Silicon Valley within its territory. Others, however, argue that France has not yet been able to create the optimum digital environment. Researcher Idriss Aberkane, for example, believes that while the hardware (infrastructure and environment) is at a satisfactory level, the software (entrepreneurial spirit and culture) is still largely lacking: we’re still training young, hopeful entrepreneurs to fear failure, and thus we’re inhibiting the emergence of a true, French incarnation of the Silicon Valley.

So if the idea is to attract international entrepreneurs, is France ready to host them? The current decade has seen the emergence of a variety of physical locations intended to accommodate digital businesses, and these can be divided into three categories where it’s not so much the function that varies, but rather their scale and the nature of investors.

The first category includes incubators, accelerators and other Fab Lab locations, backed by different economic models ranging from flat-rate fees to share offers in selected start-ups. NUMA, Mutiny, The Family ... many actors have positioned themselves within this market. Paris is arguably the European capital for incubators, accelerators and fab labs, which occupy some 100 000 m2 of physical space through which they support over 3,000 start-ups. The inauguration on March 9, 2016 of Cargo, a 15,000 m2 incubator on six floors in central Paris reinforces this dynamic. It is billed as the largest incubator in Europe ... Waiting to be dethroned by the Halle Freyssinet, in about a year.

The second category is made up of major architectural projects explicitly intended to become landmarks in the digital economy. These flagships of French Tech, often supported by private companies, have similar mandates to the aforementioned incubators, but they’re deployed on a different scale. If the Halle Freyssinet and Cargo in Paris, or Bordeaux’s Cité Numérique become figureheads within evolving neighborhoods, thecamp, near Aix-en-Provence, offers a location away from major urban centers that evokes California's Silicon Valley.

Finally, the third category includes those locations of the digital economy that are still governed by more traditional real estate players who are eager to jump on the digital bandwagon. This includes property managers and developers, as well as large businesses who want to make open innovation part of their business model: some buildings might even be entirely devoted to the digital economy, or, a business might convert a few hundred square meters of their real estate into coworking spaces...

In fact, these transformations are creating value at every turn: by creating greater proximity between start-ups and larger firms, by optimizing real estate and space efficiency, and by positively impacting the brand image as digital businesses of all shapes and sizes look to appeal to young talent. As the first link in the chain, the architect is also required to reinvent how he or she designs buildings as firms looks for new kinds of firms, as explained Philippe Chiambaretta in the video below.

This inflection is still new, so it’s hard for us to draw any conclusions yet. However, it is already clear that the digital needs of actors will have a double-edged impact on urban planning. Can a response to digital needs be standardized? For example, should new builds systematically include open spaces for brainstorming and innovation?  The review of the winning projects for Reinventing Paris reveals how developers, investors and architects tend to feel bound, at least with regard to the French capital, to provide this type of spaces in their buildings, without always examining the contextual relevance. On the other hand, these new spaces could emerge as an interesting ingredient for economic development in disadvantaged urban areas. Their potential contribution to regional planning is all the greater since in deciding where they’re going to start their business, young entrepreneurs tend to avoid the traditional business districts and prefer mixed-use and affordable neighborhoods. L’Arc de l’innovation in Montreuil, for example, provides a good illustration of this dynamic as the initiative is simultaneously stimulating the eastern suburb and its economy, and creating a link between Paris and its surrounding communities. We can see that the digital economy can be a powerful tool for urban planners, not only through technology innovations in the service of the smart city.

These issues are at the heart of the Cahier # 4 of the ESSEC Chair for Real Estate and Sustainable Development. Released March 15, 2016 at the MIPIM (International real estate professionals), produced with the support of Poste Immo and BNP Paribas Real Estate, it offers the analysis of 20 thinkers and actors in the urban planning sphere: "The digital economy in the city of tomorrow: challenges for real estate."

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