French AI startups journey westward

What do Hugging Face, Mistral AI and Pathway have in common? These AI companies, founded by French entrepreneurs, have all established a strong presence in the US. Pathway moved its headquarters from Paris to Menlo Park at the end of last year, Hugging Face’s HQ is in New York, while Mistral opened an office in Palo Alto in 2024.

“Setting up shop in the US is an ambitious step,” says Mistral’s US General Manager and Head of Revenue, Marjorie Janiewicz, during an event organized by La French Tech, a French association designed to help entrepreneurs.

Founded in 2023 by three ex-engineers from DeepMind and Meta, Mistral creates open-source LLMs. The company is a partner to Microsoft and landed several US clients—including IBM—and was valued, a year after its creation, at USD 6.2 billion. Mistral has big ambitions, and it intends to pursue them independently: the company isn’t for sale, cofounder Arthur Mensch said at Davos, and it plans to IPO.

France exports a lot of brainpower, with French computer scientists making major contributions to AI. Prominent figures in AI include Meta’s Yann LeCun and computer scientist François Chollet, who, after 10 years at Google, created ARC-AGI, a benchmark that measures AGI advancement. Chollet recently announced the launch of a new venture called NDEA, with the co-founder of Zapier.

The French startup ecosystem has been buzzing with new startups and talent of late, prompting the Financial Times recently to ask: Can France become a global AI superpower? The opening of OpenAI’s Paris office this past November reinforced France’s leading position in Europe’s AI hub.

However, for many French entrepreneurs, the choice to leave France for the US is a no-brainer: 56% of the VC investments were made in the US in 2024, according to figures from Pitchbook.

“If you want to be a global leader, you need to go after the American market,” says Matthieu Soulé, Partner and Head of C.Lab at the venture capital firm Cathay Innovation in San Francisco. “More than half of the money raised is in the US, and it remains a key market in the Western world. If you want to be number one in Europe, you’ll have to fight against American companies. And if you want to be a global leader, you must quickly enter the US market. Mechanically, for France, the question of international expansion arises because the domestic market is limited.”

During the pandemic, many predicted the end of San Francisco’s reign as the tech industry hub, as high-profile executives and companies relocated to Texas and Florida. However, the AI race changed the dynamic—San Francisco is home to AI giants like OpenAI and Anthropic, and it’s here that Amazon just opened its AGI SF Lab.

Everyone agrees: now more than ever, it’s possible to start a venture anywhere. But even in the US, one market remains key: Silicon Valley. “There are plenty of very good engineers in France,” says Marie Frochen, Cofounder and Managing Director of Ramp-Up Lab in San Francisco. “But as soon as you want to move to Series A, it gets complicated. France has a lot of talent, but it’s not just about talent. The Bay Area offers access to capital, experienced mentors, serial entrepreneurs and a culture that encourages risk-taking and collaboration.”

According to equity management firm Carta, the Bay Area was home to 73.3% of all AI funding rounds in the US in 2024, with New York and Boston sharing the crumbs (less than 10% funding each). “The network density here is so dense,” says Peter Walker, Carta’s head of insights.  “Everywhere you look, there are founders working on interesting problems. And even if you don’t partner with those businesses, you can learn from those people in person here, in a way you just can’t if you’re in other places.”

Beyond the money, the concentration of talent in the Bay Area gives Silicon Valley a competitive advantage, says Elisa de Martel, CFO at Waymo. After 15 years in the Valley, first at Apple and then at Carbon, she believes the Bay has a special confluence of factors that is hard to replicate elsewhere.

“There’s an energy and unique combination of talent and capital here,” she observes.

For the entrepreneurs behind Pathway, a company started in Paris in 2020, moving to Menlo Park, home to Meta’s headquarters, brought some challenges—but mostly opportunities. The goal? “Being in the room where it happens,” explains Zuzanna Stamirowska, CEO of Pathway.

Pathway is a data company that builds “live AI,” providing an AI framework for developers to build projects that allow data to be integrated into systems that can update themselves. Its clients include NATO and Formula 1 racing teams. Most of Pathway’s users come from the US, Stamirowska says.

“Technological needs in the American market are more advanced,” she says. “This naturally generates demand and creates a better environment for developing a highly technical product like ours.” Pathway is backed by Lukasz Kaiser, co-inventor of “Transformers” and a lead Researcher at OpenAI.

While there have been many success stories, some French transplants in the Bay Area believe that EU regulations, such as the EU AI Act, could make it harder for French businesses to achieve international success and recognition.

“Regulations can create niche markets, which might not appeal to companies looking to become a global leader,” says Stamirowska. “However, there are more opportunities to find niches within certain regions, although some may be harder to penetrate than others. On the other hand, the impact of regulation on technical progress and R&D needs to be considered as local companies may find themselves playing catch-up as opposed to leading the innovation race. Ultimately, it depends on the company’s goals.”

Lago, a startup presenting itself as an open-source alternative to Stripe, was founded in Paris. However, Anh-Tho Chuong, its cofounder and CEO, moved the headquarters to San Francisco last year. It’s not her first time in the US—she has family roots here, and participated in the famous Y Combinator, a startup incubator with alumni that include the founders of Airbnb, Twitch, Coinbase and Stripe.

“If you want a successful software company, unfortunately, it doesn’t happen in France,” Chuong says. “We’re open source, and there are few success stories, few resources. It was a strategic choice for us to have our leads in the US.”

And, as many French people know, finding success in the US is sometimes the surest way to finding success elsewhere in the world, including back home in France. “We have US-based companies as clients, recognized both in the US and Europe, which radiates across both regions,” Chuong says. “Unfortunately, if we had had the equivalent in Europe, it wouldn’t have had the same impact.”

France’s AI startups have garnered a lot of attention since 2017, when a newly elected President Emmanuel Macron announced his ambition to turn his country into Europe’s “startup nation.” “A ‘startup nation’ is a nation where everyone can say to themselves that they will be able to create a startup,” he famously said. “I want France to be one.”

In the first months of his presidency, he inaugurated Station F, a Paris-based incubator that would become the leading organization of its kind in France. Since its launch, Station F has worked with more than 7,000 startups, has raised more than 1 billion euros, and has mentored companies that were acquired by giants like Samsung, Apple and SAP.

Eight years later, as the AI race heats up more than ever, it will remain to be seen if his ambitions turn into reality.