A national catalyst for innovation

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McKinsey: Nicolas, you’ve been leading Bpifrance since its inception more than a decade ago. How did that come about?

Nicolas Dufourcq: Emmanuel Macron, who was then a senior member of President François Hollande’s government, called me in October 2012 to discuss the rejuvenation of entrepreneurship in France. When he offered me the opportunity to lead Bpifrance, which was created in December of that year, I felt I had to do it, since I already had an aspiration to create a private bank with a public mission.

McKinsey: What sets the Bpifrance model apart from similar institutions elsewhere?

Nicolas Dufourcq: We are the French national agency for innovation, and allocate €7 billion of innovation investment every year in the form of subsidies, reimbursable advances, and soft loans. We are also France’s export credit agency (ECA), and guarantee export credits totalling €20 billion per year. On top of that, we’re a major consulting boutique for small and medium-size enterprises (SMEs) as well, and conduct more than 5000 consulting assignments per year.

We accomplish all this with only 3,500 employees, so it’s a small, homogeneous organization, without any silos. We operate 55 branches throughout France, so whether you are an entrepreneur in Troyes, Champagne, La Roche-sur-Yon, Vendée, or Avignon, your local Bpifrance branch has it all: loans, equity, export credits, consulting, and innovation. We strive to create a dialogue with the entrepreneur that allows us to knit a tailor-made solution.

We are not here to push products. We are here to find solutions so entrepreneurs feel they’re dealing with someone with the utter desire to help them achieve their dreams with the whole toolbox. Of course, we sometimes have to say no. Our mantra is to always respect the dream of the entrepreneur, and try to achieve it as much as possible. But sometimes, it’s not possible. That said, we are also very profitable.

McKinsey: How did this model develop over time? I assume everything didn’t happen all at once from the start.

Nicolas Dufourcq: No, and when I started, I was surrounded by people who told me, “Of course, you’ve been asked to do this by the president of the French Republic, but you’re not going to be able to do it. We will make sure the people doing loans never talk to the people doing equity, and the people doing equity never talk to the people doing innovation. And by the way, all this will be separated into siloed subsidiaries with outside shareholders, which will really make it impossible to achieve Bpifrance’s dream.”

So my first fight was the major one, making it impossible for these people to make my life impossible, because I wanted to create something 100 percent homogeneous. For example, my executive committee is made up of the heads of loans, equity, innovation, ECA, and consulting, and they all work together, because we have only one customer. When you’re an SME, you can’t afford to have seven phone numbers for one bank. You want a single point of contact, and this is what we have achieved.

McKinsey: How did you turn Bpifrance into a catalyst for innovation in this country?

Nicolas Dufourcq: We decided to put massive amounts of money into French venture capital (VC) funds to groom an ecosystem of private funds with whom we could co-invest, and this effort was successful. Today, we finance some 200 VC funds in France, and are investing €700 million to €900 million in those private funds every year. They are the basic infrastructure for capital allocation to innovative French entrepreneurs.

McKinsey: We’ve discussed the lack of large European innovators and champions. Our own research shows that we produce a lot of primary research and invest a lot in R&D, but don’t have as many champions as North America or even China. How can we create a context where Europe can produce more economic champions and innovators?

Nicolas Dufourcq: It’s true. A lot of French, German, Dutch and other European research and science basically goes into American companies. If you look at medtech, biotech, medicine and digital health, there is massive consolidation into American powerhouses that we lack in Europe. Of course, we have world-class pharmas too, notably Swiss and some French and German, but it’s not enough.

But when these European companies buy start-ups, it’s always just a few in Europe, compared to significant investments in the United States or Israel. We need to create an environment that fosters the patient build-up of start-ups, so American competitors cannot completely absorb them when they are small. The European software landscape is mostly owned by funds, not by families, so we know where we need to act, and are aware of our weaknesses. But it will inevitably take time.

McKinsey: In your conversations with European industry leaders, what are your asks in terms of fostering this new breed of European champions?

Nicolas Dufourcq: Well, I ask them to buy start-ups. I ask them to be bold in open innovation strategies. I ask them to create corporate venture funds. I ask them to recruit researchers. I ask them to put in place entrepreneurship schemes. I ask them to talk to the new ecosystem of youngsters building European deep tech.

You know, Bpifrance generates 400 deep tech start-ups per year. We started at 50, and our objective is 500 every year. So cumulatively, we’re creating a significant population of people that need to be completely connected to big European corporations. And although it’s coming along, it could be faster.

McKinsey: We haven’t talked about talent, both managerial and scientific. How does Europe fare on that dimension? Do we have the talent pool necessary to create those champions?

Nicolas Dufourcq: I think we do. Of course, there is huge competition, but it is no longer possible for European entrepreneurs to say, “I have to leave for the United States because it’s impossible here.” Thankfully, that’s a thing of the past. If your idea is good, you will be supported in all verticals, be it deep tech, medtech, biotech, software as a service (SaaS), and so forth.

Now, the difficulty is always the entwining of scientific and managerial talents in a company, but it’s progressing. And what’s happening in France, Israel, and Germany—and already happened in the U.S. and the United Kingdom—is the rise of serial entrepreneurs. They create new companies, have a great deal of expertise, and attract a lot of equity because they’re already rich. They are also much more patient and take the time to build long-term companies instead of selling them when they are too small.

McKinsey: Let’s look forward. You’ve been at Bpifrance ten years. What are your aspirations for the next ten years? How do you see the future and what’s your ambition for Bpifrance?

Nicolas Dufourcq: We want to double the number of entrepreneurs in France. That means doubling all the verticals, not only the deep tech start-ups, but also the boutiques, everything. But doubling the proportion of entrepreneurs in the French population would only mean returning to the ratio that existed in the 1960s. Between then and roughly 2010, there was a constant increase of salaried people, people with a salary mindset. But then something clicked, and the proportion of independents and entrepreneurs has started to grow again.

But we’re still not where we were in 1968. So we want to push that, and we are putting a lot of energy and money into an all-out effort to encourage entrepreneurship. We think it’s part of modern life. You don’t need to be an entrepreneur all your life. But once you have been an entrepreneur for at least a little while, it completely changes your mindset.

We also want to partially reindustrialise France. Today, industry comprises 10 percent of GDP, but we want it to reach 12 percent, which will mean an average growth of 1.5 percent per year. That’s a lot, and we think it’s going to take ten years. To get there, we want to foster the construction of an average of 100 factories per year, which is 100 more than the natural trend.

For example, this morning I was in the north of France to inaugurate a battery gigafactory. We want to reindustrialize France though innovation, with natively green, decarbonized factories. That will be the basis of our reconquest of France’s traditional export position, because today, the situation is catastrophic. We have a humongous export deficit.

And if we want to solve that problem, there is no other solution than reindustrialising, which means encouraging engineers to join hardcore industrial projects and SMEs, which is a holistic challenge. So we work with schools and municipalities to find places suitable for factories, we work with researchers to encourage them to become industrial entrepreneurs, and finance all these efforts. That’s the second objective.

Our third objective is sovereignty. Because when you go into French pharmacies, there are some French-made medicines you cannot find anymore, because they have been offshored to generic providers. We suffered a severe shortage of paracetamol not long ago, so we have to relocate some critical elements of our sovereignty to France to avoid a repeat of such a situation. Not all, of course, but some of them, which we are financing with equity and loans.

My final objective is the democratization of private equity. Everybody in France must be able to invest in private equity, which is a great asset class. So that’s what we have done by allowing the French people to invest in the Bpifrance portfolio with minimum tickets of €1,000, and we will push that massively.

McKinsey: Well, that feels like a pretty busy agenda for the next few years.

Nicolas Dufourcq: Yes, and it’s a good one.

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