Start-up in Sophia : the first crisis

Decreasing activities, harder difficulties for fund raising : the new economy is facing its first real tempest on the research park. With many closures and restructuring process. Here is The point.

The newcomers in Sophia Antipolis go fast and they tend to deform themselves sometimes. Thus, La Tribune, in the edition of April 5th ran as headline 'Coup de froid sur les start-up à Sophia Antipolis' (cold spell over start-ups in Sophia Antiplis) by stating the list of closures and restructuring process in progress in the world of start-ups on the French Riviera. They mentioned around 150 layoffs because of hard economic circumstances coming from the United-States among others. The point was perfectly in connection the reality of the field. On the other hand, in Yahoo news, the current gust has become a tornado with a very alarmist title : 'Les malheurs de Sophia Antipolis : vent de panique sur les start-up' (disillusions in Sophia Antipolis : a wave of panic over start-ups). What is the real situation ?Trader, Healthcenter, Up-e : the first failuresThis is true : all news are not good ones . Sophia Antipolis, whose start-ups are considered as 'technos' (they create new technological products and are less turned to Business to consumer models which have been suffering a lot for one year), has been less hit by the e-krach. Still, the wind spell has been felt. Some closures and liquidations have already happened or are under way. The first significant collapses have been those of Trader.com, of HealthCenterand of Up-e.Trader.com started with a Pharaonic project : a generic plat-form which allows to manage all the small ads' sites of around twenty countries in which the group was present. The project has failed. From August 2000, the decline started with an engineer settlement from around sixty to less than ten at the moment and a scheduled closure. As for Healthcenter, the former Focus Imaging, a first layoff plan regarding half of the 35 people working in this subsidiary of the eponym American company, came late December. A second layoff plan in the beginning of the year regarded the rest of the staff expect the manager. Up-e (ten employees), the start-up marketplace, did not last a year. Opened in March 2000, in the booming period of the 'new economy', the company collapsed in February 2001, the first victim in Sophia of the e-krach.The case of Aucland, an emblematic start-up of the French RivieraSince then, other closures and restructuring plans have been announced or are discretely in progress. The most significant case and which risks to be the most painful one is the Auclandone. The auction sell site founded by Fabrice Grinda and Sacha Fosse-Parisis did not manage to be the leader on the market, even on the French one. I-Bazar, which now belongs to the American giant eBay, got a little ahead of Aucland. Since then, the gap got broader. Aucland, an emblematic start-up on the French rivera, shortens the sail, by laying form fifty to sixty people off (other occupation layoffs happen on other sites of the company). On the middle run even on the short run, we can worry about the future of the star-up which can seriously think of being taken over or merging with a big group.Another case : within the tempest, American start-ups get rid of their European setting-ups. That is the case for Worldres, a hotel booking site (10 people); for VistaPrint(around fifteen employees), the printing by the Net; for Kanbay France(5 employees) which created e-business plat-forms; for WWWhoosh(fifteen people), a website acceleration software. As a consequence, some start-ups suffer from their collapsing customers, or from companies which decide to postponed their investments. So, many outstanding payments and contracts are moving away or are disappearing. Thus, the Agence Techtonic, specialized in marketing on the Net (9 employees), lost 1.2 million francs of contracts in the beginning of the year. Hard to stave off it.Alert in microelectronics and telecomsThe other main problem is fund raising. Since they did not find enough liquid assets, some start-ups are compelled to shorten significantly the sail as Viviance. Although they are remarkably positioned on the e-learning field, this subsidiary of a Swiss company, which was supposed to have up to 25 employees, is getting down from 12 to 4 people.The microelectronic and telecom industries risk, as well, to layoff. Kast Telecomwhich has recently experienced payment difficulties (according to the company they are about to be curbed) will probably cut the staff as well. As far as American or Canadian manufacturers as concerned, they are waiting for decisions of their parent company. But Lucent Technologiesand Norteldecisions to cut staffs on the international stage are not likely to have any repercussions on Sophia.Even if it is uncomfortable, the situation is not dramatic since the market in Sophia Antipolis is still very opened. Most of the employees who have to leave find a job in companies which keep on recruiting (many start-ups still recruit like Castify Networks, Activia, m.Pixel, Pro Solution, etc, as well as great groups such as Amadeus). The occupation situation is just less tight and the pressure on rising wages for computer scientists died down. Thus, no panic for the moment. But we need also vigilance...