Financing cybersecurity in France

(vidéo in French)

Financing cybersecurity in France: What are the stakes?

The United States, Israel and the United Kingdom hold a monopoly over the cyber security sector through ambitious start-ups that spontaneously choose globalised strategies. In these countries, significant amounts are generated through financing. While the focus is global in these three geographical areas, France has a less ambitious approach and is not positioned directly on the world cyber market.

Is this a strategic error? How can we describe the cyber security world in France? What are the challenges French start-ups are facing in this sector? The participants in the round table on cyber security funding in France attempted to answer these questions.

How can we describe the corporate cyber landscape in France?

A figure on the explosion of cyber security start-ups in Israel is telling: Tel Aviv creates and supports some 50 new businesses each year. North American investors inject significant funds in the cyber sector and its global development.

Given this quasi-monopoly by these two countries, what hope does France have, with its less daring cybersecurity sector? What are Israel and the USA doing in order to be champions specialised in cyber security? Beyond the cultural aspect pushing American and Israeli entrepreneurs, what levers should be activated in France?

To avoid inferiority complexes, it doesn’t matter whether the strategy is local or international, as long as it is conceived as such from the start of the cyber activity. No option is better than another. With a clear objective, the financial investment could be huge and the idea of supporting a start-up would be more attractive for investors. This round table on French cyber security also drew a portrait of sector start-ups in France.

Characteristics of French cyber security start-ups

In five years, French entrepreneurs working in computer and technological security have gained experience and have structured their teams. These positive signs portend flourishing prospects for investors. If investors take a fledgling business's potential seriously, they may offer significant resources to develop.

French cybersecurity is dynamic, in a promising acceleration phase, but it remains fragile because it is still in construction. Brave or intuitive investors who provide funds for cyber security hope that their action will snowball.
Cyber security is becoming increasingly attractive with the sector taking off after five years with almost zero investment.

Financiers are right to invest in cyber security

Financing new companies in new technologies could pay off for everyone. Success is guaranteed for every player in the sector provided the technologies/markets pair works well. Providing resources to new technologies start-ups also means financing them to ensure they are not sold too quickly.

Over the years, investors are believing more and more in entrepreneurs’ arguments to inject funds. One reason is that it's trendy: the cyber sector can promise strong growth.

In a context of increasingly frequent cyber attacks, solutions to restore impacted systems are expensive. So, companies are having to open their wallets to counter these expenditures. What’s more, testing new technologies can help find new talents and companies that could generate income. Those responsible for funding cyber security simply need to ensure that the start-up de-velops an unobtrusive product that can be added to existing ecosystems.

If the dynamic continues, this pecuniary assistance for computer security projects could support a growing number of French companies. With two consequences for these structures:

  • The ability to impose themselves among sector leaders, still located in North America or Israel
  • A stronger French position in buying out foreign firms, options that are still out of the question today.

Given all these parameters, investors have set 2019 as the year to assist the teams of technological enterprises, so that financiers and cyber security operators gain credibility on national and international markets.

Speakers: Sébastien Montusclat, Digital Sector Manager, BPI France; Patrick Ragaru, CEO of Hackuity; Jonathan Userovici, Investment Manager, Idinvest Partners.
Moderator: Emmanuel Gras, CEO, Alsid.