In April 2022, Changpeng Zhao (CZ), the CEO of Binance asserted that “France is very well placed to be the leader of the crypto sector in Europe”. According to him, the country is “pro business”the regulations are “pro crypto” And “the attitude of the government towards the crypto industry is phenomenal”. This is why he had decided to set up his company’s headquarters in the City of Light. Flattering words with regard to France, but what is it really about in practice? Bpifrance is the armed arm of the state in terms of innovation. It finances and supports promising French start-ups throughout their development. It is the most crucial French public actor for the emergence and competitiveness of French startups. However, this institution has a very ambiguous positioning in relation to crypto startups…
Bpifrance, the cornerstone of innovation financing in France
What is Bpifrance? Bpifrance is a public investment bank present in each French region. It was created in 2013 with the aim of helping French companies in their growth, in particular startups. Concretely, she supports and finances French start-ups in loans, grants, aid for innovation, repayable advances, interest-free loans, guarantees, equity and advice. It took on a key role during the pandemic by financially supporting startups during the crisis and then the economic recovery. It is partly thanks to this public actor that the French startup ecosystem did not collapse during the covid.
In 2021, Bpifrance issued 9.6 billion euros to more than 9,992 French companies through its various support systems. In particular, in 2021, Bpifrance has invested in 70% of fundraising by French startups. Brief, Bpifrance is essential for innovation in France. She is the spearhead of the government in terms of aid for innovation and start-ups. But, what about its positioning in relation to cryptocurrencies, NFTs, the blockchain and the metaverse?
Its financial support for the French crypto ecosystem
Bpifrance’s funding is decisive for the French crypto ecosystem. Currently, the public investment bank’s direct and indirect exposure to the crypto sector amounts to almost 75 million euros. Indeed, it has given French crypto companies 30 million euros via grants and loans, 35 million euros in the form of funding from crypto funds which then invest in startups (like the Ledger-Cathay fund) and 10 million euros in equity during fundraising (as for Ledger, Dogami, Acinq and Arianee).
However, Bpifrance does not want to get too wet with crypto
However, despite this crucial fundingBpifrance neglects the crypto sector proportionally more than other sectors. Indeed, three main reasons rationally explain the reluctance of Bpifrance to venture further into the industry.
- First of allthe scandals of hacking, fraud and rug pulls are legion in the crypto sector. They represent 3.95 billion dollars in 2022 alone!
- Moreover, cascading bankruptcies of the year 2022 (like Three Arrows Capital and FTX), falling cryptocurrency pricesor even the collapse of some (such as the collapse of the algorithmic stablecoin UST and its associated cryptocurrency LUNA) generate well-founded and widespread concern about the crypto industry.
- Finally, more generally, the crypto sector is controversial with the general public because of its environmental impact. However, ecology is the major strategic sector (along with Deeptech) for Bpifrance. What’s more, in 2020, General Manager Nicolas Dufourcq even claimed to want to support exclusively “projects towards” and become the “climate bank for entrepreneurs”.
What if the solution was to launch a Web3 fund that would invest in cryptocurrencies?
Bpifrance is indeed looking into this idea which would have a double utility: train internally And finance French crypto startups. According to Ivan de Lastours, Blockchain & Crypto Manager at Bpifrance, “As a bank, it is important for us to learn how to master the functioning of these operations; and it would be a way to be able to support companies that raise funds in tokens, which are a new class of digital assets, a financial object that is still not very well identified”. However, this project remains only hypothetical. “The subject is delicate because we are in a complicated phase, with actors with fraudulent behavior who have discredited cryptocurrencies”. Indeed, the FTX rout and its potential snowball effect arouses the legitimate mistrust of institutions like Bpifrance.
Bpifrance also takes on the role of evangelizer of Web 3.0 innovations with companies
Since Bpifrance interacts with all French companies, it has an essential communication and popularization mission for the crypto industry. Indeed, on the one hand, by advising many companies, she helps to explain the advantages and operation of these new revolutionary technologies that can be used for various use cases. On the other hand, because of its central and public position, it is the most legitimate actor to organize events and bring together the ecosystem of blockchain, cryptocurrencies, NFTs and Web3.0 as a whole… It allows research laboratories and companies in the sector to meet, create synergies through partnerships, collaborations or quite simply the exchange of ideas and information..
In short, Bpifrance is the public catalyst for financing and supporting innovation and start-ups in France. Although it provides significant funding to French crypto startups, its financial support is relatively weaker for the crypto sector than most other sectors (especially deeptech and ecology). Who knows, maybe with its desire to invest in tokens, its impact will increase in 2023… Anyway, in reality, Bpifrance’s main contribution to the crypto industry is currently through its role of crypto evangelizer with traditional companies and unifier of companies in the crypto ecosystem. In addition, to stay on the topic of financing crypto startups, we have done an article on Crypto fundraisers of 2022: Top10, results, trends and lessons. As well as another on the pessimistic predictions for crypto fundraising in 2023.
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