Ease of doing business worldwide still beats Paris but that could change
Jean-Michel Chalayer had only one logical destination after he left his consulting job in Munich three years ago to try his hand as an internet entrepreneur. “There was no other city that would have been attractive at that time other than London,” said Mr Chalayer, a Frenchman who has also lived in Germany, Canada, Switzerland and Argentina. As an EU citizen, he did not need a visa to move to London. When he arrived, he discovered an ease of doing business absent in his native Paris, a network of technology investors and a deep pool of talent to help launch Le Salon, an app that allows customers to book at-home manicures and other beauty treatments. Its staff of seven — some British, some European, all young — work in a shared office in the trendy Shoreditch neighbourhood known as the Ministry of Startups. With caffeinated developers packed elbow-to-elbow, plentiful facial hair and one seemingly discarded grand piano, it feels like a millennial commune. “London was so much more open to the world,” Mr Chalayer said, explaining its appeal. The fashionable Shoreditch district in east London is home to many tech start-ups including Le Salon
A generation of French technology entrepreneurs has been drawn by the city’s alchemy of talent, money, creativity and openness. An estimated 4,500 of them are now living in the UK, according to FrenchConnect London, a networking group for expatriates, with the biggest intake coming over the past decade. “The reason that French people come here — especially entrepreneurs — is that the ecosystem is very friendly for start-ups,” said Albin Serviant, FrenchConnect’s co-founder. “It’s far easier than France to open a business here.” The ecosystem is very friendly for start-ups . . . It’s far easier than France to open a business here Albin Serviant, co-founder, FrenchConnect
Whether the city retains its allure after the UK’s June vote to leave the EU is an open question. So far, few French tech entrepreneurs seem to have left, say executives. But other losses may be harder to measure. “When you put a barrier where there was not one, you block serendipity,” Mr Chalayer said. For those still arriving, one path is familiar: they will hatch a business in Paris and, if it works, move to London as a springboard for international expansion. “It’s about scaling your business abroad and London is great for that,” said Mr Serviant, who came to London four years ago to lead EasyRoommate, a flat-sharing service, and now oversees a tech-focused investment fund.
His companies benefit from tax laws that provide relief for start-ups and labour laws that are more forgiving than those in France, where the rules and regulations become more onerous as a company’s headcount approaches 50.
But what makes London unique, he says, is its collection of talent. His own staff feature a dozen nationalities, making it easy to operate in markets from Poland to Portugal. “Here, you can be in 24 countries with a single office,” Mr Serviant said.
Antoine Baschiera, another French entrepreneur, agreed: “When you’re a French company and you want to have international DNA, it’s London.”
The former PwC consultant founded Early Metrics in 2015 as a sort of rating agency for start-ups, evaluating them on criteria such as management talent, finances and growth potential. After a year in Paris, French clients such as LVMH, the luxury goods company, urged him to cross the Channel. “When you’re in Paris, you’re not on a world map. You’re not even on a European map. You’re on a French map,” he said. Antoine Baschiera, chief executive of Early Metrics © Alex Orrow
So far, Mr Baschiera has found it “super easy” to establish a company in London and praised a tech “ecosystem” that balances start-ups, investors, universities and customers. (He was less prepared for an Anglo business culture in which money is so frankly discussed).
When it comes to Brexit, he is remarkably untroubled. “Start-ups live and die in micro-environments,” he said. “Brexit is not affecting them.” Others disagree. “When I arrived in London, the dynamic was so positive,” said Fabrice Bernhard, who recalled the buzz among entrepreneurs that the city would one day overtake Silicon Valley. “I’ve not heard that since Brexit.”
Mr Bernhard opened a London office for his Paris-based software consultancy Theodo 18 months ago with this rationale: “The world is big and the conquest of the world should go through London.” He was also encouraged by UK tax laws. An “entrepreneurs’ relief” clause, for example, would allow him to pay just 10 per cent on the first £10m of profit from the sale of a start-up. “If you compare it to the French system, where the best scenario is you pay 35 per cent, we’re talking huge amounts of money,” Mr Bernhard said. He now envisions mountains of paperwork to secure UK visas and has even begun thinking about a return to Paris.
France has thrown open its arms to entrepreneurs by introducing a new “tech visa” to attract talent and pouring more money into tech promotion. “France has this amazing irrational appeal,” Mr Bernhard said, urging policymakers to address “the rational stuff” like tax and labour laws to close the gap with London.
Even if they did, Mr Bernhard acknowledged, Paris would still lack English as a business tongue. This year’s French presidential election also brings uncertainty. “It could become worse,” he said.
In the start-up world, the years it will take to negotiate Brexit could be many lifetimes. If things sour, companies such as Le Salon can pack up for another shared office in Berlin or Barcelona in a matter of weeks. Mr Serviant doubts that will be necessary. He sees London becoming even more hospitable to foreign entrepreneurs post-Brexit by cutting taxes and offering other incentives to retain them. “I’m optimistic because this country is pragmatic,” he said.