Le Web is Alive and Well in Paris

Posted by: Jennifer L. Schenker on December 10

For once the chill in the air had nothing to do with the economy. The heat was not working on Tuesday Dec. 9 at Le Web, an Internet Paris conference that attracted more than 1.700 attendees from Europe, U.S. and Asia. Despite the cold (temperatures hovered around freezing outside) there was a spirit of warm camaraderie and optimism among the start-ups at the conference, which is organized annually by French blogger and tech entrepreneur Loic Le Meur and his wife Geraldine.

Conference goers were packed into a mortuary converted into a hip loft-style conference center. That provoked some humorous comments. Israeli Internet guru Yossi Vardi, a conference speaker, said he had a great idea for a new company: an Internet service for dead people. The business model included a lifetime subscription and an all-you- can-eat meal plan. Vardi argued that it was sure to be viral because everyone knows at least one dead person and the market grows daily.

Jokes aside, despite predictions from industry pundits, Web 2.0 is clearly not dead. MySpace COO Amit Kapur used the podium at Le Web to announce some new services, such as the addition of MySpace ID into offers from mobile phone operator Vodafone. Such deals will eventually allow users to integrate their MySpace content, including contact lists and photos, with mobile services. And, the migration of the Internet to the mobile is also presenting opportunities for start-ups.

Consider Fring, an Israeli start-up launched at the Mobile World Congress in Barcelona in February 2007. Fring is an always-on, always-connected mobile Internet application that allows users to talk, chat, and interact. It runs in the background, without the need for a browser, continually updating itself and the details of a user’s community of friends and events as they happen.

The company is adding a half a million customers every month and recently signed a deal with mobilkom Austria, Fring co-founder and chief executive Avi Shechter said during an interview at Le Web. Fring now comes pre-installed on all Samsung devices running the Symbian operating system. It also works on other major mobile operating systems and is available over thousands of mobile devices, including Nokia, the Apple iPhone and iPod touch, Microsoft Windows Mobile phones, Sony Ericsson, and phones based on Linux, Android, and Qualcomm's Brew.

Other types of Web 2.0 companies seem to be thriving despite the economic downturn. Online dating service Be2, which is headquartered in Switzerland and recently raised venture capital, has expanded into 35 countries on six continents and recently raised $15 million in venture capital. Founded by German sociologist Robert Wuttke, the service aims to connect people who are interested in long term relationships--including marriage. "We are not afraid of the M-word," laughs Wuttke.

And, experienced technies are launching new companies despite economic uncertainty. One company in beta that emerged from stealth mode at Le Web is fotonauts, founded by Frenchman Jean-Marie Hullot, former chief technology officer of NeXT and chief technology officer of Apple's application division. Fotonauts, which includes a photo search engine, seeks to be a kind of Wikipedia for on-line photos. It has raised funding from France's Banexi Ventures as well as well-known Silicon Valley angels Saul Klein, Ron Conway, and Reid Hoffman.

Le Web's start-up competition, held in a side room, was packed with investors interested in hearing pitches from companies like fotonauts. And, on Dec. 10 French Finance Minister Christine Lagarde is scheduled to give out the award to the winner at this year's event.

Of course, governments need to do more than hand out awards. They need to reward entrepreneurs for taking risks. The consensus at the conference was that the only way to turn around economies is to innovate out of this mess. But despite the success stories and the optimism at the conference there's a major risk that the pipeline of new ideas and projects could get cut off due to lack of funding. Investors, such as serial entrepreneur Martin Varsavsky, made that clear during panel discussions at Le Web.

That's where finance ministers like Lagarde can play a bigger role. While Internet startups were meeting in Paris, a press release was issued Dec. 9 by a a blue-ribbon panel of leaders in industry, academia and policy called the Science|Business Innovation Board, which includes top executives from Microsoft, BP, Procter & Gamble, and representatives from the INSEAD and ESADE business schools.

The group urged government action to ensure that the supply of young, innovative companies doesn't dry up in the recession. "During this crisis, we need to prevent the early death of promising companies," panel member Philippe Pouletty, CEO of French venture capital firm Truffle Capital and chair of France Biotech, an industry association, said in a statement. "We need to take this historic opportunity to build the future economy based on science, technology, and proactive investment into innovative companies."

Participants in the Innovation Board session recommended a series of measures to keep the money spigot open for small companies. They include:

- At a time when governments in countries such as France are planning to spend billions of euros on economic stimulus, they should include measures to ensure funding for innovation, research and development, and the growth of high-tech companies.

- Governments should provide matching funds to universities that find private investors for their new spin-out companies. There's already a track record for such experimental programs in individual EU countries. The innovation board is calling for an expanded effort, coordinated across the EU, to ensure that private sector funding for university spin-outs doesn't dry up.

- A pan-European initiative is needed to give special recognition, under EU state aids and member-state fiscal policies, to young, innovative companies. A French initiative begun in 2004 that Pouletty has been championing at the European level, has successfully benefited more than 1,700 high-tech companies with special tax breaks. If scaled up to an EU level, it could assist an estimated 5,000 to 15,000 new companies.