Roxanne Varza, Director at Station F: Station F became a launchpad for Europe’s top startups

0:00Hello and welcome back to the Scaling Europe show. I'm Seb Johnson. Today we've joined by amazing guest Roxanne, the director of Station F. Station F is the monumental startup campus in Paris that has been home to some phenomenal companies such as Hugging Face and Alan. Roxanne, thank you for joining me. How are you doing today?

0:13Roxanne Varza:Great. I'm really excited to be here. Thank you. It's absolutely great to have you. Look, I want to start by saying you have become an absolute pillar of the French ecosystem, but you are not French yourself. You've moved there. What was it about France and French tech that excited you? I have a passport now. But no, what excited? So I left the US in 2009. So that was a while ago. Initially, my family is originally from Iran. And I think I probably felt I wanted to leave around 9-11. And it grew from there. But actually, I studied French. And one of my first jobs out of university was working for what is today business France.

0:51Roxanne Varza:I know the UK and other countries in Europe have similar organizations. Essentially, you help American companies set up shop in a given European country. And so I was trying to convince companies to come to France from the Bay Area, from Silicon Valley. And they were all looking at me like I was crazy. And so I decided, well, let's go see what the reality is. So I came out here to do a master's degree, but it was more like a pretext just to come out here. And I discovered an incredible ecosystem. And there was so much to build. Whereas in San Francisco, it felt like it was very saturated. And so I've just kind of watched this place explode.

1:27Roxanne Varza:Just it's been incredible to also be able to contribute to that since I've been here. And how do you contribute? Can you touch a bit about your role in Station F or Bordy for maybe people outside of the French ecosystem who don't know it so well? Yeah, so Station F, we're a massive startup campus, the world's biggest startup campus based in central Paris. We're in the city center. We're over 50 ,000 square meters of space. Our main building is the building that everybody knows. In that building we house 1 ,000 early stage companies and they're divided into 30 different programs and we can dive into that if you want.

2:00Roxanne Varza:And the idea is really to kickstart, help people with the first maybe two years of getting their business started and then the idea is they go from there and they get their offices and they scale and they grow. And then we also have housing. A lot of people don't know this. We house 600 people that work in our building. And then we also have some extension projects around the main building. So really a mini startup city, if you will, is what Station F is becoming. And how instrumental has it been to the French ecosystem? I mean, I can't say that we by ourselves have transformed this ecosystem.

2:32Roxanne Varza:I think Station F's launch was timed, not intentionally, with the arrival of President Macron. very pro-business compared to his predecessor, geopolitical situation that shifted a lot as well, Brexit, Trump in the US. So we actually have seen France really rise to the forefront of European tech from our launch. I can't say it's all Station F, but just to give you maybe a number that will speak to people. In our first year, Station F companies raised around 300 million. Last year, our companies raised 1.5 billion, which is the equivalent of some European countries just coming out of station F building.

3:10Roxanne Varza:So that kind of can tell you just how things have have evolved since we opened up. Well, last month, I read that it was 1.3 billion. It was in March alone. Yes, we're counting a very mega round in there. But even if we take that round out, that was a record month for us. 400 million raised without that mega round. that's huge we're starting to see more and more bigger rounds of funding obviously we're also including our alumni in there but it's just something we never expected yeah i mean it's crazy though i i would love to see it on a chart because it must really be like yeah um i say you know you play this role of the campus itself the building to house all these different programs and accelerators and to bring the ecosystem together but station f did start investing right a few years ago at what point did you decide to make that transition um i think it became evident to us when we started having some really successful companies um and that also you know we also felt that it's a shame not to a lot of people had a relationship with us for the two years that they'd be on campus they'd leave campus and we would still in some cases continue relationship in some cases not and we thought how can we really show our top companies that we're we have skin in the game and they're with we're with them for the long haul um so i think we made that decision around 2022 was the first year that that happened uh that we started investing not that it happened that we made that decision and so what we do now is we are not investing in all the companies at stage and f that's a lot of companies to go into we every november pick the top 40 companies from that year and we will put a small check follower check about 100k into 10 to 15 of those top companies.

4:57And how do you do that assessment? Because as you said, you've got a thousand companies on campus, you then go from a thousand to 40 of the top 40. And then from the top 40, you pick the top 10. So you really, it's really the top 1%. It's like, how does that process look like? What is the process from going to a thousand to 40 to 10?

5:15Roxanne Varza:So first of all, from going from 1000 to 40, when they get nominated to join that, they have to be nominated by their program, by people who work with them on campus. So they're kind of being identified as best in class for us. Then we are looking at kind of the whole selection pool and seeing who's kind of hit an exceptional milestone from this pool that we have, who's really standing out. And then for the investments, we are looking also at the investment round itself. Who's joining that round? You know, how excited are we about this company? We're looking at a lot of different elements, but it's it's also something where we say, look, we have these 40 top companies, but who's actually pushing the bar even higher?

5:57Roxanne Varza:So we're really just getting in the very, very top. And I want to talk about the new program that you've just launched. Well, you launched at the beginning of January, the FAI program. Can you just give a one minute overview of what it is? And then let's get into it. Yeah. So FAI, I'm super, super excited about this program. um we essentially wanted to build the most ambitious program for ai in europe um and hopefully that's what we've done so we brought together 16 major ai players that's for the first core hope that may change in the future it may grow because we have a lot of incoming demand um but we have 16 major ai players i'm not going to be able to list them all but open ai anthropic mistraw lovable clay hugging face i mean there are a lot of a meta google kind of the major.

6:41Roxanne Varza:It's everyone. When I looked at the list, it was like, who's not on there? And then we also decided to work with eight key investment funds. So these are really tier one investment funds, Sequoia, Lightspeed, General Catalyst, 20VC, Seedcamp. And so the idea was this also, I didn't get to mention everybody there, but the idea is one, these companies get access to the best tech stack. They're getting direct access to our partners. They're recommended to join the program. This is not an open application situation. So the funds are recommending and our partners as well can recommend. And then the final thing that we wanted to put the emphasis on was business acceleration.

7:21Roxanne Varza:We had heard from too many investors that, yeah, Europe has great AI companies, but when we look at the commercials, it's just ridiculously slow compared to the US. I had one investor that said, if they're not doing 1 million within the first six months, I'm not going to look at it. And we thought, OK, we need to get Europe up to speed. So we're really trying to help them accelerate those commercial relationships during the program. And how did the nomination process work? Did you get like hundreds of nominations or was it already quite a small select group that you were just able to pick the best from?

7:53Roxanne Varza:I have to tell you, I actually don't want hundreds because for most of our programs on campus, we've had hundreds and you have to filter through a lot and not a majority of them are relevant. we were really looking for how can we get a really high quality small pool so I think we were actually under 100 applications for this first one and we didn't communicate at all we only went through our partners but the recommendations were excellent we got a lot of repeat founders a lot of really experienced technical teams and that's exactly what we wanted for this program yeah and I saw that there's a lot of repeat founders and a lot of PhD holders why was that the focus you think and we're saying like other programs you know like project europe is all about like under 25 whatever like you know you're doubling down on a repeat founders incredibly technical why did you think that was a great profile it's a great profile it's not the only profile so i also want to be clear that if there is a first-time founder that we feel has very strong potential we'll look at it um but they are just people that i think we were we were seeing their acceleration was faster um they're able to attract sometimes stronger talent uh Sometimes they can build more technical products.

9:02Roxanne Varza:So that was just a profile that we actually got recommended more. We felt they were able, a lot of them came with funding product. They were ready to commercialize. Sometimes those teams go faster because investors will fund them sooner. So, yeah, that's just a profile that we got particularly excited about for this batch. Amazing. And you mentioned, you sort of mentioned what kind of stage they were at. Was that a very conscious choice that, you know, we want people who have got maybe a product ready, maybe a team built, maybe a bit of money, and the focus of the program is really acceleration?

9:33Or was there companies that are still figuring out their product? Or were you very intentional about getting companies at a certain stage?

9:42Roxanne Varza:I think in order for the program to make the most sense, because we are putting emphasis on that business acceleration piece, if they're not close to commercialization, if they're miles out from that, it's not going to be the right time to join. And we did have some great applications, like really strong technical profiles, that they were just too far from that. So we said maybe we can talk for the next batch. But yes, I think for the company to benefit, it needs to be close to commercialization. And this is all leading up to Deal Day. Yeah. What is Deal Day? So Deal Day is different from Demo Day because Demo Day targets investors.

10:19Roxanne Varza:Most of our companies arrived with funding because they're coming through investor channels, because they're repeat founders. So we thought we don't need to put you in front of investors, although there will be some investors in the room. Deal day is really about how can we all, one, first of all, this was a time for all the partners, everyone involved in the program to kind of be in the room together. So we have some really exciting things lined up. But it was also a moment for us to bring in some potential commercial deals for these companies. How can we bring in AI buyers, people who are actually maybe CTOs, data, AI leads within their companies, get them in the room so that they can actually see who these companies are and maybe actually have deals with them in the future?

11:02Amazing. So, yeah, it's like, yeah, it's completely, it's a similar approach with Demo Day, but it's like just close deals. Just close deals. Yeah, it's one of our term sheets, closed deals, revenue through the door. And why, it's been slightly stradding secrecy in the sense that we don't know the companies that are going through it at the moment. Why was it decided to not announce them?

11:26Roxanne Varza:Yeah, so we, actually the companies are now public. I think we got harassed by some media to share the names. and also some of the companies like they started posting things where you could see that they were on campus and so there was there was a conscious decision in the beginning to kickstart the program and we wanted to announce it not in Paris we wanted we actually announced it in Stockholm at Tech Arena we really want it to be a European program we have some non-French founders in the the program actually and we actually have some non-European founders as well this is not meant to be like for only European people.

12:04Roxanne Varza:This is if you want to build an ambitious AI company in Europe, this is the place to do it. So we were secretive about it. Also, because I think we want people to perform. And there's no there's no use in, you know, yelling, I'm in the program, when you haven't done anything yet. So I think that's something that we had seen happen in the past and other programs. And we really want people to come and build, show us what you that's when you should be going live. Amazing. And how has the experience been to date? You know, you're several months in, deal day's happening very soon. How's it been? I mean, I've been, first of all, I've been blown away by the teams.

12:42Roxanne Varza:This, you know, they came in, it's such a high quality group. I mean, they built, many of them have built companies before, but it's just great to see what they share with each other, the questions that they have. They want to go fast. They're working all the time. Like at Station F, we have some other programs that meet at certain times of the day, less present. You go to the FAI zone, there's just like all the time people there. And then the other thing that's been incredible through this program is actually the implication of our partners. So all of our partners have come met with the teams, brought exceptional resources and deals for their products.

13:16Roxanne Varza:Many of them have given us access to C-levels as speakers. So we spoke to, for example, the person who built Cloud Code through Anthropic. We built also, So we spoke to the CTO of Meta. I mean, we've spoken to some really high level people through our partners that I think we just haven't seen that in Europe as much as you see that in the US for programs. Yeah, it does feel like you've been able to bring so many amazing people from across the ecosystem together in a way that you are. Europe has not been very good at, you know, Stockholm has amazing events and amazing ecosystem. London is great, but it does feel like you've been able to access these amazing people from across the ecosystem, not just European, but amazing American labs and companies and bring everyone together.

14:01What are you going to change for the next batch?

14:04Roxanne Varza:I think we're going to, you know, keep on going up. I think one thing I want to do is I really want to make it European. So we're going to look at maybe how can we build some partnerships? How can our partners are already kind of international partners? how can we leverage them more on a pan-European level so I think this is one thing we're gonna we're gonna bring I don't want to spoil everything but we're looking at also how can we make the resources in the program even more meaningful to the founders a lot of our partners are U.S. based there could be something that we build there so I'm not going to spoil but I gave you some hints so those are things we're looking at and do you think this is going to be you know something that you run now every three or four months for at least you know a while um so we are planning we we already have partner commitments for a couple years so amazing not planning on going away yeah amazing this is really cool and i guess this is sort of like station f's own accelerator within the startup campus itself yes that what's that experience been like you know you've had experience housing so many accelerators for so long now you're kind of running your own what's that been like so we actually from day one we've had programs that the team has run we had founders program fighters program this is a very very different kind of program this is also the first program on campus that brings together multiple partners because all of our other programs there's 30 of them but there's it's usually one partner one program this was one where we actually we thought we already have companies coming.

15:43Roxanne Varza:They do the Microsoft program. They go to Meta. They jump around. Maybe if we put everyone together, we can go even faster. And so, you know, this is a very, very different type of program. But I also have to say this is one that we really thought about things very, very differently from programs we've built in the past. Yeah, interesting. And I saw that you had Jan from AmiLabs. And that was the big that was the big mega round that you were kind of referencing. how impactful was that for you know the french ecosystem the paris ecosystem and station f to have a round of that size being you know based in a by a company based in paris and station f yeah i mean yan he's incredible he announced the launch of ami at station f so we kind of have a long history with with this company i have to say he blew it out of the water with his round because that wasn't even the initial target that he had set.

16:38Roxanne Varza:Yeah. So he was, I think he was targeting 500 million. And this is just, it's just massive. I think it brings massive credibility to this ecosystem. The nice thing is also up until now, we kind of had Mistral as the lone poster boy. And I think this just brings even more, kind of solidifies the fact that this is a proper tech ecosystem and it's not just like a one hit wonder. and kind of making parallels to music. But I think, yeah, it's really kind of changed how people feel about this ecosystem. And why do you think he chose Paris? You know, he told me, I asked him this question because somebody asked me to talk about it on a panel not too long ago.

17:20Roxanne Varza:And he told me the talent, actually. He told me he didn't even consider really anywhere else, that it was just kind of obvious from the talent that he knew in Paris. and it makes sense because I guess uh met his llama models was built out of Paris so I guess maybe he had yeah huge networks yeah yeah yeah but I mean you talk about uh sort of mistral being one hit wonder but there have been amazing AI companies coming out of Paris at the moment yes no no I don't want to say that all the other companies but I want to say on the kind of the funding and the valuation level and the speed mistral was kind of set apart that's absolutely true and you know i think one of the yeah but looking at some of the other companies you've you know like h company you know raised what was 220 million dollar seed a few years ago uh companies like pool house and these are companies that are frontier ai companies in the sense that they're not building at the application layer they're really trying to push the boundaries forward of what ai can do why is france and paris performing so well at that at that level compared to other european ecosystems where we we're not seeing that density of quality of AR companies?

18:29Roxanne Varza:I mean, I really do think it has to do with the talent. I'll agree with Jan. I think we have just a really strong technical talent pool here. We often send it to other countries to build for other companies. And now they actually have a possibility to come here, build here. Investors are now investing in companies locally. I think also talent attracts talent. So once you have one founder that does it, everybody wants to work for him and then people leave that company. And I think we're starting to see people leave some of these teams and they stay locally, they build their company locally. So we have seen former Hugging Face, former Mistral, former what have you, stay here and put together some phenomenal teams for new companies as well.

19:15And where do you think that change is coming from? I think I saw a stat in that the State of European Tech report from Atomico last year, which is something like over 60 % of European founders want to build in Europe just because they want to see Europe succeed. Are you seeing that in French founders? Is there this push towards like, I care about the French ecosystem as much as I care about my own startup?

19:40Roxanne Varza:I mean, I will definitely say there's some kind of nationalistic pride involved in wanting to stay in this ecosystem, whether it be French or European. I think we probably need to think more European than just French. I will also say that I think the geopolitical context is also making people think twice. This is also an ecosystem that has positively evolved a lot. There's, you know, in order to be able to found your company here, get funding relatively quickly, there's no real infrastructure gaps. We used to have a lot of them. And hopefully with the arrival of EU Inc, things will be even more accelerated.

20:20Roxanne Varza:So I think really that the arguments are really strong for staying and building here. Yeah, absolutely. And we're definitely seeing this overall push towards sovereignty, you know, Macron announcing that he wants to move away from Teams and Zooms. And I think by 2027, the civil service is going to be using like a local tool. How important do you think that is when it comes to French government or all European governments, when it comes to procuring local tools over, you know, American or international alternatives? I mean, given the current political situation that is happening as we speak, and maybe what we have seen, I think there's just so much uncertainty now that, and you know, you would have asked me this a while ago, and I may have thought, maybe it's ridiculous.

21:06Roxanne Varza:How do you decouple from so much American tech? But for security reasons, for dependency reasons, you know, I think if you want to in the future have the upper hand, you may need to consider that, especially for government services. Right. So I'm definitely I'm definitely not against that. Now, I don't know that they have chosen. I think that the tools that they have chosen for the moment are communicated on at least are very kind of visible tools. Are they actually doing it full stack? I think would be interesting to know. yeah that's that's a really good point it's um the uk government announced a partnership with open ai that you know like i think at the end of last year and that to me just felt crazy you know like we have mistrial in france why on earth would you choose to go with open ai given this whole push towards tech sovereignty and it's about really becoming sovereign across the whole infrastructure as opposed to just little bits of it here and there um but yeah it's interesting And are you seeing that resonate throughout more of the ecosystem?

22:06Are you seeing, you know, this tech nationalism kind of ripple through station F? Are you seeing that sort of national pride grow?

22:15Roxanne Varza:I would say yes. I'd say that, I mean, you definitely feel it more in certain domains more than others. And I do think that, you know, our companies are still building a lot of the solutions if you want to build a competitive solution. In some cases, there just aren't European alternatives that are as performant. And so our companies are aware of it. I think they're aware of it. And we push them not to be kind of country dependent in the same way that many years ago we pushed people not to be platform dependent. So I think it's just good business practice. But if you don't have a competitive alternative, I think you might end up impacting your business.

22:54Roxanne Varza:So it has to be sovereign, but also has to be performant. And I know Matt Miller has spoken about that a lot. And I definitely agree with it. Yeah, yeah. Yeah, and things like cloud infrastructure hasn't been a solid viable alternative. And it's like, well, what are you going to do? I also want to touch on defence, right? We're seeing this big push towards defence across the ecosystem. Both the UK and France got their very first defence tech unicorns this year. Munich has been absolutely flying in terms of the drone companies and the deep tech that they're producing. The French one was Harmerton, which I know you're an investor in.

23:28how well equipped do you think France is to build defense unicorns and to have a thriving defense ecosystem in the same way that it's got a thriving AI ecosystem?

23:39Roxanne Varza:I mean I think actually we're seeing more and more defense we're seeing a lot of security so I will say the groundwork for security is definitely there and now going proper defense I mean it's starting and I think harmattan is proof and it's going to be a ripple effect so as you have one company that does it gets to unicorn status also very quickly i think you're going to have more companies that that try to go the same route so i think we're probably already on track we're starting to see also more specialized defense investors smaller funds but people who really know the topic this is something that maybe five years ago in europe you couldn't name a fund that was doing defense deals and now you're starting to have actually specialized funds around that so it's it's really interesting to see the evolution of this space yeah i mean actually i had a louise from is it sisyphus um who's like yeah i was blown away by her depth of knowledge of the ecosystem and you know she's been investing in it for several years now and just seems to really know it and it's interesting because we're seeing all of these investors who are now taking an interest in a way that they weren't a few years ago is that having knock-on effects like is the you know like when i talk about defense companies on LinkedIn, I often get a bit of pushback.

24:52Like, why are we celebrating a defense company becoming a unicorn? This is like, you know, it's, there's still questions around the morality of it, that even though it feels like a lot of the ecosystem is aligned, is that true in France? Is there a lot of, you know, has the ecosystem accepted the need for it? And what's the public perception?

25:10Roxanne Varza:I mean, it's still very, it's obviously a difficult topic, right? But I mean, I think as the need is there, it's really interesting because I was even torn with this and the the goal is you have security solutions or defense solutions but you don't need to use them they're there to protect and keep the peace and I actually had a conversation with the the Harmington founder about this and I actually thought that was a good way to look at it and then on a similar level you also the day that you need them, you want to be able to buy local solutions, don't you? So I think that's also something to take into consideration.

25:52Roxanne Varza:But yes, I'd say it's still a difficult, difficult area. Ethically, you know, it's something that's hard. But given the current climate, as we are, you know, doing this podcast right now, I think people are much more willing, much more open and much more that it's a topic that people have just kind of accepted as a reality. Yeah, absolutely. And And can I ask what attracted you about Harmerton? You know, you invested, became a unicorn this year. What about that founder, that company, did you find particularly appealing? I have to say he's an exceptional founder. It's somebody who's just really intelligent, really sharp, fast at execution.