France pushes for EU capital market unity to boost startups

France is pushing for the integration of the European Union’s fragmented capital markets to support its burgeoning startup sector and reduce reliance on US venture capital, according to ministers, CEOs, and investors, Reuters reported on Monday.

Europe’s national financial regulations hinder the development of deep capital markets, leading startups to turn to US venture capital for growth.

French startup Photoroom’s CEO, Matthieu Rouif, highlighted this issue at the Viva Technology fair, noting the significant wealth created by tech innovation that Europeans miss out on.

In 2023, European startups raised $45 billion compared to $120 billion in the US, according to Atomico.

French Finance Minister Bruno Le Maire emphasised the urgency of harmonising financial regulations across the EU to prevent companies like Mistral AI from seeking funds elsewhere.

Bank of France Governor Francois Villeroy de Galhau suggested increasing public sector investment in startups, while venture capital firms argue a unified market would encourage more European listings.

This integration could provide a more stable investor base and enhance liquidity in Europe’s venture capital ecosystem.