France’s Fund Aims To Rescue Tech Startups From Takeovers

Looking for a way to protect technology companies from becoming prey to foreign buyers, France has created a fund to bail out startups.

Bloomberg News reported that the French Ministry for the Economy and Finance allocated 150 million euro ($170 million) through its government-backed lender, Bpifrance Financement SA, to invest in French companies if they are targeted by an unsolicited foreign investor.

In a statement on Friday (June 5), the government said it may increase the fund to 500 million euros ($567 million) next year. Its mission will be to protect the country’s businesses by taking minority stakes in strategic companies, the news service reported.

The infusion of cash is part of the nation’s stimulus package for the technology industry as France tries to keep investors at bay.

In April, the French government passed a 300-euro ($339 billion) stimulus package that guarantees up to 90 percent of eligible loans to companies registered in France. The loans, a collaboration between the Finance Ministry, Bpifrance and the French Banking Federation, provide a 12-month payment deferral and an option for the borrower to repay the loan over five years, Proskauer reported.

In addition, France is adding a 100 million-euro ($113 million) program for companies that are still in the research phase, but don’t qualify for state-backed loans, the Ministry said on Friday.

U.S. lawmakers have taken a different approach to protecting small and medium-sized businesses.  In April, Sen. Elizabeth Warren (D-Mass.) and U.S. Rep. Alexandria Ocasio-Cortez (D-New York) called on the White House and the U.S. Treasury Department to place a moratorium on mergers and acquisitions (M&As) during the COVID-19 crisis.

PYMNTS reported that the Democrats introduced the Pandemic Anti-Monopoly Act, which would curb M&As during the coronavirus pandemic. No action has been taken on the bill. If approved, the measure would prohibit M&A transactions until the Federal Trade Commission (FTC) determines that small businesses, workers and consumers are no longer under severe financial distress. It would encompass all M&As that involve companies with more than $100 million in revenue or financial institutions (FIs) with more than $100 million in market capitalization.