France to Boost Tech Bailout Package as Investors Pull Out

(Bloomberg) --

France is preparing to increase its 4 billion-euro ($4.3 billion) bailout package for tech startups by more than 50% to compensate for an investor retreat, people familiar with the matter said.

The government plans to enlarge a series of financial measures set up in late March, to keep innovative companies afloat, by the end of the month, according to two French officials with knowledge of the plans who asked not to be identified because the deliberations are private. The increase is still under discussion and the plans may still change, they said.

Many venture capital firms are holding off on new investments in the country, focusing on their existing portfolio, the people said. The government expects U.S. investors to delay or cancel funding plans in France’s tech scene, the people said. The U.S. and Canada accounted for about 15% of French startup funding last year, according to a report from startup analytics firm Dealroom.

The state is anticipating demand for loans backed by the state to double from original estimates to 4 billion euros by year end, the people said. Tax breaks outlined in the initial package may also increase, they said.

A loan program for startups whose fundraising plans were put on hold by the pandemic lockdowns could be approximately doubled, the people said. The French Finance Ministry and state-backed lender Bpifrance Financement SA, are looking to increase the bridge funding measure to between 250 million euros and 300 million euros or more, from 160 million euros initially.

A spokesman for the Finance Ministry said they’re studying the next phase of the program and declined to comment further.

While France started easing lockdown measures on Monday, the outlook for business activity is still rocky. The economy is running 33% below normal levels, only a slight improvement from the 36% reported at the start of the lockdown, according to statistics agency Insee. The package for tech startups is part of a bigger 300 billion-euro package of state-guaranteed loans from the Finance Ministry, Bpifrance and the French Banking Federation.

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