Welcome to French Tech Updates! Your weekly source of startup, VC, and tech news and insights. I’m James, a startup-obsessed American living in Paris.

The unfortunate reality of defense tech in Europe 🚀

Two months ago I published a recap of the 250+ funding announcements I wrote about last year. One of the biggest surprises for me while preparing this summary was the lack of investment going into defense tech in France. And not just in France since defense tech drew in only 1.8% of all European VC funding in 2024.

Perhaps I should have been less surprised given that defense tech investments are also a recently emerging focus for VCs in the US—dwarfed in comparison to the hundreds of billions going to companies in other industries.

Still, with the recently inaugurated Trump administration making it repeatedly clear that Europe is increasingly on its own when it comes to defense, I see the situation on this continent as very different from the one across the Atlantic. Recent news like Mistral’s defense partnerships, planned defense budget expansion in Germany, and confirmed budget increases in Latvia point to the likelihood that European startups, investors, and governments are also taking notice.

While higher levels of available funding should help spur Europe’s defense industry, it will take years for this funding to materialize as actual products. European governments will also need to step up even more, considering large funding rounds of the kind required by defense hardware startups are still dominated by foreign investors—a soon-to-be untenable imbalance in a world calling for sovereign AI, sovereign supply chains, and sovereign defense solutions.

In addition to the funding barrier, European defense tech also needs to overcome an even larger barrier of changing public opinion to attract more founders and employees to the defense space. Shifting opinions is much harder and time consuming than shifting dollars, but perhaps some of the outrage over the US’ recent actions (the same outrage that even pushed Canada over the edge) can accelerate this process.

It’s certainly possible. In just a few years, nuclear energy managed to go through a similarly remarkable rebrand process—transforming from ultimate danger in the eyes of some to a source of clean energy so promising that climate activists now protest in favor of keeping plants open.

Personally, I would have preferred more hydro-electric, solar, and wind power. But given the choice between nuclear energy or climate disasters I’ll happily take the former. I feel the same about defense. I would prefer to live in a peaceful world where we don’t need enhanced technology for improved war fighting. But, as long as the threat of war exists the need for better defense systems will remain. Whether or not Europe can rise to meet that need is entirely in the hands of Europeans.

With that, let’s jump into this week’s update!

📝 Quiz: In 2024, what % of venture capital invested in France came from foreign sources?

(answer at the bottom of the newsletter)

• A.) 21%

• B.) 33%

• C.) 48%

• D.) 60%

What’s new this week in 🇫🇷

• 🛟 French Tech fights to protect JEI status: 15 major industry associations, including France Digitale and France Biotech, urge the government to maintain the R&D spending threshold at 15%—warning that raising it to 20% would exclude 1,000 startups from key tax benefits, weaken innovation incentives, and contradict France’s ambition to be a global tech leader.

• 🍒 Fruitz gone bad: Bumble is shutting down the French Gen-Z dating app it acquired in 2022. The move is part of a larger shift to re-focus on Bumble’s struggling core business and includes the sunset of Official—another Bumble acquisition aimed at strengthening relationships for couples.

🌍 Headlines from around the world

• 🇺🇸 Emboldened Silicon Valley giants are fighting back against the EU’s AI Act (Financial Times)

• 🍎 Apple pulls iCloud end-to-end encryption feature for UK users after government demanded backdoor (TechCrunch)

• 🚔 Coinbase says the SEC has agreed to end ‘bogus’ enforcement case against crypto exchange (CNBC)

• 🎥 OpenAI is finally releasing it’s Sora video generator (Bloomberg)

• 💰 Khosla Ventures is raising $3.5 billion for three new funds (WSJ)

• 🪦 Much-mocked “AI pin” company Humane acquired by HP for $116 million (TechCrunch)

• 📈 OpenAI reaches 400M users and doubled enterprise customers since September (CNBC)

• 🤯 Microsoft’s quantum computing program has created a new state of matter (Observer)

New Funding 💶

15 companies raised €137.5 million in the last week including €750K by Symexo (Infrastructure Management) and €250K by Terroe (Agritech) and excluding an unknown amount by PulseSight Therapeutics.

Upcoming Events 🗓

• Community Apero at Climate House – February 26

• The Future of Agentic AI & Autonomous Organizations February 27

• Corma x Thomas Bigagli: the Rise of Agentic AI – February 27

• AWS Startup Day | Early Stage Edition 2025 – March 4

• Demo Day | CCI Paris x SeedLegals – March 6

• InnoConnect Startup Pitch Deadline – March 6

• Deeptech Founders & VCs Meet (by Ventech, AFI Ventures, Matterwave and Kvanted) – March 12

Interesting Jobs 👩‍💻

• 📈 Head of Marketing @ Luko

• 💻 Head of Software @ Unseenlabs

• 🎨 Product Designer @ Mistral

• 👩‍💻 Product Manager @ Beavr

• 🧑‍💻 Senior Product Manager – AI Lab @ Brevo

• 🫡 Head of Product @ Klaro

• 🎓 CTO Associate (Intern) @ Malt

• 👍 Influencer & Creative Manager @ Photoroom

• 🎨 Product Designer @ Noota

• 🤖 Technical Program Manager (Freelance) @ Mistral

What Else I’m Reading 📚

• What happens when 1,000 AI agents play Minecraft? (Altera AI)

• Stackable Business Models in the Age of AI (NfX)

• Y Combinator W25 European Startups (Erwan Gardelle)

• What’s next when the US no longer guarantees Europe’s security? (Andreas Schwarzenbrunner)

• Meet Europe’s 25 most active angel investors (Sifted)

• AI can fix bugs, but can’t find them (VentureBeat)

Newsletter Recommendations 🫶

Quiz Answer: D.) 60%

While this figure is down from the 2021 peak of 76%, it’s also up from the 2023 low. The % of deals with foreign investors has also continued to increase and reached a new high in 2024 at 33%.