165
cyber startups
in France
165 startups, 32 scale-ups (including 1 FrenchTech120 and 1 cyber unicorn), €341M in capital raised: those are some of the key figures from the 2023 edition of France’s cybersecurity startups radar, produced by Wavestone in partnership with Bpifrance.
France's cyber ecosystem in balance: resisting, growing and looking to the future
Resisting: In today’s uncertain economy, cybersecurity is proving to be a highly attractive sector, driving growth and creating jobs.
Growing: The French cybersecurity ecosystem is expanding and getting stronger at every level: business support, funding, clusters of excellence and specialized entities (such as the Campus Cyber).
Looking to the future: Startups are working today to ensure tomorrow’s cybersecurity for users and citizens, as new technologies emerge (artificial intelligence, quantum computing, everyday online applications, etc.).
Resisting: an exceptional year for cyber startups in a tight market environment
€341M
funds raised
2023 momentum is positive on two levels:
- more tickets, around €40M;
- many more under €10 million (a total of €61 million raised by 19 structures).
Gérôme Billois
Partner, Cybersecurity
Wavestone
This year’s fund-raising dynamics are particularly impressive, reflecting cyber’s attractiveness.
New funds specializing in the cyber sector provide one of the key factors in the ecosystem’s maturity. For example, Auriga Partners recently raised €50 million to invest in 25 start-ups. Tikehau Capital, meanwhile, is a vehicle dedicated to more mature startups.
Public authorities continue to play an important role, particularly for startups, via the Fonds Innovation Défense (managed by Bpifrance on behalf of the French Ministry of the Armed Forces) or the Digital Venture fund. These players are stepping up their efforts to ensure French start-ups continue to thrive – at least in their early years.
On the other hand, current economic conditions, particularly abroad, are making it increasingly difficult to access the the B and C series. Businesses tend to seek the necessary funds outside France.
Growing: more numerous, innovative, international... A panorama of cyber startups in France
Expansion and innovation, the driving forces behind the cyber ecosystem
34
new cyber startups
France has a thriving ecosystem for cyber innovation: no less than 34 start-ups joined our radar between June 2022 and June 2023! On average, 25 new cyber startups are created in France every year, according to the figures we’ve been measuring over the past 4 years.
Gérôme Billois
Partner, Cybersecurity
Wavestone
“Real technological breakthroughs lie ahead, in particular quantum technology and artificial intelligence, but not only that… Our startups need to take action on these issues and stay at the forefront of technology. This will obviously require better connections with the research ecosystem, which is already very active in these areas.”
53% of the radar new entries ground their project or concept in innovation; the remaining 47% reinvent existing solutions. By “innovative”, we mean a company that:
- focuses on building a new market (e.g. product or targeting);
- or conducts extensive research to develop a new technology.
Cyber innovation could benefit from the involvement of private research players (15% of startups are in contact with such organizations) and public ones (17%). Tapping into these sources will enable the ecosystem to reach new milestones, such as Deeptech.
Cyber scale-ups' recipe for growth
32
cyber scale-ups
The cyber ecosystem is breeding ever more scale-ups: we counted 32 in 2023, compared with 24 in 2022 and just 11 in 2021.
The most successful companies use one or more of the following strategies:
- Renew their technological approach.
- Business model breaks new ground, addressing the SME segment or targeting expert markets, for example.
- Perfectly execute their scaling-up phase and international operations.
Paul-François Fournier
Executive Vice President for Innovation
BPIfrance
We believe that building a strong French cybersecurity ecosystem is the key to a digital society based on trust, competitiveness, and sovereignty. We have the expertise to achieve this throughout France. Bpifrance’s ambition is to enable new cybersecurity companies to thrive, particularly by conquering international markets, and to create synergies between players. Our contribution to the French Cybersecurity Startups Radar, alongside Wavestone, is part of this goal.
French startups go global
59%
sell their solution abroad
59% of surveyed startups already have customers outside France. For them, French and European markets remain priority target.
Cyber ecosystem in the French regions: Rennes and Lille lead the way
5406
jobs
directly created
With over 5,000 direct jobs, France’s cyber innovation ecosystem remains on a human scale compared with the national job market – particularly in the tech sector.
The regional cyber ecosystem is gaining ground. Nearly half of all structures are now located outside Paris and its surrounding areas, compared with a third last year. Half of all new companies since 2021 have been established in the French regions. Today, 70% of structures are concentrated in 3 hubs: Paris, Lille and Rennes.
Local support structures need to keep pace. On the one hand, consolidated regional footholds is needed, with initiatives such as Campus Cyber satellites. On the other hand, regional startups are expected to become more specialized; their generalist, generic approach is often criticized by the startups interviewed.
Looking to the future: key trends in cyber innovation
Many technological, regulatory and societal challenges lie ahead for cybersecurity and its innovation ecosystem. Simple solutions tailored to the various targets of the French economic landscape are also a major challenge.
Artificial Intelligence (AI)
26 cyber startups claim they use AI to provide more efficient, faster, automated tools, or to enable better data analysis. How this technology actually impacts their value proposition is not always clear. Beyond being a selling point, we believe that AI represents a real business opportunity when it comes to securing the use of AI. While many organizations are deploying AI solutions, new specific attack methods are appearing on a regular basis.
Data security
We foresee an unparalleled transformation of data security, and in particular encryption, with new technologies coming to maturity: post-quantum encryption (which cannot be broken by the power of the quantum computer, unlike a large proportion of the algorithms currently in use) and homomorphic encryption (which enables operations to be carried out on encrypted data without first decrypting it, and provides essential answers to the issue of sovereignty, particularly in relations with cloud providers). Coupled with new ways of securing data, via fragmentation between several clouds and innovative encryption systems, these technologies offer a wide range of business potential.
Support for small businesses
Small and medium-sized businesses (SMEs) account for a much larger market than the CAC40; a growing number of dedicated solutions appear among French cybersecurity startups. NIS2 directive, which is expected to affect several thousand or even tens of thousands of companies in France, represents a major growth opportunity.
Product security
New European regulations, in particular the CRA (Cyber Resilience Act), now require a mandatory minimum security level for products. The latter range from everyday digital devices (e.g. wifi terminals and internet boxes) to connected objects such as trains, airplanes and medical equipment. Given their specificity, context of use, low power and long lifespan, numerous cybersecurity solutions will have to be invented. Unfortunately, to date, this field remains largely unexplored by French entrepreneurs.
Directions for improvement in the cyber ecosystem
More than overcoming economic uncertainty, France’s cybersecurity players continue to grow and lead the way. The cyber innovation ecosystem will maintain its momentum by combining all its strengths.
- Startups: stand out from the crowd by innovating, relying on public research and the private sector, and identifying the next growth drivers for cyber.
- Lawmakers: take things to the next level – set your sights on Europe! Use European regulations (NIS2, DORA, CRA) to make a difference.
- Investors: continue to invest in the ecosystem – let’s go for the €100m! Take advantage of the cyber investment boom
What's on the 2023 radar for cybersecurity startups in France?
- A rich ecosystem: 165 startups (166 in 2022) and 32 scale-ups (24 in 2022)
- An exceptional year in an uncertain economic climate: €341M of funds raised
- An expanding environment: 34 new startups
- Strong internationalization: 59% operating outside France
Radar methodology
Time frame
The 2023 edition of Wavestone’s French Cybersecurity Startups Radar is based on data observed from June 1, 2022 to May 31, 2023.
Selection process and criteria
- Headquarters must be located in France.
- Security product must account for at least 50% of turnover.
- We call “startup” companies with less than 7 years of existence and fewer than 35 employees.
- We call “scale-up” companies that meet one of the following conditions: have raised at least €10M in a single round of financing for 3 years OR have at least €2.5M turnover and annual growth of over 25% over the last 3 fiscal years (for each fiscal year).
Data analysis
This study is based on different types of information.
- Compilation of Open Source Intelligence (OSINT).
- Qualitative interviews with key startups on the radar and players in the cyber innovation sector.
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