(Updates with closing share prices.)
Oct. 25 (Bloomberg) -- France Telecom SA and Publicis SA agreed to set up a venture-capital fund focused on European technology startups, boosting support for the region’s entrepreneurs, two people with knowledge of the plan said.
The size of the fund may be greater than 100 million euros ($139 million), said the people, who declined to be identified before an announcement. The investment will probably be split equally between France’s biggest phone operator and the world’s third-largest advertising company, one of the people said. France Telecom and Publicis declined to comment.
While young European technology companies such as fashion retailer Vente-Privee.com and online calling provider Skype Technologies SA, now part of Microsoft Corp., have found international success, others have suffered from a venture funding landscape that’s less promising than in the U.S. Venture investment in the U.S. totaled $22 billion last year compared with about $4.9 billion in Europe, according to the National Venture Capital Association and the European Venture Capital Association.
Helping to narrow the gap, European investors such as French billionaire Xavier Niel have used some of their personal funds for venture investing. The majority owner of Iliad SA puts about 50 million euros a year toward startups. Deutsche Telekom AG, Europe’s largest phone company, also has a venture-capital arm.
France Telecom and Publicis, both based in Paris, have been active on the startup scene. The phone company has partnered recently with Deezer, a music-streaming site, and invested in DailyMotion, a provider of online video. Publicis has acquired Web-focused startups including online marketing company Airlock and Big Fuel, a New-York based social media company.
For European companies, access to a stronger network of home-grown startups may mean getting a first look at new technologies that might otherwise benefit global competitors. Telecommunications companies, in particular, have struggled to offer online consumer services such as video and social- networking that can compete with those from Google Inc. and Facebook Inc.
French State Fund
European governments are also looking to encourage a more vibrant technology scene. In the U.K., Prime Minister David Cameron’s government is seeking to attract global technology companies to London’s “Silicon Roundabout,” a neighborhood of converted warehouses that’s helped incubate startups including Lovefilm and Tweetdeck.
In France, the FSI sovereign wealth fund is backing young technology companies, and Industry Minister Eric Besson has become a booster of projects such as the European School of Internet Professions, an academy for aspiring technology entrepreneurs that’s taken over part of the former Paris stock exchange.
France Telecom slipped 0.1 percent to 13.02 euros at the close of trading in Paris. The stock is down 17 percent this year. Publicis added 0.3 percent to 34.95 euros and has fallen 10 percent this year.
--Editors: Kenneth Wong, Rob Valpuesta
To contact the reporters on this story: Matthew Campbell in Paris at firstname.lastname@example.org; Amy Thomson in London at email@example.com
To contact the editor responsible for this story: Kenneth Wong at firstname.lastname@example.org