Why France may lead in the Internet of Things

France has become a force to be reckoned with in the Internet of Things sector. What's driving this rapid growth?

“Every asset should be connected: doors, shoes, chairs, everything!” Ludovic Le Moan, CEO of Sigfox, is an ambitious man. His previous company, Anywhere Technology, used GPRS to connect early IoT sensors in networks. Sigfox takes that further, using low-power radio devices to add sensors to everything from burglar alarms to shipping containers.

With intelligently-networked sensor modules costing as little as 20c and consuming very little energy, it's easy to understand Le Moan's goal of connecting everything – literally everything. The company already has a presence in 39 countries, with full nationwide coverage in 17 of them.

Le Moan is not alone. Something has stirred in France. A blend of ambition and technological know-how has driven French IoT startups from humble beginnings to international success. Sigfox is perhaps the most well-known, along with drone company Parrot, but there are many more. La French Tech distributed as a PDF [pp6-17] describes 130 tech startups at Web Summit 2017 in November. Not all were pure IoT companies but the majority were IoT-related, ranging from FinTech to healthcare, big data to automation.

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Olivier Ezratty, a digital consultant, innovation expert and adviser to French tech firms, says: “Every year we see growth of 40 to 50%. This year we have more than 300 and most of these are in the IoT space.”

Why France and why now? Benjamin Carlu, head of Usine IO, an accelerator that has helped more than 450 startups in industry, attributes it to several factors. First, there's the realisation that startups in general are here to stay. “The corporate world was quite arrogant in the beginning, looking at startups in terms of acquisition or tech to smash down. But now more and more, with hardware especially, we're seeing more collaboration between large companies and our startups.”

Then there's the move away from pure B2C solutions to a B2B focus. “That's one of the major shifts,” says Carlu. “We see more people developing industrial appliances or products dedicated to more simple use, not only consumer use but more industrial use. It's changed a lot.”

Thirdly, there's the manufacturing connection. “Five years ago, a typical Texas Instruments or STMicroelectronics would not have had direct access, but now the startups can meet these people and are sharing, just as they would have done with IBM, Cisco, Apple,” says Carlu. “So now there's much more information available on both sides.”

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Pierre-Damien Berger is the secrétaire national of the 'IoT & Manufacturing' French Tech network. “A lot of talent is grown in France and now we can see much more talent coming into France,” he says. “We speak a lot of a mixed collaboration between tech and business in order to be successful. On top is a third component, the venture capital. We have places like Station F which is a huge old train station, completely renovated, in the middle of Paris. It's ten minutes from Gare de Lyon and it's the biggest accelerator in the world.”

Depth of engineering knowledge is a vital component of French IoT success. Leibovici says: “I think IoT for me is the science of integration so you need good developers, designers, good telecommunication engineers. In France we are lucky because we are very strong expertise in those three domains.”

Ezratty agrees: “Telecom business has a long history in France. 50 years ago it was by government, because in the 60s/70s most telco firms were government-owned companies, then became private companies. There's a strong history of telecoms research with France Telecom which became Orange. Out of this strong investment came a lot of research, some startups, then a lot of engineers trained. So you can trace the history of today's IoT skills back to the 1960s!”

Pierre-Eric Leibovici, co-founder and partner at French VC firm Daphni SAS, sees connectivity as a fundamental goal of French IoT. “When you look in your environment, in a room, chairs will be connected and will enable you to follow your stats; the door, the lamp, the fridge, the coffee machine – everything will be connected.”

Daphni has a community of 300 people collaborating through a self-built digital network, dedicated to helping startups achieve international success. The firm is adding on average one new Series A deal every month. “From a macro perspective there are more people coming from outside France because the ecosystem is very good at the moment. Look at Nordic or UK startups: they tend to have more than 50% of employees from outside England, so they are international from day one. That was not the case in France but it is now.”

This international flow works in both directions: "44% of the business of French startups is done at the international level,” according to Berger.

And what of the companies at the sharp end? Vijayaraghavan Narayanan is Founder & CEO of Bluemint Labs. The company's Bixi product offers a method of controlling devices with hand gestures. “Had I not had help from the French government, it would have been tougher,” he says. “To leave a job and start up on your own it's a whole different ballgame.”

He was helped by a 12,000 euro ($14,000) grant that's offered to companies with potential, so they can carry out a feasibility study. “This gives you some confidence on whether to take the plunge or not,” he says. “There is a French public structure called BPI France who were also helpful in terms of providing loans and grants.”

Demographics in French IoT startups vary. “I think the average age is around 35-40, which is quite old in the incubation/acceleration space, especially looking at the software industry,” says Carlu. “People who are launching these startups, they have a background in industry or service. They are also quite open to any type of discussion when talking about new ideas.” In terms of gender balance, “we have less than 20% of women including tech people; more than in engineer school but not big enough.”

Other challenges remain. Carlu: “If we take France only, we have a lot of industry suppliers and so on, there are spots on the map all over the place, but sadly the network is not here. Yellow Pages won't solve the problem. Companies need guidance and experience-sharing. That's where accelerator initiatives like ours work well to help people – even the ones who know how to develop a product.”

Narayanan sees this too: “We are based in Grenobles but most things happen in Paris. So in terms of networking it's a bit less here. But Business France is taking active roles in selecting startups, taking them to CES and so on. Business France helps a lot, and so do the regional organizations. They put us in contact with interesting groups in the US and Asia and other countries, so we can meet people at CES and strike deals. This helps startups to meet big companies which would otherwise be hard to meet.”

Leibovici: “We still have to work on our distribution capacity. This can't come from government, it's more a cultural issue. In the US, even if they don't have the best product then they launch anyway and make it up with marketing. In France we want the best product ever and that takes time and gets too complex. So we need to get some more product marketing guys and that culture does not really exist in Europe.

It's interesting that Le Moan attributes Sigfox's success to this 'US' model. “We took this tech approach with marketing and vision and speed to market, right from day one.”

Leibovici continues: “There are people in the US who can do tech and sales marketing, but we don't find that kind of profile here. Either engineers or salespeople with a business background, but very rarely the two skills together.”

A final dose of reality is supplied by Ezratty: “The success rate of startups is very small. My view of IoT is it's one of the toughest in the startup space. Add up all the challenges – hardware, software, cloud, design, manufacturing – all the problems altogether! So it's the hardest sector in which to succeed.”

Still, France is somehow making it work. Amongst more than 2,000 companies present at Web Summit 2017, five French startups were in the top ten list of “most solicited by international investors” according to La French Tech. Vive la différence.