French tech's Patagonia-wearing ex-ministers

Good morning there,

Being a politician can be a tough gig — you're under a tonne of scrutiny, the hours are long and the pay often pales in comparison to what some of the business leaders you might spend your days regulating make. It's no surprise then that some public servants swap ministerial life for the private sector — and, in particular, tech startups.

It's a trend gathering pace in France, which has seen numerous ministers join the ranks of the Patagonia-wearing tech bros in recent years. But the tricky nature of the transition raises the question: Can tech and policy mix? My colleagues Daphné Leprince-Ringuet and Chris O'Brien dig into that today.

Elsewhere, we look at why founders are turning to marriage counselling for the sake of their startups and ask why there aren't more homegrown AI giants in central and eastern Europe.

— Anne Sraders, senior reporter

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From politics to pitch decks — what could go wrong?

Since time immemorial, ministers have been tempted to take jobs in the private sector once they’re worn out from the long hours, lower pay and public scrutiny that come with government life. 

That flywheel is gathering momentum in France, as president Emmanuel Macron’s promised “startup” nation comes of age. In the past few years, a growing number of French politicians have swapped their ministerial suits for white trainers and Patagonia fleeces as they join the ranks of early-stage companies and VC firms.

That’s not to say the move is easy. In some cases, it’s caused plenty of controversy — the most high-profile example of that being Cédric O, France’s former digital minister-turned-cofounder of red-hot GenAI startup Mistral, who has since been accused of U-turning on the pro-regulation stance he held when he was in office.

France also has a set of strict laws that regulate what politicians can and cannot do when entering the private sector — namely, they aren't allowed to work, advise or invest in any company that they have signed contracts with or that has been directly affected by a decision they made while in government. 

It’s made post-ministerial life harder for some. Ex-minister Fleur Pellerin, for example, found herself struggling to raise funds for her newly founded VC firm Korelya Capital when an investigation was opened to look into a potential conflict of interest with one of her LPs. The investigation was inconclusive — but it lasted three years and seriously hampered her fundraising efforts.

The all-encompassing nature of the law and the burden it places on officials mean that the public and the private sector can’t mix, according to Pellerin and others. In other words, tech and government will never be on the same page.

“The way the law is interpreted now means that you could have shaken someone’s hand at a social event and you can’t work with them later,” says Pellerin.

It seems a small price to pay to ensure that ministers take decisions for the public good — not to score a cushy job a few years down the line. So, should laws intended to prevent corruption be changed to enable more flexibility? And to what extent do the rules in place actually stop startups from benefitting from ex-ministers’ expertise? Chris O’Brien and I dig deeper into the thorny topic here. 

— Daphné Leprince-Ringuet, French tech reporter

🏦 Yesterday, the European Central Bank again decided to keep interest rates steady — at record highs — for “a sufficiently long duration” to reach its 2% inflation target. Still, the ECB has previously hinted that rate cuts might begin in the summer — which would be music to the ears of some VCs, as the rapid hikes in recent years have put a squeeze on capital markets.

📦 The valuation of Swedish last-mile delivery startup Instabee has been written down by 10% to SEK 5.8bn (€510m) by its publicly listed shareholder Creades, which owns 6% of the startup.

• The value reduction reflects, among other things, a cooling market and lowering valuations for e-commerce companies during last year, according to Creades's report.
• Instabee was the result of a merger between Instabox and Budbee in September 2022, which at the time, valued the entity at €1.8bn.

💍 Marriage counselling sessions with a business partner you’re not in a romantic relationship with may sound unorthodox — but that’s exactly what some founders have turned to for the sake of their startups.

• “We're being bold all the time, especially as founders, and there's not a lot of room for being vulnerable,” says cofounder Emilia Theye, who made coaching with her cofounder a priority from the beginning of their relationship. “You have to become aware of your own vulnerability by understanding each other and seeing that we're all on a learning path — I think then you can become the kind of company that you want to lead.” 
• For founders who worry that couples therapy signals trouble to investors, VCs are also on board. “Getting a handle on things like this before complicated things happen in the company can help you better understand each other, and you can even go so far as to create structures, processes and a vocabulary to deal with things as they arise,” says Suranga Chandratillake, partner at Balderton — which launched its own founder wellbeing programme for portfolio companies last year.  

🤖 If there’s one thing that central eastern Europe (CEE) is known for in the startup world (apart from UiPath), it’s IT talent. The engineers from the region are known for being highly qualified and relatively cheap — and they’re historically good at building AI and machine learning solutions. They’re often the founding members of technical teams at some of the world’s biggest tech companies and some of the best-known AI startups — there’s just one problem: they very rarely set up their own AI ventures at home. 

• One reason for this is the many systemic challenges that stop the region’s startups from riding the AI wave: investors and founders say that the VC funds in the region are usually too small and too risk-averse to back complicated AI ventures. Moreover, the CEE countries rarely have well-defined political strategies in the field of AI.
• There’s also the question of mindset — even the best engineers might not be the best startup founders. There also aren't too many stories of really successful AI startups from the region, which could serve as an example for early-stage founders — even though the recently acquired unicorn status of voice AI startup ElevenLabs could change that.   

🕵️ Tech recruiters, it's time to check your hiring bias.

📊 What European executives really think about GenAI (sponsored by BCG X).

Berlin-based Ceezer, which helps companies manage their carbon credit portfolios, raised €10.3m in Series A funding. HV Capital led the round and was joined by investors including Norrsken VC, Picus Capital and Carbon Removal Partners.

Amsterdam-based Send AI, which enables companies to automatically process and classify documents and emails, raised €2.2m in pre-seed funding. Gradient Ventures and Keen Venture Partners led the round. 

Prague-based Hedepy, an online therapy platform, raised €1.8m in funding from the Hungarian Impact Ventures fund.

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