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In France, entrepreneurs battle culture of ‘no’

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TOULOUSE, France — The idea for a renewable-energy start-up germinated three years ago when Alexandre Marciel saw an intriguing magazine article about gyrating dancers and blinking lights at a disco.

Instead of leading to a new business for Toulouse, however, the idea demonstrated how hard it is to innovate in this risk-averse country. Impossible to realize here, it suggested why breaking out of the mold — and climbing out of Europe’s economic crisis — is so difficult for France’s would-be entrepreneurs.

A Dutch firm, the article said, had installed floor panels that, when tread on, powered rhythmic lights in the ceiling. Marciel, a hard-charging 39-year-old Toulouse city councilman, wondered whether the concept could be extended to sidewalks and street lamps for this graceful city of 500,000 in southwestern France, saving taxpayers up to $7.2 million a year in lighting costs.

His friend Laurent Villerouge, an aspiring Toulouse start-up mogul, answered yes.

Working with the scientists who abound in a region where Airbus makes planes, French companies make satellites and downstream high-tech workers buzz with dreams, Villerouge came up with a panel that, when pedestrians walked on it, generated enough electricity to power the street lamps above. Excited by the prospect of getting rich by conserving energy, Villerouge founded Viha Concept last year and set out to produce the device for sale to cities around the world.

That’s when the excitement sank.

Bank after bank, ministry after ministry, investor after investor, France was unwilling to take a chance on Villerouge’s venture. For nearly two years he tried to find financing. Finally, frustrated and feeling betrayed by his homeland, he asked for help from an acquaintance in the United States. The response was swift: Later this month, Villerouge, 44, plans to sign a contract and move to New York to set up production with a partner on Long Island.

“The French bankers all said nyet,” Villerouge recalled. “They said great, it’s a brilliant idea, but we don’t do that. Come back and see me when you have your company up and running. In America, it’s yes or no. In France, it’s well . . . I don’t know. . . . It can’t be done. France is just too complicated. People do everything to be secure.”

The Villerouge experience is not unique. Jean-Louis Lopez, for instance, has been trying for months to get financing to produce devices that signal to drivers where they can find open parking spaces in crowded city streets. Lopez said he has bites from Tel Aviv, Rio de Janeiro and Washington but cannot find a banker willing to take a risk.

“In France, people start off by saying it’s not possible. If there is a notion of Old Europe, this is where you see it,” said Lopez, a 55-year-old graduate of the prestigious Polytechnique school in Paris. “France does not produce Bill Gates.”

Meanwhile, he has sold local McDonald’s franchises a version of his device that allows managers to track vehicles at drive-through windows, showing where responsibility lies if it takes too long for customers to place their orders, pay their bills or pick up their burgers. Lopez said he would like to make a pitch to McDonald’s U.S. headquarters to sell his system worldwide but cannot find an investor to underwrite a production offer.

More audacity

The need for more audacity is well known and much discussed in France. Political leaders, left and right, have made the need to foster start-up businesses a staple of their speeches. During his presidential campaign last spring, Francois Hollande promised to set up a government bank to make such investments easier in these times of tight credit. Reminded that the government already has a facility, he promised instead to make it work better.

The reason is easy to understand. Small and medium-size businesses, defined here as those with just a few or up to 500 employees, account for half the jobs in France and an overwhelming majority of economic activity. Economists explain regularly that if France is to pull out of the crisis, small, nimble businesses ready to move in response to new markets are the answer.

The large number of German small and medium-size businesses that have spotted niche markets abroad for high-quality and innovative products, they say, helps explain why Germany’s exports are booming and the country’s national accounts are healthy. More than 1,000 Internet start-ups have registered in Germany during the past two years, drawing investors from the United States and Europe, according to Eric Archambeau, an associate at the Wellington Partners investment fund, writing in Le Figaro newspaper.

But for Villerouge, the politicians’ talk led nowhere. Bank loan officers responded to his appeals for financing by saying they could not take a chance on something unknown. They had heard of windmills or solar panels, but sidewalk tiles were not in their university courses.

Government at all levels — regional and national — responded in the same way, he said. Hopes rose when the office of Natalie Kosciusko-Morizet, then minister for ecology and economic development, said it would study his appeal for subsidies. But months later when he asked for a response, Villerouge recounted, officials told him the file had gone astray.

The European Union’s executive commission in Brussels, which has a department to foster new energy projects, also gave him a hearing but refused to put up money, arguing yet again that the idea was untested. The icing on the cake, Villerouge said, came several months later when a visiting delegation of E.U. bureaucrats offered to feature his project in a glossy E.U. magazine on innovation — but demanded an advertising fee to do so.

In fact, the product was not untested. Marciel, who has made a specialty of fostering innovative projects in Toulouse, organized a city-financed demonstration of the electricity-producing tiles on one of Toulouse’s main squares.

Pedestrians who walked on granite-like panels embedded in the square’s surface produced enough accumulated electricity during the day to power surrounding street lamps during the night. The result, Marciel said, showed that the device needs improvement but is feasible for mass production.

Too much protection

In the meantime, Villerouge had extended the concept to panels embedded in parking lots to produce electricity when cars drive over them and to attachments that produce electricity when washing machines spin-dry their loads. In the U.S.-based business plan, he explained, his company will produce first the parking lot panels, then the washing machine devices and finally the sidewalk tiles.

For Villerouge, France’s hesitation to take a chance on something new arises from a long-established ideal of safety and protection. It is not by accident, he noted, that France enjoys one of the world’s best social-protection systems, with health insurance that is envied by its neighbors, a comfortable retirement system, long-term unemployment insurance and weeks of paid vacation.

The urge for protection is so ingrained that travel agencies touting vacation packages routinely include insurance policies against rain at the beach.

“People want to be secure,” Villerouge said. “There is too much help for French people.”

A poll of 30,000 young people in 25 countries taken last year showed that while 91 percent of Chinese youths regard globalization as an opportunity to get ahead, fewer than half the French youths queried saw unfettered worldwide trade as a positive development, Archambeau reported.

Marciel, a graduate of the prestigious Political Science Institute in Paris, said part of the problem lies in French education, which emphasizes digesting and reproducing previous knowledge rather than coming up with something new.

“The notions of audacity, or innovation, these are not in the program of French schools,” he said.

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