Like a lot of politicians, France's Emmanuel Macron idolises tech startups. They are seen to provide jobs, opportunity and entrepreneurship in a country needing all three, and they are a benign counterweight to the establishment titans on the blue-chip CAC 40 stock index.
Hence the online celebrations from Macron's government this week as France added a 24th 'unicorn' to its list of home-grown billion-dollar startups: Fintech firm Qonto was valued at $5.5 billion after raising funds. There has been debate over whether France has 23, 24 or 25 unicorns; either way, it is highly likely that Macron will soon announce he has hit his 2025 target of 25 unicorns about three years ahead of schedule.
But the president would be wise to interrupt the chest-beating with some self-reflection.
For a supposedly mythical creature, startup unicorns are starting to look as common as everyday ponies. After all, what may be exciting for a country that had only four unicorns in 2018 barely registers at the global level: The US boasts 644 unicorns, the UK 51 and Germany 33, according to data from analytics firm dealroom.co, which sees France as having 25. Whatever tide is lifting French boats is doing the same globally. There was a rapid 69 percent rise in startup valuations around the world last year, according to CBInsights, birthing 517 new unicorns for a total of 959.
While it would be wrong to dismiss these price tags as wholly disconnected from reality, the recent drop in frothy tech stocks in public markets suggests some nervousness about the tide going out. Well-run French unicorns like the electronics marketplace Back Market can certainly boast of having pulled in more consumers during the pandemic and boosted growth.
Yet there is a record amount of money swirling around that is vulnerable to rising interest rates. Back Market, currently valued at $5.7 billion, was valued at half that in May. And NFT company Sorare's $4.3 billion valuation depends on the hype around cryptocurrencies surviving a post-pandemic reality check.
In a world where everything gallops, counting horns begins to look futile. A few more metrics would offer a clearer picture, such as revenue growth, argues Benoist Grossmann of Eurazeo, who says several unicorns have managed to double their sales during Covid and now have to keep the motor running.
Billionaire Xavier Niel has another suggestion: Simply raise the bar for what constitutes a rare creature. He told Bloomberg News recently that $10 billion 'decacorns' should be the new standard. That would be sobering for France: Of the 44 global startups that meet the criteria, not one is based there.
Macron's call for a "start-up nation" was always about establishing an ecosystem — of researchers, entrepreneurs, investors — to create ideas, fund them, grow them and sell them to repeat the cycle. We are not quite there yet.
France ranks 15th in the European Union's digital economy index and 11th in the World Intellectual Property Organization's innovation index, suggesting it punches below its economic weight in terms of new ideas. The same goes for startup exits.
None of Europe's 10 biggest IPOs last year was in France. The old curse of "made in France, now in America" is still with us: Six French unicorns born since 2011 are headquartered in the US
There is more for France, and the EU, to do to improve those indicators. Beyond longer-term boosts to education and research, more homegrown funding could be unlocked by dropping barriers to entry and offering tax incentives to divert household savings into startups.
Connecting Europe's disparate stock markets by harmonising rules across the continent might also allow bigger pools of capital to form and back big ideas.
Healthy stock markets are especially important for a tech ecosystem, says Alice Albizzati, co-founder of investment fund Revaian. This is all the more so if VC hype is set to cool. Last year's mixed bag for tech IPOs in Paris saw music company Believe come very close to losing unicorn status.
Rome was not built in a day, and 'Silicon Sentier' — Paris's answer to Silicon Valley — will not be either. But when Macron announces that 25th unicorn, he should make clear that France, and Europe, can aim even higher.
Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.