French cyber startups raise €341 million since last year

Investments in French cybersecurity startups are on the rise, contrasting with a universal fall in investments in startups elsewhere. The sector has bagged €341 million in funding since last year, according to a report from global consulting firm Wavestone in collaboration with Bpifrance.

The French cybersecurity startup scene is largely resisting the downward trends seen elsewhere, proving to be an attractive sector for investors. The ecosystem is growing and looking to the future, which bring huge advances in areas like artificial intelligence and quantum computing, among other emerging technologies.

“This year’s fund-raising dynamics are particularly impressive, reflecting cyber’s attractiveness,” said Gérôme Billois, partner in Wavestone’s Cybersecurity practice.

Some venture capital firms have recently emerged with a specialization in the cybersecurity sector, such as Tikehau Capital, which is dedicated to investing in mature ventures, and Auriga Partners, which recently invested €50 million in 25 different startups.

Public funding also plays a role, with some French state security investment available for cybersecurity startups: For example, the Fonds Innovation Défense, which is linked to the French Ministry of the Armed Forces.

An enormous increase in investments from 2021 to 2022 was mostly accounted for by a large sum secured by Series C startup Ledger, a unicorn that designs hardware crypto currency wallets. But funding for the period between June 2022 and June 2023 (€341 million) was still up from the previous year even if Ledger’s funding rounds are excluded.

Investments in startups fell by a sharp 25% in Europe in 2022, down from a record high in 2021. In fact, 2021 is seen as an historic high-water mark for startup funding and 2023 is expected to continue the downward trend that began last year, falling another 39%.

“Real technological breakthroughs lay ahead, in particular quantum technology and artificial intelligence, but not only that… Our startups need to take action on these issues and stay at the forefront of technology. This will obviously require better connections with the research ecosystem, which is already very active in these areas,” said Billois.

Around 59% of the cybersecurity startups profiled by the report sell their services abroad, though France and Europe remain priority markets. The report estimates over 5,000 jobs have been created by the sector, which is concentrated in and around the cities of Paris, Lille, and Rennes.

“We believe that building a strong French cybersecurity ecosystem is the key to a digital society based on trust, competitiveness, and sovereignty. We have the expertise to achieve this throughout France,” said Paul-François Fournier, Executive Vice President for Innovation at Bpifrance.