Over the past couple years, Berlin and London have worked hard to become attractive TechHubs in Europe, and the Russian VC market has thrilled. So much the better to foster cross border investments.

Nonetheless and despite a less successful collect of VCTs in 2012, in terms of supply of Venture Capital for fast growing companies, France 
remains the densest area of VC investors in Europe due to:
  • The success of numerous VCTs ("FCPI" and "FIP"): there are every year several hundreds of m€ retail tax-incentive funds raised through banks and insurances networks. Those funds represent 5€ out of 10 invested in VC in France; Tax payers investing in French VCTs get an immediate tax reductions between 18 and 50% of the amount invested (capped). As the overall rate of taxes in France is one of the highest in OECD, those VCTs have naturally had a certain success while people try hard to escape high tax pressure;
  • Several FCPR raised in 2012-2013, new corporate funds, new public funds (BPI, FNE PME, FSI Regions etc.) and several active regional funds; 
Many of those funds are active across EU due to:
  • The search of the best performance possible in a top down best of breed approach,
  • The international background of their teams (now counting a lot of native German, Schwiss, Italian, American nationals...) enabling them to overcome barrier language, cultural differences and fears;
  • A relatively competitive national market, driving investors to get increasingly interested in under-covered European deals.
Another important factor in favor of Innovation made in France and an active VC market, is its 
unique tax heaven for Research and Development, see on this page of the French agency for foreign investments, describing Europe's most attractive research credit. As a matter of fact, Paris region is the first in Europe in R&D besides being Europe's wealthiest and largest regional economy (source wikipedia, NUTS-1 region).
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"France is the last VC market active in Europe!" - a London based fundraiser