French Cybersecurity Start-ups Radar 2022

The 2022 edition of the Wavestone French Cybersecurity Start-up Radar comprises 166 start-ups, 24 scale-ups, 1 cyber unicorn. In addition, €630M of funding was raised for start-ups and scale-ups, demonstrating a significant increase in investment compared to last year.

Given the current geopolitical climate, cybersecurity is now more than ever a major strategic issue. The conflict in Ukraine has highlighted our collective need for new cybersecurity champions to guarantee Europe’s sovereignty and strategic independence. As evidenced by some early positive results, the innovation ecosystem appears to be playing a key role in progressing towards this goal. However, there is a strategic imperative to accelerate this progress. Alongside its business partners, Wavestone has identified two major growth levers during this study.

Of all Cybersecurity start-ups, 61% re-invent existing solutions without bringing noticeable innovations to the table. This could be explained in part by the high number of founders operating in isolation from the research and development environments. For example, of the start-ups that happen to re-invent, only 22% collaborate with research labs and only 16% interact with the private sector. However, tangible developments can be seen, especially surrounding data security and data exchange security, where several start-ups have launched truly innovative solutions.

The total amount of funds raised grew six-fold since last year (€100M in 2021 vs. €630M in 2022). Even removing Ledger (€330 million) from the equation, it seems reasonable to suggest that investment in the ecosystem is gaining momentum.

Naturally, France still demonstrates a large potential for improvement; especially when compared to American (about €14B) and Israeli (about €1.6B) champions, and its British neighbours (about €900M).

To respond, Wavestone has launched a dedicated team comprised of key players of the cyber ecosystem: Bpifrance, France Digital, the General Secretariat for Investments (SGPI) and the Cyber Campus. Furthermore, Wavestone has conducted interviews with innovation ecosystem constituents (investors, public actors, researchers, entrepreneurs, and support structures) to obtain a view of perspectives.

The obstacles are real and have been known for a while. A fragmented European market, difficulties to export internationally, difficulties to innovate, a lack of ambition from business founders, problems linked with human resources (hiring, lack of skills in commercial development, …), apprehensive investors and industry players neglecting adequate funding in cybersecurity and exit difficulties in the cyber sphere.

A portion of the solutions to these obstacles have also been known for a while and several actors (incubators, support structures, …) are already taking action to overcome them. These approaches include fine-tuning value propositions and pitching skills, creating favourable conditions for the adoption of their solution, addressing clients as quickly as possible, and leveraging their start-up appeal to hire top talent. Joining these structures is essential. But joining the most recent ones that specialize in cybersecurity is ideal.

What’s more, our workgroup has identified additional measures to take advantage of the current situation.

• For entrepreneurs: benefit from the recently created ecosystem to rapidly confirm your innovation, be ambitious regarding international expansion (do not hesitate to join international incubators to quickly test your ideas and the foreign markets), and carefully choose your path for growth (depending on the level of innovation of your solutions and the targeted markets, paths are not identical).

• For the ecosystem: it is urgent to simplify the access to the European market. This is made possible thanks to tangible networking, decoding and labelling the actions carried out by key cybersecurity innovation players. The strengthening in purchase preferences as mentioned in the “Buy European Tech Act” project is also a key driver. Regarding investments, a step up is necessary to challenge the United States and will require better communication with investors, more transparency concerning the exportation and foreign investments control processes, but also incentives for new sizeable European cyber funds.