Welcome to a special edition of French Tech Updates! Normally, this newsletter is your weekly source of startup, VC, and tech news and insights written by me, James— a startup-obsessed American living in Paris.

🎬 That’s a wrap on Q1

Somehow it’s almost Easter. Does anyone else feel like it should still be January?

2026 has already been packed with news—some good, some concerning, and some that left me shaking my head and muttering WTF.

In France, Q1 brought a significant uptick in fundraising for startups and VCs, Europe’s largest ever seed round, and cemented “Digital Sovereignty” as the catchphrase of the year.

This report recaps all the major stories and data points that you should know about. Let’s jump in.

Table of Contents

• 📈 Fundraising Deep Dive

• 🆕 Venture Capital Stocked Up On Capital

• 🚀 Upcoming IPOs and Exits

• 🎲 Notable Exits & Strategic Pullbacks

• ⚠️ Trouble Spots

• 🏛️ Policy, Government & Digital Sovereignty

• 🧪 New Labs, Programs & Initiatives

• 🏅 Top 10 Deals of Q1

📈 Fundraising Deep Dive

Compared to Q1, 2025 funding is up 68% in 2026, in large part driven by AMI’s €895M seed round—the largest ever in Europe.

Even without the AMI deal funding is still higher by 17% year over year. That doesn’t mean it’s gotten easier to raise capital though. Deal volume fell by 20% down to 124 deals announced vs. 155 in Q1, 2025.

Capital continues to concentrate in larger deals, with €100M+ rounds capturing 58% of all capital deployed.

Seed to Series A stage is still the most active area by deal count, with €1-€10M rounds accounting for 62% of deal volume in Q1.

The power law also remains alive and well in France with the top 10 deals capturing an eye watering 70% of all capital deployed vs. 38% in 2025.

To no one’s surprise, AI was the main industry destination for capital in Q1 and 31% of all funds deployed went to AI rounds.

This is deceptive though, since AI here only accounts for companies with AI as their primary focus. The true figure is probably somewhere between 90%-100% as nearly every startup is now incorporating AI into their products.

Looking deeper, quantum computing, fintech, defense, and cybersecurity complete the top 5 industries by capital raised in Q1.

Collectively, 60% of fundraising for the quarter went to companies in the top 5 industries. The increased focus on security is clearly evident here, even vs. last year when neither defense nor cybersecurity cracked the top 10 industries by funding raised.

Rising threats from conflicts in Ukraine and the Middle East, increased fears over Russian drone incursions and cyber attacks, and severely decreased confidence in The United States as a defense partner are driving this shift while France is simultaneously investing at the state level to prepare for a rapidly changing defense landscape.

France plans to increase national defense spending by €7 billion in 2026 and Harmattan AI’s €172M Series B and GitGuardian’s €42M Series C show that investors are willing to put forward large sums for defense and security companies in the private sector as well.

France also continues to be a strong global force in health, medicine, and biotech and these three industries have seen the highest deal volume so far in 2026 with 23 deals announced.

Total funding in this space amounted to €318M driven by DentalMonitoring (€80M), Hublo (€40M), Waiv (€28.8M), Enodia Therapeutics (€20.7M), and FineHeart (€35M).

🆕 Venture Capital Stocked Up On Capital

Q1 wasn’t just about investing, it was also one of the busiest quarters recently for French VCs raising money. Over €2 billion in new fund capital was announced with €1.97 billion secured for investment theses spanning across quantum computing, climate tech, deeptech, agritech, and backing for underrepresented founders.

• Quantonation closed a €220 million quantum-focused fund — one of the few VCs globally dedicated exclusively to quantum technology. The oversubscribed vehicle will back 25 startups from pre-seed to Series A across quantum computing, sensing, communications, and infrastructure. Ticket sizes range from €200K to €12 million with up to €20 million reserved for follow-ons.

• Daphni had a particularly active quarter, closing two funds. The Blue fund reached €260 million in total commitments to back ~40 European startups with roots in scientific research across math, chemistry, biology, and AI. The separate Time4 fund, focused on supporting underrepresented founders in partnership with HEC, Les Déterminés, and Live for Good, hit €50 million on its way to a €100 million target.

• Eurazeo closed the first €175 million tranche of what it hopes will be a €400 million maritime decarbonisation fund to target 20–30 projects in offshore renewables, port infrastructure, and ship construction.

• Partech closed its inaugural impact fund at €300 million and will back European B2B companies using technology to clean up global value chains. LPs include Allianz, EIF, British Business Bank, Neuberger Berman, and the Visa Foundation.

• Elaia closed new funding for two investment vehicles. DTS3 (Deep Tech Seed 3) came in at €134 million or double the size of its predecessors. DTS3 will cover €1M–€13M tickets across future computing, industry, and life sciences. Their second fund of the quarter, Digital Ventures V, reached its first close of €120 million with a €200 million total target. DV V will back pre-seed to Series B B2B European tech companies and is funded by LPs that include Bpifrance, J.P. Morgan, and BNP Paribas.

• Slate, a new Paris-based climate VC, closed a €132 million debut fund with Bpifrance, EIF, and BNP Paribas as LPs. Targeting €250M total, Slate backs Series A–C European companies where emissions cuts and margin improvements align. Early investments include Fairmat (recycled carbon fiber) and Resourcify (circular economy).

• Cerea Partners launched the Cerea Agro Dev Industrie (ADI) fund with a €250 million first close and a €500 million total target. ADI will cover €10–€50M checks for French agritech SMEs focused on competitiveness, ecological transition, and food sovereignty, mirroring the digital sovereignty wave but for agriculture.

• OSS Ventures completed the first €44 million close of a new €75 million fund for physical-world startups building factory intelligence. The Paris-and-Boston-based studio's 22 portfolio companies are already deployed across 3,800 factories worldwide. Tickets run from €500K–€2M with follow-on investments up to €6M.

• Entrepreneurs First closed on $200 million in new capital for its pre-pre-seed programs. EF is still investing in Europe, even though the accelerator scrapped its French and German programs last October to double down on moving founders to San Francisco.

• 360 Capital hit an €85 million first close for Poli360 2, its Franco-Italian deeptech fund targeting university spinouts, with MBDA (the defense prime) among LPs.

🚀 Upcoming IPOs and Exits

France's two most ambitious public market moves this quarter and have their eyes set across the Atlantic on American markets.

• Pasqal is exploring a Nasdaq SPAC listing later this year which would make it one of the rare French tech companies to tap into US public markets. The company, which builds neutral-atom quantum processors for industrial applications, raised a €340M pre-IPO round in March at a $2 billion valuation, making Pasqal France's first quantum unicorn.

• Ledger is building interest for a Wall Street IPO at a $4 billion+ valuation. That list price would come as a sharp step up from its $1.5 billion valuation in 2023. Bankers are already circling and CEO Pascal Gauthier has been clear that "the money is in New York" for a crypto listing. If successful, Ledger would be only the second French tech company (outside of biotech) to go public in the US since Criteo over a decade ago. Beyond the IPO, Ledger is repositioning from "crypto wallet" to “guardian of digital identity”—a story Wall Street may be very willing to buy.

🎲 Notable Exits & Strategic Pullbacks

• France's ABTasty is merging with India's Wingify in a PE-backed deal led by Singapore's Everstone Capital ($3.2B AUM), creating a combined entity with ~$100M in annual revenue serving 4,000 clients globally. ABTasty raised ~$65M from Partech, XAnge, and Crédit Mutuel over 16 years. Based on disclosed revenue multiples, the acquisition price likely landed between €200–€250 million.

• Société Générale is close to selling Treezor, the Banking-as-a-Service subsidiary SG acquired Treezor in 2018. While Treezor has never reached profitability, it has achieved significant traction with 8 million cards issued and processed over €130 billion in transaction volume. The sale to fintech Shares continues a pattern of SG divesting fintech assets after the sale of Shine in 2024.

• Mistral completed its first-ever acquisition with the purchase of Koyeb, a serverless infrastructure startup founded in 2020 by three Scaleway alumni. Koyeb's 13-person team joins Mistral to continue building tooling for deploying AI applications and reinforcing Mistral Compute—the company's sovereign European AI cloud.

⚠️ Trouble Spots

• France’s unicorn count is shrinking. Research from consulting firm Mighty Nine found that 60 out of 199 European unicorns (30%) no longer maintain their €1 billion+ valuation. Among the former French darlings that have been "de-horned" are PayFit, Spendesk, and gaming company Sorare. France did mint two new unicorns this quarter with Pennylane and Pasqal but the net count is moving in the wrong direction for the cohort as a whole.

• Ubisoft had a brutal quarter. In January, the company announced the cancellation of six planned games, the delay of seven others, and a major restructuring that sent the stock down 34% in a single day. Then, in March, Google's Project Genie demo (text-to-game AI) briefly rattled the entire gaming sector. The combined blows continued a multi-year collapse that has erased nearly 95% of Ubisoft's market cap since 2021.

• Capgemini announced plans to eliminate 2,400 positions in France. The 6% workforce reduction is driven by weak demand for their services, particularly in the automotive sector. The company is pursuing voluntary departures rather than mass layoffs, but employees report pressure through difficult working conditions and mandatory travel requirements.

🏛️ Policy, Government & Digital Sovereignty

If Q1 had a catchphrase it was "digital sovereignty." The push for French tech’s version of “Made in France” showed up in nearly every major policy story from budget battles in the senate to the halls of Davos.

• France's 2026 budget finally passed after a lengthy political battle. The startup community largely dodged its worst fears and the CIR research tax credit, JEI (Young Innovative Company) designation, and BSPCE employee ownership programs all survived intact. However, France 2030's annual funding allocation was also cut by €1.1 billion. The €54B committed fund remains intact, but the pace of deployment is slowing at a moment when AI spending globally is accelerating.

• EU Inc. received a formal green light from European Commission President Von der Leyen at Davos. The proposal, supported via petition by over 20,000 startup founders, aims to create a unified company structure and regulatory environment across the EU with promises of online company registration within 48 hours and a consistent cross-border capital regime.

• Mistral committed €1.2 billion to a Swedish data center partnership with EcoDataCenter with facilities planned to open in 2027. The whopping sum is equivalent to 41% of all capital Mistral has ever raised and adds momentum to the infrastructure layer of Mistral’s "fully European AI technology stack" ambition.

• The French government announced a break with American tech platforms and declared that public administrators will migrate away from tools like Zoom and Microsoft Office onto homegrown alternatives like Visio, a video conferencing tool being co-developed by Kyutai and Pyannote AI. The government projects savings of €1 million per year for every 100,000 users who stop paying US tech licenses.

• Bordeaux is building a €3 billion sovereign AI campus. BXIA will sit on the site of a former exhibition center parking lot and aims to give French companies a place to store data and train AI models on European soil. Currently, 92% of European data is reportedly stored on American servers.

• The EU committed €75 million to build a shared European cloud computing network running on telecom infrastructure across member states. This is a symbolic but significantly underpowered response to American hyperscalers like Amazon which reportedly plans to spend over $500 million per day on AWS CapEx.

• The European Investment Fund announced ETCI 2, a €15 billion fund of funds to support 100 mid-to-large VCs across Europe. Already seeded with €1.25B from the EIF and EIB and targeting a first close this summer, ETCI 2 is also pulling in a new class of LPs to include insurers, commercial banks, and pension funds historically absent from European VC tables. The stated goal is to unlock up to €80 billion to fill Europe's late-stage funding gap.

• Data center backlash entered French municipal election politics. A Reuters investigation found candidates in at least 10 cities, including Marseille and Bordeaux, campaigned against new data centers in March citing concerns over power consumption, heat, noise, and the lack of local jobs. At the national level, a draft law to classify data centers as "projects of national interest" remains stuck in parliament.

• France's National Assembly voted to ban social media for children under 15, echoing Australia's under-16 ban. The bill was approved in the Senate this week but faces additional debate over specifics. If implemented, France would become only the second country after Australia to enact such a restriction.

🧪 New Labs, Programs & Initiatives

• Bpifrance launched a new Deeptech Seed Accelerator to support 75 companies across three 2026 cohorts. The accelerator aims to bridge the gap from research lab to funded startup with 12 hours of individual coaching, group workshops, and a Demo Day in front of 100 investors.

• Bpifrance and Banque des Territoires announced a €100 million Digital Health Prevention Fund co-backed by CNP Assurances to back 15 seed-to-growth startups in AI-powered disease detection, chronic disease management, and behavioral health. The fund has also committed to a unique KPI: measuring actual health outcomes from its investments.

• Doctolib launched a €20 million AI lab to build tools for both doctors and patients. Applications will be co-developed with the German Research Center for Artificial Intelligence and hospitals in Paris, Nantes, and Berlin, with research findings published as open source.

• Station F unveiled the first cohort of F/ai, its new AI-focused accelerator backed by Microsoft, Meta, Mistral, Google, Anthropic, OpenAI, AMD, General Catalyst, Sequoia, Lightspeed, 20VC, and others. Twenty startups (15 French, 5 international) have a stated goal of reaching €1M in revenue within six months. The cohort skews toward B2B agents, voice AI, and GEO optimization. Frequent French Tech Updates readers will recognize Lemrock, GetMint, and Well in the group.

🏅 Top 10 Deals of Q1

AMI Labs

💶 Amount Raised: €895M / $1.03B (Seed)
🔗 Website: amilabs.xyz
📍 Location: Paris, France & USA
✏️ Description: Creates "world models", or AI systems trained on video and physical-world data using Yann LeCun's JEPA architecture as a direct alternative to large language models. Founded by the Turing Award-winning LeCun four months before closing Europe's largest-ever seed round.

Pasqal

💶 Amount Raised: €340M (Pre-IPO)
🔗 Website: pasqal.com 
📍 Location: Palaiseau, France
✏️ Description: Builds neutral-atom quantum processors and develops quantum computing applications for industry with a Nasdaq SPAC listing planned for 2026.

Pennylane

💶 Amount Raised: €175M (Series C)
🔗 Website: pennylane.com 
📍 Location: Paris, France
✏️ Description: Provides accounting and financial management software used by 6,000 accounting firms and 800,000 businesses across France and Europe, with AI tools and e-invoicing compliance as the next growth frontier.

Harmattan AI

💶 Amount Raised: €172M / $200M (Series B)
🔗 Website: harmattan.ai
📍 Location: Paris, France
✏️ Description: Builds AI-powered autonomous defense systems including drone platforms, with contracts from the UK and French Ministries of Defence and a strategic partnership with Dassault Aviation to develop AI for future air combat.

Hynaero

💶 Amount Raised: €117M (Series A)
🔗 Website: hynaero.com 
📍 Location: Istres, France
✏️ Description: Developing the Frégate-F100, a next-generation amphibious water bomber designed to replace the aging Canadair fleet for wildfire suppression across France and Southern Europe, with first deliveries expected in 2032.

Alan

💶 Amount Raised: €100M (Series F)
🔗 Website: alan.com 
📍 Location: Paris, France
✏️ Description: Digital health insurance platform serving employers and freelancers across France, Belgium, Spain, and Canada, combining coverage with healthcare services on the path to €1.16B ARR.

DentalMonitoring

💶 Amount Raised: €84M / $100M (Series C/D)
🔗 Website: dental-monitoring.com 
📍 Location: Paris, France
✏️ Description: AI platform that enables orthodontists to remotely monitor patient treatment progress via smartphone scans, replacing frequent in-office visits.

newcleo

💶 Amount Raised: €75M (Series B)
🔗 Website: newcleo.com 
📍 Location: Paris, France
✏️ Description: Develops lead-cooled fast reactors powered by nuclear waste with facilities planned in Nogent-sur-Seine and Chinon and backed by a broad coalition of European industrial groups.

Naboo

💶 Amount Raised: €59M / $70M (Series B)
🔗 Website: naboo.app 
📍 Location: Paris, France
✏️ Description: AI-powered procurement platform for corporate events that helps large enterprises plan, book, and pay for MICE spending in one place. Already used by a quarter of the CAC40 and customers like Google, Siemens, and Microsoft.

Hummingbirds

💶 Amount Raised: €50M (Series A)
🔗 Website: hummingbirds.eu 
📍 Location: Paris, France
✏️ Description: Develops and finances community-driven conservation and ecosystem restoration projects across Africa, Latin America, and Southeast Asia that generate carbon credits for corporate buyers anchored by three development finance institutions.