Lyon, France Rolls out the Welcome Mat for Foreign Direct Investors

Note to entrepreneurs seeking funding for their start-ups: “No is simply “Yes” in disguise,” according to Jon Bonnano, chair of the Keiretsu Forum’s clean-tech investment committee. One might forgive entrepreneurs for dismissing such sentiments, especially in today’s climate when funding is thin and the world’s financial institutions have yet to loosen the credit strings. But if you’re a promising life science or clean-tech company scouting for a location to plant European roots, you’re likely to hear a lot more Oui than Non from officials at ADERLY, the economic development agency of Lyon, France.

ADERLY’s clean-tech investment manager, Frederic Miribel and Bonnano joined a panel in Sunnyvale hosted by the San Francisco Chapter of the French American Chamber of Commerce. Five executives spoke on “Funding Opportunities in Europe for Clean-tech Start-ups.” Along with Miribel and Bonanno, participants included: Louis Armstrong, VP at URS Corp., Francois Bergasse, CEO of Easenergy EDF Group and Kamel Ounadjela, president and CEO of Calisolar.

At ADERLY, they’re rolling out the welcome mat for foreign clean-tech and life science companies offering an array of incentives largely geared to support R&D operations. Tax credits are the cornerstone incentives and investors can expect a 50% deduction in year 1, 40% in year 2 and 30% in year 3, up to a maximum of 100M Euros. Once ramped up and into production, the incentives are not as generous. However, additional funding is available for employee training and facilities, and for a period of time, ADERLY will also fund new PhD hires from local universities.

Miribel is keen to correct perceptions of France as an impossibly expensive place to do business. He quoted a recent report that ranked France as least costly when compared to other EU countries, and just about 3.4% more expensive than the U.S. Not surprisingly, the U.S. is the top foreign direct investor in France.

France’s economic development efforts are structured around a “cluster” model. This means that certain industry segments are concentrated in one location, typically adjacent to centers of higher learning that focus on specific disciplines. Toulouse, for example, hosts France’s aerospace industry, while Grenoble is a center of excellence for semiconductor initiatives. Clean-tech and life sciences are Lyon’s focus.

But the country faces stiff competition from its EU counterparts. Germany has established itself as an irresistible location for solar companies seeking investment partners to shoulder some of the burden of expensive production fabs. Ireland continues a decades-long tradition of attracting premium foreign companies with its very attractive corporate tax rates, most recently drawing Google and Facebook. And, Eastern European countries like Estonia are also amping up efforts to attract foreign direct investment. All have top-class universities fueling a continuous pipeline of highly qualified talent.

For his part, Miribel hopes that ADERLY incentives will draw the initial investment. Once entrenched, he’s confident that the region’s wonderful food and world-class wine will compel foreign investors to stay!