The same can be said for many other European countries. What this makes clear is that the French government has been investing in and facilitating the development of local startups which are then ultimately controlled by foreign firms. 35% of rounds in France that year had at least one foreign investor. Digital sovereignty generally refers to the degree to which a country has control over core IT infrastructure and data used by the state, companies and individuals.Ī KPMG study on French startups’ equity fundraising shows that foreign investors provided 66% of capital in rounds of at least €100m in 2021. Digital sovereigntyĭigital sovereignty is the second main argument for the focus on unicorns and hypergrowth more generally. The successes that are highlighted in the media and flaunted by governments hide the forest of failures such as decommissioned or deceased unicorns which we hear little or nothing about. The obsession with growth and the pressure from various stakeholders, financiers in particular, encourages irresponsible opportunism - just take the case of Theranos in the US.įinally, due to the ambient diktat of growth, some companies have embarked, most often in spite of themselves, on growth strategies that are too ambitious and/or unsuited to their case. Nonetheless, policymakers and the media still devote the vast majority of their resources to unicorns at the expense of what constitutes 99.99% of entrepreneurship - companies that are not unicorns and are not trying to become one.įurthermore, these unrealistic models of entrepreneurial success can induce a number of particularly harmful behaviours. In response to criticism of his focus on hypergrowth companies, Macron recently said that “French tech is obviously not just unicorns, but I see them in a way as examples, models for the whole ecosystem”.

“These unrealistic models of entrepreneurial success can induce a number of particularly harmful behaviours” This more than puts into perspective the unicorn model - and indeed the current market slowdown has also brought this reality into stark relief. In a recent study of close to 40% of all European SMEs over an eight-year timespan, my coauthor and I found that firms across all sectors that initially prioritise profitability over growth are 2.5 times more likely to successfully secure high levels of both profitability and growth in the medium and longer term than those focusing primarily on growth.Ĭonversely, we find that companies focusing their initial strategy on growth are 2.6 times more likely to end up with poor performance in terms of both growth and profitability. However, a growth-at-all-costs model is more often than not a fast track to failure. Traditionally, startups prioritise growth - often hypergrowth like blitzscaling - to reach that elusive unicorn title. They cannot be presented as an aspirational model for all entrepreneurs and they cannot be the basis for building digital sovereignty. Only 1.2% of European companies that raise a seed round go on to become a unicorn, according to Atomico and Dealroom analysis.

They can lead ecosystems composed of startups and SMEs - similar to what China’s Alibaba has managed to build.īut we can’t forget that unicorns are rare. Unicorns have an important impact on the economy as a source of direct and indirect jobs but also of innovation. Unicorns aren’t a national growth strategy - precisely because they are rare Politicians and policymakers risk making major mistakes if their only approach to supporting entrepreneurship and young businesses is to focus on the creation of startups worth over $1bn.

Gaia project tech track