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What are the ideal conditions for tech startups?

When Thibauld Favre started talking about his startup at the reception following the first day of the eG8 Forum in Paris, he could have been any eager, bright young entrepreneur. He pitched the idea of a "Windows App Store" with great enthusiasm, noting that All My Apps already had more than 500,000 users, with a billion-plus potential Windows users to attract in the future. Favre said that the platform was in open beta and, with 15 employees, his startup was growing fast.

And then he said that his next step was to move to California to be closer to the ecosystem of developer networks and startups. When I asked Favre why he would leave France, which was offering generous subsidies for his fledgling tech company, his answer was straightforward: He wanted to tap into the culture of tech entrepreneurs in Silicon Valley.

During my trip to Paris for the eG8, the following concerns about the conditions for startups in France emerged in various discussions.

  • Lack of a mentorship culture — In Silicon Valley, established entrepreneurs mentor new ones.
  • A limited venture capital ecosystem — There's low tolerance for risk, or lack thereof, in investors. That concern goes for engineers as well, in terms of joining startups, big business, or government.
  • Hierarchical institutions — There's a resistance to the flattening effect of technology in enterprises and government. That culture can transfer to smaller concerns. (Think of "Gov 2.0 vs the beast of bureaucracy.)
  • Inability to fire people — When people don't perform as needed in startups, entrepreneurs have to bring in new talent or they'll lose to innovators in the market who can.
  • Low tolerance for flex time or casual attire — Talented software engineers have a global marketplace for their talents. Formal dress and rigid working hours are significant negatives.
  • Tax structure — Without being too specific about the codes in question, entrepreneurs said startup costs and red-tape were an issue.
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The Economist's briefing on Europe's tech entrepreneurs last year reflected these themes. There are young European technology companies in France, like Criteo, but from what I've heard there's a long way yet to go to attract more of them or catalyze their founding.

"I definitely agree with these arguments," said Internet entrepreneur Fabrice Grinda, founder of Aucland and co-CEO of OLX. Grinda was quite critical of the eG8 after its conclusion. "The inability to fire people and too much red tape are high on the list and can be addressed," he said. "A smaller domestic market and entrepreneurs looking only domestically is harder to address."

What do you think? Do you agree with this characterization of conditions in France? Do they exists elsewhere in Europe? If France could address these issues, would more venture capital move into the country and fund the technical talent coming out of its universities? Is there a universal set of conditions that a given city, state or country needs to meet in order to catalyze startup activity and job creation?

Please share your thoughts in the comments.

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