Paris (AFP)

Emmanuel Macron's "start-up nation" is suffering from coronavirus: the government has announced an emergency aid plan for innovative companies, whose economic model is often fragile but which reside "at the heart of French competitiveness and sovereignty.

Their difficulties may seem less visible than those of restaurateurs or "non-essential" businesses, but start-ups are also suffering from the crisis caused by the Covid-19 pandemic.

"Many companies were counting on fundraising in the next twelve months, but the market will be very strongly disrupted over this period," said AFP François Véron, one of the directors of the Newfund investment fund. In addition, "they are SMEs like the others, which do not necessarily have very established banking relationships".

However, many start-ups do not currently have a profitable economic model, and risk running out of cash if they cannot borrow or raise funds. And even for those who already had a viable model, they can face a significant loss of turnover caused by the pandemic.

"We cannot afford to drop them in the current period," Secretary of State for Digital Cédric O said on Wednesday during a conference call with Bpifrance, the state’s armed wing to support innovative businesses. .

"A biotech can take 10 years of research to release its product, without achieving any turnover, and if we destroy this fabric at the heart of our strategy, competitiveness and French sovereignty, the risk is that we will put years to restore it, "he said.

- "National unity" -

The government has therefore announced an arsenal of measures, including the advance payment of a certain number of aid or tax credits, such as the research tax credit. This must represent a cash advance of at least 1.5 billion euros, according to Cédric O.

Also provided are state guaranteed cash loans based on annual payroll or turnover, announced by the Minister of Economy Bruno Le Maire, which may represent up to 2 billion euros for start-ups.

And for start-ups whose financial situation is most critical, a specific envelope of 80 million euros managed by Bpifrance to "finance bridges (bridging loan) between two fundraisers" is also released.

In addition, the State maintains, through Bpifrance, its support for innovative companies, as in previous years. They should thus receive "nearly 1.3 billion euros in innovation aid" in 2020 in the form of "grants, repayable advances, loans, etc.", according to a government statement.

In addition, "Bpifrance will continue its direct investments and in funds of funds, alongside private investors". In 2019, these capital investments had represented around 380 million euros, according to Bpifrance data.

This public windfall is crucial in a context of high economic uncertainty, which risks deterring investors. Cédric O acknowledged on Wednesday that "there could be a temptation on the part of the funds to keep the reserve and let the crisis pass".

He must meet Thursday with a number of private investors to ask them to "take responsibility" in this period of "national unity", and to continue to invest in start-ups, in particular via capital funds -risk in which they participate.

Nicolas Brien, the managing director of France Digitale - a federation of start-ups and venture capitalists - praised the government's "rapid" efforts, while wishing some additional adjustments.

"The government is reacting a lot as it did after the 2008 crisis, when there was a credit shock," he told AFP. But "there we are in a shock of demand", he continues, asking moreover "the extension of partial unemployment to self-employed workers", who will not all necessarily be covered by the self-employed assistance fund announced by the government.

François Véron for his part asked for as much clarity as possible about the aid measures. "The economic situation adds uncertainty to that which is health," he observes. "Let’s not add to this uncertainty announcements whose application methods are not entirely clear".

© 2020 AFP