French VC Investment Hits Five-Year Low Amid Political Uncertainty

Paris, May 1, 2025 — Venture capital investment in France has plummeted to its lowest level in five years, as internal political instability casts a long shadow over the country’s entrepreneurial landscape and investor confidence.

According to PitchBook’s Q1 2025 France Market Snapshot, French startups raised just €1.4 billion in venture funding during the first three months of the year—a steep 36.4% decline compared to the same period in 2024.

This marks the worst quarter for VC investment in France since Q2 2020, when the COVID-19 pandemic first disrupted global markets.

Analysts attribute the downturn largely to ongoing political unrest in the country, stemming from contentious pension reforms, labor strikes, and growing public discontent with President Emmanuel Macron’s centrist government.

The uncertainty has spilled over into financial markets and business sentiment, discouraging both domestic and international investors from making significant bets on French tech and innovation.

“Investors are cautious in the face of macroeconomic headwinds and political turbulence,” said Marie Lavallée, a senior analyst at PitchBook. “Startups are finding it increasingly difficult to close funding rounds, particularly at later stages, as VCs reevaluate risk and shift their focus to more stable markets.”

The decline comes despite France’s previously ambitious plans to become a European startup powerhouse.

Over the past decade, the government has poured billions into initiatives aimed at boosting entrepreneurship, including the €5 billion French Tech initiative launched in 2019. Paris has also emerged as a leading European tech hub, rivalling Berlin and London in startup activity.

However, the momentum appears to be stalling. Seed and early-stage deals saw notable contractions in Q1 2025, while late-stage rounds all but dried up.

PitchBook’s data shows a drop in both the volume and size of deals across all sectors, with fintech, SaaS, and healthtech startups bearing the brunt of the slowdown.

“The environment is incredibly tough right now,” said Clara Dupont, CEO of a Paris-based digital health startup that recently postponed its Series B fundraising. “Investors are more risk-averse, and many are choosing to wait and see how the political situation unfolds before making any big commitments.”

The broader economic picture also presents challenges. France’s GDP growth slowed to 0.2% in Q1, and inflation remains stubbornly high, further dampening consumer demand and corporate spending.

As the eurozone continues to grapple with global economic pressures, France’s domestic woes only deepen the uncertainty for investors.

Despite the bleak figures, some experts remain cautiously optimistic. “This could be a temporary correction,” said Jean-Marc Pelissier, a venture partner at an international investment firm.

“France still has world-class talent, and once the political dust settles, we could see a rebound in capital inflows—especially with valuations becoming more attractive.”

For now, however, the mood remains subdued. With political protests still erupting across major cities and no clear end in sight, many founders and funders alike are bracing for a difficult year ahead.

This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members