In the 13th arrondissement of the French capital Paris is an old rail freight station that has been converted into the world’s biggest startup campus.

Known as Station F, the massive complex, which can house 1,000 startups and has corporate partners including U.S. tech giants like Meta and Google, underscores France’s push over the last few years to reinvent itself as one of the world’s leading tech hubs.

In the second episode of our European tech hubs mini-series for CNBC Tech’s “Beyond the Valley” — which you can listen to above — Tom Chitty and I travelled to Station F to talk to its director Roxanne Varza about the growth of the French tech scene over the last few years.

In 2015, taxi drivers in France protested the rise of Uber and startup founders complained about the country’s burdensome labor laws that made it difficult for young tech firms to be nimble. From the outside, France had a reputation of being anti-tech and innovation.

But various governments over the years have championed the country’s technology ecosystem to push programs like Station F and reforms to laws to help out startups. And with the tech world currently undergoing a boom in artificial intelligence, France is looking to position itself as a leading hub.

French generative AI companies have raised $2.29 billion to date, according to data from Accel and Dealroom, the most of any European country. This has been driven by huge investments in buzzy French AI startups such as Mistral AI and H.

“France is the leader on artificial intelligence in Europe,” Bruno Le Maire, France’s finance minister, told me at the country’s high profile event Viva Tech last month.

If you have any thoughts on this or previous episodes, please email us at beyondthevalley@cnbc.com.

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Here is a transcript of the “Beyond the Valley” episode released on June 20, 2024. It has been edited for clarity and brevity.

Tom Chitty 

The 13th Arrondissement in Paris is home to a thriving nightlife scene and the city’s principal Asian community. If you like Chinese or Vietnamese food, then you’ll be happy here. It also happens to be home to Station F, the world’s largest startup campus. Brimming with entrepreneurs and around 1,000 startup companies, it embodies France’s exciting tech industry. In the second installment of our look at Europe’s leading tech hubs, we’re in Paris to speak to the head of Station F about how the country brushed off its reputation as being anti-tech, the success of its AI companies, and the political and regulatory challenges it may face. Arjun, have you been to Station F before?

Arjun Kharpal

This is my first time. I’ve been wanting to visit for so many years. So quite excited to be here. It’s amazing. 

Tom Chitty 

To describe to our listeners quickly what it’s like. It is a bit of an oasis. It looks like a huge aircraft hangar. And there’s all these sort of shipping containers which serve as sort of meeting rooms [which are] glass fronted so you can kind of see in them. Anyway, that’s what it looks like visually, but to understand what actually goes on here, with the work that happens and the companies that are located here, we need to speak to the Director of Station F, Roxanne Varza. Thank you for joining us on Beyond the Valley, Roxanne.

Roxanne Varza

Thanks so much for having me.

Tom Chitty

First off, give us a bit of a backstory of this place. What’s the purpose of it? And how did it start?

Roxanne Varza

So we opened in 2017 and it was right after President Macron had been elected for his first presidency. And essentially, the idea had kind of come about a few years before. Obviously, we’d been noticing that, especially from abroad, when people would look at the European ecosystem, they would know London and London has all these companies that everyone knows, and all the funds are based there. People actually knew a lot about Berlin. I think a couple of companies quite well-known had been based there as well. And France was just kind of not on anyone’s radar, even though there was actually a lot going on. So the idea behind Station F was let’s make this kind of big emblematic space, bring everyone to the ecosystem together, really facilitate launching a business because that really kind of felt like the hurdle was getting people up and running. And so that’s essentially what we’ve been doing.

Tom Chitty

Let’s find out a little bit about yourself, because I know that in some French media, you have been called the queen of tech amongst other titles, all very positive. Well, I’ll let you decide that. But you’re also scout investor for Sequoia Capital, which we’d like to talk a little bit about. But what makes you the right person to be director here? How did you get selected for that role?

Roxanne Varza

So many people ask me this, and I wish I knew what was going on in our founder’s head when he picked me. I grew up in the U.S. in Silicon Valley. I was born and raised in Palo Alto. I moved out to Europe about 15 years ago, at the time, it was to do a master’s degree and I just fell in love with this ecosystem. Having come from the Bay Area, it felt like so many things existed over there. And here, there was so much opportunity to build and to have an impact. So what makes me the right person for this role? Probably, I would say maybe just my connection to the startup ecosystem, the international startup ecosystem. I think, also, if you look at maybe people who don’t know, our founder, his name is Xavier Niel, and he’s got a big telecoms company in France and he’s launched so many projects that have just powered this ecosystem. But if you look at the other projects that he’s done, he tends to gravitate towards people that would be what he calls less formatted, young and maybe not too influenced by a large corporate career. And that was very much my case when I came into this role. And maybe also the fact that [to] have a bit of an international female profile is a bit appealing for today’s ecosystem that needs to kind of consider diversity.

Tom Chitty

Now, before we get back to it, we have, of course got to do stat of the week. Have you heard about stat of the week?

Roxanne Varza

I have not. Should I be nervous?

Tom Chitty

Very much, I get nervous every week to play it. It’s a game we play, where Arjun has a stat, which he’s thought about extensively in the lead up to this episode, and it refers to what we’re going to be talking about. But he will just give us a stat and you and I are going to go head-to-head. And whoever gets it right or closest to what it refers to, then we win. But I do have a quick question, which I’ve asked all of our guests on this mini series that we’ve done. So if you could rank Europe’s tech hubs, what would be your top three?

 Roxanne Varza

That’s almost mean. I mean, I lived in both Paris and London and I feel like those are no brainers. So can I start with those two? The third one, I think is actually really hard. So every year in the summer, I take my entire team to a new ecosystem. We’ve been to Amsterdam, we went to Berlin. This year, we’re going to Lisbon. And I feel like I don’t know enough hubs to really have a fair point of view. But I’m really excited about Lisbon actually, I know the Mayor of Lisbon pretty well, have been hearing really positive things. And I feel like we’ve also got a very interesting French entrepreneur expat community that’s growing there. So that’s an ecosystem. I’m pretty excited about. 

Tom Chitty

Okay, but just to push you, which would be number one?

Roxanne Varza

Paris, what do you mean, you’re pushing me?

Tom Chitty

Arjun, I’ll let you take it away.

Arjun Kharpal

Stat of the week. $2.29 billion dollars.

Tom Chitty

Arjun, you had a question.

Arjun Kharpal

I wanted to start with the sort of concept of Station F because we always talk about these ecosystems around Europe. And, you know, if you go to London, traditionally, it was sort of the East End of London around Old Street roundabout that had these hubs, Shoreditch and sort of expanded. But there were these sort of pockets in many cities, where these startups, investors perhaps gathered. Is the idea almost to just create this single giant hub where you don’t need to have these kind of disparate parts of cities. I know, they’re single cities, but some of them are still big one end to the other, can take a bit of time. So is that really the idea behind Station F?

Roxanne Varza

You know, I think at the time, that was the idea, because we thought this is so big, 1,000 companies, that’s going to be the whole ecosystem. But actually, what we’ve seen is that even today, Station F is really not even that big anymore, given how big the whole ecosystem is. So we’re really I think, in terms of early stage and getting started, this is where you come. And then there’s different pockets, as you said, for kind of later stage and growth stage companies within Paris.

Arjun Kharpal

And Roxanne, what year did you take? 2017?

Roxanne Varza

Was the launch in the summer.

Arjun Kharpal

And is that when you took over the role here?

Roxanne Varza

I started two years before.

Arjun Kharpal

I think we’re on so many years now, I think so many things have changed. I remember sort of visiting Paris at the time, and there were protests from the taxi drivers around Uber. And, you know, many had from the outside looked at that and said, well, this is just underscores at this point France’s broader sort of antithesis to technology and change and innovation. What’s changed since then, in France and Paris in particular, around technology?

Roxanne Varza

I mean, so much has changed. It feels literally like 180 degree flip. When we started Station F, it was more like almost a running joke. Are there really 1,000 companies in France to fill this space? Like are you guys even sure about what you’re doing? Whereas today, people are looking at this ecosystem and going is that the leading ecosystem in Europe? Is everybody building an AI company in Paris? Which I just think is just not something that we would have imagined so long ago. So a lot of things have changed. I have to say the government has definitely played a very active role. And they have known which steps to take and taking the right ones, because government can also sometimes overstep and try to do things that doesn’t necessarily make sense for the government to do. And then I also just think culturally, we’ve really been through a huge transformation, I think, maybe in part powered by Station F. But we’re not the only players in that space. And it kind of made entrepreneurship cool. It made it possible for a lot of people that just were almost ashamed to tell their families, I did this degree, and now I’m going to start a business.

Arjun Kharpal

And so what would you say are some of the core strengths at the moment of the of the French technology scene? I know, the university kind of path has been quite strong with some of those technical universities. There’s also I guess, people having been experienced in some of the big U.S. tech giants as well. Where are the core strengths? 

Roxanne Varza

I would say like in terms of infrastructure, we’re up there with any leading tech ecosystem, I mean, places like Station F, we have all the university programs you would possibly need, all the resources that you know, tangible resources to build a company. I think the talent is the piece that we’ve kind of cracked a little bit over these last few years with international talent now coming here. The French government made the visas a lot easier to get a hold of. And we’re also just seeing, I think, with the global maybe geopolitical shift, people are looking less towards the U.S. maybe less towards traditional ecosystems, and now coming here. So I think that has played definitely a huge role. And then in terms of funding, it used to be impossible to get the tier one funds on your cap table being based in Paris. Now they’re here every week. 

Tom Chitty

And by the same token, the challenge is that France, Paris, Station F has, are they the same as any European tech hub? Or are there any particular ones that you’ve found here?

Roxanne Varza

Well, I do think I mean, it’s not an English speaking market. So I think if you compare working in Paris to working with London, I think, people who are looking, for example, for bilingual schools, or for doctors, that would be very comfortable in English, like, there’s just little things like that, that I still think are maybe still not where they could be. But otherwise, if we look at just the ecosystem, and from a business perspective, I think working here is as good as any other ecosystem if not better.

Arjun Kharpal

I remember one of the complaints a few years ago, were things like labor laws, the startup founders were really kind of not happy, they were too rigid, too strict. Have some of those sort of teething issues in the early stages of founding startups in France changed at all?

Roxanne Varza

100%. I’d say the labor law, when people bring that up now, I almost feel like, okay, you haven’t caught up to speed with where we are today. There’s definitely a lot of ways to get around the hurdles. I mean, you can’t compare, obviously, what we have in France with what happens, for example, in the U.S. with how easy it is to hire and fire. They’re just different markets. But it’s no longer creating the headlines that we were seeing 10 years ago of, you know, impossible to fire the teams and things like that.

Tom Chitty

When we talk about the U.S, obviously, a lot of the European markets are always facing the challenge of U.S. big tech, you know, wanting to get into these markets and, you know, flex their muscles, if you will. How much do you worry about that? Is that something that keeps you up at night?

Roxanne Varza

Big tech coming here?

Tom Chitty

U.S. Big Tech.

Roxanne Varza

Not at all, because they’re all Station F partners. You can see their logos behind me. I think this is an ecosystem that wants to work with international leaders. If they be French, if they be Chinese, if they be from the U.S., you know, whoever they are, I think the entrepreneurs here want to work with those companies. And all of the U.S. leaders are present and have been present for a long time.

Arjun Kharpal

It’s a good chance, I think, then to talk about artificial intelligence, very difficult to have a conversation these days in tech without talking about that buzzword. But you know, France, for sure has been in the headlines with companies like Mistral and H and all of these different companies as well raising very large sums of money, as well. Look, Europe just more broadly, lost out, let’s say in the internet age to the big U.S. tech giants when it came to social media, search, all of those kinds of things. What kind of opportunities does the boom in AI we’re seeing present for French companies and for European companies more broadly, to compete on the global stage?

Roxanne Varza

I think you’re absolutely right. I mean, you just put your finger on it. So I think there was this feeling of we missed out from kind of that first generation of the internet essentially. Even though there were many excellent companies that were built here, they just didn’t compete on the same level. And I think today there is a bit of this race to be competitive on that level. And when we had Mistral’s mega first round, everyone thought OK, that’s wonderful, but it’s one round, it’s one company. And today we’ve had Poolside who’s also, you know, come over from the U.S. We just H. And now people are starting to wonder, is this a trend? Is this something we can actually really build into our ecosystem long term? And I think the answer is potentially, yes.

Arjun Kharpal

I think to Tom’s point, though, as well, about the sort of influence of the U.S. tech giants. One of the interesting things has been how involved they’ve been very early on in these companies, the likes of Mistral getting backing from Microsoft and some of the other large tech giants. I remember I was at Viva Tech just a few weeks ago, French Finance Minister Bruno Le Maire was there and I asked him, are you concerned even still about the influence potentially, as Europe tries to really grow its homegrown technology companies in the in the world of AI about the role of the U.S. tech giants. And I think his was one of there needs to be a balanced, we’re happy to sort of have them here. But we also need to champion our own homegrown. Again, we’re still very early stage, but as you see this developing, how is that balance needed to be struck?

Roxanne Varza

It’s interesting because here we’re talking about countries and almost there’s a level of sovereignty that’s probably involved in that discussion. But I also think just from, let’s imagine that everybody wants to team up with some of these big players, we also want to avoid having them have so much power that they can dictate tomorrow’s innovations. And so I think these are probably topics, I mean, France will be the next country that will host the next AI summit in February of 2025, and I think these are going to be very, very key topics. But I do think there’s a very clear sovereignty angle that should be a concern for many governments.

Tom Chitty

When we talk about governments and countries, France is facing an upcoming election. Are you concerned about where you might be in six months time,

Roxanne Varza

I mean, very, very clearly, a lot could change. I think more will change when we have the next presidential election. So clearly, my mind was there. But we could see things change ahead of time. I don’t think they’ll be as dramatic, hopefully, I mean, it could go down to not having a minister for digital. I mean things like that could just be completely deprioritized, which is essentially what has been helping us move things forward in France. So things could change very dramatically. But a lot of people are quite confident that that will not change, it will maybe be more on a policy level. And it may take more months and weeks to see the action. So I mean, I have to say we’re trying to be as positive as we can. 

Arjun Kharpal

One of the concerns I read was that if there is, you know, this sort of resurgence of the far right, and there’s a negative impact on things like immigration policy, that could affect access to talent from abroad, right?

Roxanne Varza

100%. I mean the real issue is if you look on both extreme sides of the spectrum, they send not great messages to foreign talent, to foreign investors. So I think those are the risks. But there’s also people who feel that maybe it will go so poorly that in the next upcoming election, things will go back to where they should be. So there may be a silver lining in both cases. But yes, I do think in the case that we have both extreme sides, one or the other win, it will not be as good as we are today. It’s very clear.

Arjun Kharpal

You mentioned the push from the French government, particularly under Macron, and his government to boost the French tech scene as well. Again, another sort of reputation Europe more broadly has had is one of regulation over innovation. And to some extent, that still reigns. We saw the big EU AI Act pass as well. But it feels like President Macron in particular has tried to bring the narrative back to, no, we can innovate, but we also do need to regulate as well. Under Macron what have been for you the big positives that have come out of his presidency and tech push more broadly.

Roxanne Varza

Oh, wow, there’s been so many. I will say that I think he’s done a lot for international visas. The visa scheme was overhauled, I think it was the same year that we launched Station F and we saw the impact immediately. Late stage funding, I mean, the funding landscape has just transformed. Before we used to feel like there’s no early stage funding, and there’s no late stage funding. And today, I just feel like it’s all the gaps have been filled.

Arjun Kharpal

And why is that though?

Roxanne Varza

The government, I think, they’ve really gone out and tried to work on either implementing policies that would encourage people to invest in early stage, whether it be through tax breaks, and other things like that. Those are more recent. But he’s actually gone out and essentially gathered up the capital needed for some of those late stage funding initiatives. So I would say those are probably the two biggest ones. But then there have also been little adjustments to kind of labor law and things like that, that we mentioned earlier, that have just kind of cleaned things up quite a bit. So I would say just across the board, we’ve just felt things always going forward, never going backwards, which had definitely been the case previously.

Arjun Kharpal

That funding gap with the U.S. does still remain not just here in France, this is a broader European issue as well. Where do you see this sort of next steps required to close that gap further?

Roxanne Varza

Oh, wow, that’s a really good question. So I do think we still have late stage funding issues. I mean, when we’re not at the amounts, or even the number of rounds that we should be maybe even with regards to building those companies. So I would say late stage is still a big thing. But I think the real piece that we have to crack in Europe, across the board is exits. And I’m sure you’ve heard this many times before. But I think we can definitely do a lot to encourage more of an acquisition culture in Europe with our European corporates, which seem quite absent, if you compare with all the Americans that come over and want to acquire companies. The IPO market is really where I don’t know how you fix

Arjun Kharpal

I was on the roof of the London Stock Exchange. When was this? Last week? … But it was the IPO of a company called Raspberry Pi, the computing startup that’s been around for you know, I think, more than a decade now. And there was big fanfare, confetti cannons and lots of noise for an IPO I think that valued the company, just over about $500 million. And I think that really underscores the issues with the market at the moment or the concerns about the market that even for such a small, or relatively small IPO in the tech world, there was a lot of excitement, because it just hasn’t been those exits on the IPO front. And there’s, I think in London in particular, there’s lots of issues around things like founder shares, and dual class share structures, and all of these various things which need to be reformed and access to some of these startups in the earliest stages from pension funds and other areas. Are those similar issues prevalent here in France?

Roxanne Varza

100%. And I would say probably we also have just, how can I say this? The market just doesn’t exist. So I think when it comes to listing a technology company, people just automatically assume I mean, we have had some here, I shouldn’t say we haven’t because a few years ago, we had quite a few, two or three. But I think today just anybody who wants to go public just will not look at this market, given what the track record that we’ve had.

Arjun Kharpal

And it feels like a pivotal time because if you’ve got companies like Mistral raising these sums at astronomical valuations, thinking, even 2, 3, 4 years’ time, what they’re going to be valued at, the market doesn’t exist for them to go on an IPO of maybe $100 billion valuation, potentially in a few years … The other point you brought up was the M&A side of things. So European corporates not as active in terms of buying or acquiring technology companies?

Roxanne Varza

Yes. And I think I mean, I can really speak to the French market when I say that, I don’t know if it’s the case across Europe, but it is a feeling that I have. I mean, at Station F we have a ton of early stage companies. And we’ve got all the American corp dev teams that come show up here. And we’ve had very few of their French counterparts. And I think it just points to the fact that culturally, they’re probably less aggressive in that space. In some cases, they don’t even have corp dev teams. So I think that’s definitely something that we can work on building.

Tom Chitty

Just to bring it back to the sort of what we talked about right at the top with where Paris and France is as a tech hub. What do you see is the future for Station F and are you focused on kind of what’s happening elsewhere and making sure you’re still leading in those areas? Or do you very much look at yourself and just worry about you? How do you see the next sort of couple of years panning out?

Roxanne Varza

Well, as I mentioned, we have this looming election, so ask me again in a few weeks. I think it’s a balance, because we definitely look abroad and we get inspired by a lot of what’s happening elsewhere. And we try to sometimes look at those ideas and do they work locally. But Station F was actually really built for local demand, local needs. So a lot of people have asked us, you know, did you essentially cut and paste something that exists elsewhere? Absolutely not. We asked all the entrepreneurs around us essentially, not just entrepreneurs, but everyone in our ecosystem, what works well? What’s needed? Where do you have difficulties? And some of the stuff we’ve built you would never see it outside of France.

Arjun Kharpal

Has the profile of startups in here changed as tech trends have changed, whether it’s the crypto boom into the AI boom?

Roxanne Varza

Very good question. Yeah, we actually refresh everything on a yearly basis. So two years ago, crypto, we launched our crypto Web3, program. Last year, we did quantum computing, two AI programs, I think this year, we’ll continue to see AI. I’m hoping we can boost climate tech a bit more. I think that’s another place where Europe really has a possibility to shine. But what have I seen in terms of kind of evolution of entrepreneurs? It used to be a lot of first time entrepreneurs, very young, fresh out of school. Today, we’re seeing more and more repeat entrepreneurs. I think over 50% of the entrepreneurs we have on campus have already created a business and I think it points to the mature maturity of our ecosystem,

Arjun Kharpal

And you’re building a hotel.

Roxanne Varza

We launched housing in 2019. So we have 600 people that live in our housing component. And we’re kind of finishing that we have a restaurant there, we’re going to have a sports facility. So there’s some other things that we have on site, it’s about 15 minutes away. Later this year, we’re launching, it’s right outside the building but it’s essentially 12 spaces that will complete the offers that we have for entrepreneurs so they wanted more healthier food options, bike repair, smartphone repair, podcast studio. So those kinds of services will be available next to us and the hotel of course in two-to-four years.

Tom Chitty

Fantastic. Well that is all we have time for but we have of course got to do stat of the week. Have you been thinking about it?

Arjun Kharpal

So that is the stat of the week. $2.29 billion. Any guesses?

Tom Chitty

The value of France’s AI market in 2025 projected.

Arjun Kharpal

On the right-ish tracks but no cigar.

Roxanne Varza

Amount invested in AI since the beginning of the year?

Arjun Kharpal

Close. I’ll do one more round of guesses.

Roxanne Varza

It can’t be how much we raised as a global volume for the first half of the year?

Arjun Kharpal

You’re knocking at the door. I’ll give this one to Roxanne, because she was super close. So it was the amount French generative AI startups have raised to-date …So that’s quite astronomical. A few other fun stats. So the top five cities for generative AI startup creation across the region, London number one, 27% of GenAI startups from London. Tel Aviv 13%, Berlin 12%, Paris 10% and Amsterdam 5%. Even though Paris is fourth in terms of GenAI startup creation, it has the highest levels of funding thanks to some of those aforementioned companies there.

Tom Chitty

Okay. That is all we have time for. If you would like to follow and subscribe to the show, you can. And you can also rate the podcast which would be great, five stars if you want. Thank you, Arjun.

Arjun Kharpal

Thank you, Tom.

Tom Chitty,

Thank you, Roxanne.

Roxanne Varza

Thank you.

Tom Chitty

We’ll be back next week for another episode of Beyond the Valley. Goodbye.