Models of ICT innovation : ten cases of successful innovative ICT SMEs in France.
Date: 2015-05-18
Institutions: Institute for Prospective Technological Studies
Subjects: France, business policy, digital technology, financing, information technology, innovation, knowledge economy, multinational enterprise, research and development, research report, small and medium-sized enterprises, technological change

Models of ICT Innovation  

Ten cases of successful 
innovative ICT SMEs  
in France 

Author: Alain Puissochet 
Editor: Marc Bogdanowicz 

2 0 1 5  

Report EUR 27233 EN 

 
 
European Commission 
Joint Research Centre 
Institute for Prospective Technological Studies  

Contact information 
Address: Edificio Expo. c/ Inca Garcilaso, 3. E-41092 Seville (Spain) 
E-mail: jrc-ipts-secretariat@ec.europa.eu 
Tel.: +34 954488318 
Fax: +34 954488300 

https://ec.europa.eu/jrc 
https://ec.europa.eu/jrc/en/institutes/ipts 

Legal Notice 
This publication is a Science and Policy Report by the Joint Research Centre, the European Commission’s in-house science 
service. It aims to provide evidence-based scientific support to the European policy-making process. The scientific output 
expressed does not imply a policy position of the European Commission. Neither the European Commission nor any person 
acting on behalf of the Commission is responsible for the use which might be made of this publication. 

All images © European Union 2015 

JRC95537 

EUR 27233 EN 

ISBN 978-92-79-48166-6 (PDF) 

ISSN 1831-9424 (online) 

doi:10.2791/672955 

Luxembourg: Publications Office of the European Union, 2015 

© European Union, 2015 

Reproduction is authorised provided the source is acknowledged. 

Abstract 
This report is the result of an exploratory study on innovation models, which looked for the commonalities and 
differences between ten small innovative and successful ICT companies in France. Specific attention was paid to 
documenting business strategies, purposes, means and drivers in very concrete terms. Chapter 2 regroups a large 
part of the information gathered under three main headings – technology, finances and markets. It illustrates each 
heading with the observations collected, and indicates what seem to be the key features of the innovation model. 
Chapter 3 broadens the perspective by pointing to various topics that contextualize the model of innovation. It 
questions the specific role of the observed companies in the overall ICT innovation ecosystem, and their relations to 
multinationals and the national and local innovation system. Chapter 4 summarizes findings and offers some 
conclusions. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents 

Preface ................................................................................................................................................................. 2 

Acknowledgements .......................................................................................................................................... 3 

1. 

Introduction .............................................................................................................................................. 4 

2.  

2.1 
2.2 

A tentative model of innovation .................................................................................................. 7 
Introduction ..................................................................................................................................... 7 
Access to technological knowledge ........................................................................................ 7 
2.2.1  Capitalizing on in-house technological knowledge ................................................................................ 8 
2.2.2  Access to external knowledge ........................................................................................................................ 10 
2.2.3  Technological knowledge: concluding remarks ..................................................................................... 15 
Access to finance ....................................................................................................................... 15 
2.3.1  Private funding ........................................................................................................................................................ 15 
2.3.2  Public funding .......................................................................................................................................................... 19 
2.3.3  Access to finances: concluding remarks ................................................................................................... 23 
Access to market knowledge ................................................................................................. 24 
2.4.1  Early product failure ............................................................................................................................................ 24 
2.4.2  Collaborating with the customer................................................................................................................... 25 
2.4.3  Expanding market reach: Going global ...................................................................................................... 28 
2.4.4  Some conclusions .................................................................................................................................................. 29 

2.3 

2.4 

3.1  
3.2 

3.  Beyond the model of innovation .................................................................................................... 30 
The case of Specialized Technology Suppliers (STS) ..................................................... 30 
Behaving within a broader ecosystem ............................................................................... 31 
3.2.1  Coexisting with multinationals (MNE)? ...................................................................................................... 31 
Multinationals as competitors .......................................................................................................................................... 31 
3.2.2  Benefiting from the innovation system? .................................................................................................. 35 

4.  Conclusions: a triangle of uncertainties ..................................................................................... 40 

5.  Annex: Company descriptions .......................................................................................................... 43 
Aquafadas ..................................................................................................................................... 43 
5.1 
Astellia ........................................................................................................................................... 45 
5.2 
Ateme .............................................................................................................................................. 47 
5.3 
Awox ................................................................................................................................................ 49 
5.4 
Esker Document Process Automation ................................................................................. 50 
5.5 
Intrasense ..................................................................................................................................... 53 
5.6 
Itesoft ............................................................................................................................................. 55 
5.7 
Kreactive ....................................................................................................................................... 57 
5.8 
5.9 
Vitec ................................................................................................................................................ 59 
5.10  Wiztivi ............................................................................................................................................. 61 

 1 

 
 
 
 
Preface  

This report was prepared in the context of the three-year research project on European Innovation 
Policies for the Digital Shift (EURIPIDIS). This project was launched jointly in 2013 by JRC-IPTS and 
DG CONNECT of the European Commission in order to improve understanding of innovation in the 
ICT sector and of ICT-enabled innovation in the rest of the economy.1  

The  purpose  of  the  EURIPIDIS  project  is  to  provide  evidence-based  support  to  the  policies, 
instruments  and  measurement  needs  of  DG  CONNECT  for  enhancing  ICT  Innovation  in  Europe, 
mainly in the context of the Digital  Single Market policy agenda and of the ICT priority of Horizon 
2020. It focuses on the improvement of the transfer of best research ideas to the market.   

EURIPIDIS aims are:  

1.  to better understand how ICT innovation works, at the level of actors such as firms, and also of 

the ICT “innovation system” in the EU;  

2.  to assess the EU's current ICT innovation performance, by attempting to measure ICT innovation 
in  Europe  and  measuring  the  impact  of  existing  policies  and  instruments  (such  as  FP7  and 
Horizon 2020); and  

3.  to explore and suggest how policy makers could make ICT innovation in the EU work better. 

This report offers a qualitative observation of ten innovative ICT SMEs in France. It aims to provide 
a better understanding of what aspects of their models of innovation allowed these companies to 
innovate, survive and prosper. 

The concept of models of innovation refers to the way the innovators manage an invention from its 
conception  through  to  its  commercialization.  Innovators  make  decisions  on  how  to  create  the 
conditions for value making, within an overall context of high uncertainty due to the very nature of 
their innovative activity.  

This study has focused on observing their behaviour and provides a structured insight into the main 
features of their models of innovation. 

1   For more information, see the project web site:  
    http://is.jrc.ec.europa.eu/pages/ISG/EURIPIDIS/EURIPIDIS.index.html 

 2 

 
 
 
 
                                                        
Acknowledgements 

The  assertions  made  in  this  report  are  the  sole  responsibility  of  the  author.  They  reflect  his 
interpretation of the information communicated, but do not represent in any way the opinions of the 
people or the companies the author encountered. 

The author would like to thank everybody who agreed to talk to him and broaden his views about 
ICT innovation from a company-level perspective, and who contributed stimulating ideas. 

The author is especially grateful to those who helped him to translate his practical experience into a 
more structured document, even though it still has many limitations. 

 3 

 
 
 
 
1. 

Introduction   

This report offers a qualitative observation of ten innovative ICT SMEs in France. It aims to provide 
a  better  understanding  of  what  models  of  innovation  allow  companies  to  innovate,  survive  and 
prosper. 

The concept of "models of innovation" refers to the way the innovators (individuals or companies) 
manage  an  invention  from  its  conception  to  its  commercialization.  Innovators  make  decisions  on 
how to create the conditions for value making, within an overall context – an Innovation System – 
about which they often have limited knowledge. 

The study tried to answer the following questions for each company: 
  What were the main initial drivers for creating the company? 
  What major obstacles or challenges has the company had to deal with? 
  Who financed the company? 
  How does the company access knowledge to stay innovative? 
  How did the founders deal with their markets? 
  How homogeneous or diverse were the solutions adopted? 
  How have local, national or European instruments affected the companies? 

All these questions aim to reveal the companies' "models of innovation". 

Models  of  innovation  are the  ways  and means innovators  use  to  position  themselves,  their  firms, 
and  their  activities  within  the  local,  national  and  international  contexts  that  surround,  support  or 
constrain  them.  It  is  a  micro-level  approach  to  innovation  as  a  process,  from  the  firm's  and  the 
individual's perspective. 

The academically and politically acknowledged concept of Innovation Systems2 is different. It refers 
to "the supporting network of scientific and technical institutions, the infrastructure, and the social 
environment”  (Freeman  1990,  quoted  by  Carlsson,  2003).  Therefore  the  study  of  innovation 
systems  emphasizes  and  analyses  the  role  of  institutions  and  looks  instead,  one  can  say,  at  the 
meso level.  

The  companies  in  this  study  were  selected  from  more  than  100  French  ICT  companies  that  the 
author has got to know during the 25 years he dedicated to consultancy work. The author made his 
choice of 10 companies, complying as far as possible with the above-mentioned criteria ("innovative 
and successful ICT SMEs") and with suggestions made by IPTS and external experts from regional or 
national public agencies. 

The age of the firms was not used as a criterion. As there is no real consensus in literature about 
what  constitutes  a  'young'  company,3 'longevity'4 was  used,  as  a  sign  of  success,  to  select 
companies,  that  had  proven  resilience,  survival  and  growth.  At  the  time  of  the  study,  4  of  the 

2   For a thorough literature review, see: 

http://faculty.weatherhead.case.edu/carlsson/documents/InnovationSystemsSurveypaper6.pdf 

3   Regarding this notion of age, Eurostat sets a maximum of 5 years for its "young" companies in the case of 
gazelles. Those are the subset of high-growth enterprises which are up to five years old. The definition of 
gazelles is: All enterprises up to 5 years old with average annualised growth greater than 20% per annum, 
over a three year period, should be considered as gazelles. See at 
http://ec.europa.eu/eurostat/ramon/statmanuals/files/KS-RA-07-010-EN.pdf. Czarnitzki and Delanote 
(2012) use the European definition as specified in article 35 of the General Block Exemption Regulation 
(GBER) which determines Young Innovative Companies as having less than 250 employees, being less than 
6 years old and spending at least 15% of its operating expenses on R&D. This definition is also used by 
Schneider and Veugelers (2010). 

4   From the Technical specifications: Success will be measured in terms of longevity and growth (Revenues, 

staff, profits). 

 4 

 
 
                                                        
companies observed were less than 10 years old, 2 less than 20 years old, and 4 less than 30 years 
old.  This  age  criteria  excluded  de  facto  large  companies  and  multinationals,  such  as  incumbent 
telecom operators or IT equipment producers, for example.5  

There  is  also  no  consensus  on  the  term  'success'  in  the  literature.  The  minimum  criterion  for  a 
company  to  be  considered  successful  in  the  study  sample  was  that  it  had  to  have  been  active 
during  the  last  5  years  with  a  significant  growth  in  revenues.6 The  selected  companies'  turnovers 
range from 3 to 11 million euro for companies less than 10 years old, and from 18 to 40 million 
euro for the older ones.7  Together, the ten companies provide 1,500 jobs and a turnover of around 
€170  million.  Out  of  the  10  companies,  8  are  or  were  high  growth  companies  as  defined  by  the 
OECD  (average  annual  growth  greater  than  20%,  over  a  three  year  period).  Four  of  them  have 
achieved impressive average yearly growth over the last five years of above 45%. 

The  author,  on  the  basis  of  his  expert  knowledge  and  long  professional  experience,  assessed  the 
innovativeness of all the companies in the initial sample. The criterion is not very selective per se 
since almost all companies of the initial 100+ list claim to be innovative.8 The level of R&D intensity 
(R&D  expenditures  /  turn-over)  was  not  considered  in  the  selection,  as  this  factor  would  be 
investigated for each case later in the project.   

Finally,  companies  were  chosen  deliberately  for  their  technological  diversity  in  order  to  capture 
potential  differences  in  behaviour.  In  two  cases,  pairs  of  companies  were  selected  to  allow  for 
additional comparison within technological domains. 

The following table provides the basic company-level data for year 2013.9  

5   This is true for France but could have been different in another country  
6   All  enterprises  with  average  annualised  growth  greater  than  20%  per  annum,  over  a  three  year  period 
should be considered as high-growth enterprises. Growth can be measured by the number of employees or 
by turnover. (OECD  see at: http://www.oecd.org/industry/business-stats/39974588.pdf). 

7   Detailed data can be found in the annexes 
8   Self-reporting  and  its  assessment  is  not  a  fundamentally  new  issue  as  it  accompanies  also  the 

emblematic Community Innovation Survey of EUROSTAT 

9   Data  is  collected  from  company  reports  when  available.  For  companies  that  do  not  publish  results,  the 
data from the site www.societe.com was used. It provide the results obtained by French companies, which 
are mandatorily published, but do not provide consolidated results. That is the case for Aquafadas, Ateme, 
Kreactive,  Vitec,  and  Wiztivi.  This  underestimates  specially  the  revenues  of  Vitec,  for  which  consolidates 
revenues for 2013 are estimated at 30M€. 

 5 

 
 
 
                                                        
Company 
name 

Technological 
domain 

Creation 
date 

Number of 
employees 

Turnover 

Turnover CAGR 
2009-2013) 

Sector (NACE) 

Aquafadas 

Software for 
digital publishing 

Astellia 

Monitoring 
mobile networks 

Ateme 

Awox 

Esker 

Intrasense 

Itesoft 

Video equipment 
Domestic 
network 

Document 
management 
and delivery 

Medical imaging 
software 

Document 
management 
and delivery 

Kreactive 

Education 
services 

2006 

62 

3,6 M€ 

46% 

2000 

350 

36 M€ 

27% 

1991 

110 

20,6 M€ 

2003 

42 

6,9M€ 

17% 

27% 

1985 

290 

41,1 M€ 

11% 

2004 

70 

4,1 M€ 

46% 

1984 

196 

21,6 M€ 

2% 

2004 

40 

3,3 M€ 

59% 

Vitec 

Wiztivi 

Video equipment 
Interactive 
digital TV 

1988 

175 

25.,9 M € 

10% 

2007 

50 

4,7 M€ 

117% 

Software publishing 
58.29 

Manufacture of 
communication 
equipment 26.3 

Manufacture of 
communication 
equipment 26.3 
Consumer 
electronics 26.4 

Software publishing 
58.29 

Software publishing 
58.29 

Software publishing 
58.29 

Information Service 
Activities 63 

Manufacture of 
communication 
equipment 26.3 
Software publishing 
58.29 

This study is exploratory. It is based on brief case studies of ten ICT companies, covering a diverse 
range of ICT subsectors. It relies on the author's ex-ante deep knowledge of the companies, and is 
complemented  by  desk  research  and  by  direct  contacts  with  each  company,  including  interviews 
with the CEOs, and usually founders, of the companies. Specific attention was paid to documenting 
business strategies, purposes, means and drivers in very concrete terms. 

The report is structured as follows.  

-  Chapter 2 regroups a large part of the information gathered  under three main headings – 
technology,  finances  and  markets.  It  illustrates  each  one  with  the  observations  collected, 
and indicates what seem to be the key features of the innovation model.  

-  Chapter  3  broadens  the  perspective  by  pointing  at  various  topics  that  contextualize  the 
model  of  innovation  on  the  basis  of  the  observation.  It  questions  the  specific  role  of  the 
observed  companies  in  the  overall  ICT  innovation  ecosystem,  and  their  relations  to 
Multinationals and the national and local Innovation System. 

-  Chapter 4 summarizes findings and offers some conclusions. 

-  A  presentation  of  the  10  companies  can  be  found  in  the  annex,  which  includes  for  each 
company  a  description,  a  commented  chronology,  and  a  more  detailed  description  of  its 
specific innovation model. 

 6 

 
 
 
2.   A tentative model of innovation 

2.1 

Introduction 

The  data  and  information  collected  from  the  10  case  studies  can  be  grouped  around  three  main 
topics: 

1.  Access to technological knowledge 
2.  Access to finances 
3.  Access to market knowledge 

In  this  report,  'access  to  technological  knowledge'  refers  to  knowledge  in  terms  of  technological 
competences  and  also  market  evolutions  (such  as  standards)  or  competitors'  capacities  (such  as 
new solutions emerging on the market).  

'Access to finance' deals with access to financial resources, be they private or public.  

'Access to market knowledge' encompasses market information. It aims to understand demand, and 
address it adequately. It is a matching exercise with the (potential) customer. 

These three topics are the three essential resources an innovator (an individual or a team) tries to 
access, interpret and integrate in a coherent manner. They are also the three main uncertainties the 
innovator  needs  to  address  and  "tame".  These  aspects  are  obviously  interrelated:  raising  money 
may facilitate the access to knowledge developed internally or bought, as well as  entering a new 
market.  

This  perceived  need  to  integrate  the  three  resources  adds  the  issue  of  timing  to  the  innovator's 
concerns.  Timing  affects  all  three  factors  and  is  an  essential  part  of  the  innovator's  coordination 
problem.  As  summarized  by  a  company  manager:  "A  successful  innovation  needs  good  timing, 
customer  acceptance,  an  enabling  technology  and  acceptance  of  the  financial  market".  This 
perspective introduces us to the uniqueness of innovators' activities: they need to gather resources, 
make decisions and convince other players about an as-yet unknown (innovative) product, service or 
process. 

2.2  Access to technological knowledge 

The  following  section  analyzes  in  more  detail  the  resources  used  at  company  level  to  obtain 
technological  knowledge.  Obviously,  technological  knowledge  is  crucial  for  technology  companies, 
and  also  the  origin  of  their  existence.  This  point  is  sometimes  neglected  though  it  defines  the 
difference between a tech and a non-tech company. 

The  initial  technological  knowledge  is  most  often  cited  as  the  initial  reason  for  setting  up  the 
company.  Founders  often  have  technical  higher  education  ("engineers"),  and  an  initial  drive  –
frequently  still alive years later  – for developing their own ideas and solutions and pushing them 
onto the market. 

But  initial  knowledge  is  certainly  not  enough.  The  knowledge  required  to  start  and  maintain  an 
innovative ICT company must be rapidly changed, updated and increased. 

This is explained in relation to: 

  The need for knowledge about new technologies and products to meet new demands.  

Example:  
In  the  video  and  TV  sector,  there  is  strong  user  demand  to  view  content  on  any  device. 
Another, more technical need is to be able to benefit from the development of cloud-based 
services  and  processes.  This  has  significant  consequences  when  developing  digital  video 
processing tools.  

 7 

 
 
 
 
Vitec,  for  example,  bought  the  Israeli  company  Octibase  in  order  to  be  able  to  provide 
IPTV10 dedicated products. 

  The continuous technological progress in ICT, described by Moore’s law, and also progress in 
telecommunication 

intelligence, 

several  domains:  software  development,  artificial 
efficiency (such as radio technologies) and others.  

Examples:  
Companies  dealing  with  document  management,  such  as  Esker  or  Itesoft,  have  to 
continually add new algorithms which allow products to be more efficient, by basing them 
on text understanding and the use of new semantic tools. A telecom equipment company 
such as Astellia is permanently confronted with new standards: from GSM to 3G to 4G and, 
most recently, to 5G projects. 

There  is  also  a  general  move  towards  software-based  equipment,  instead  of  dedicated 
hardware.  Standard  hardware,  such  as  a  PC,  has  more  and  more  processing  power  and 
therefore  algorithms  that  previously  needed  dedicated  hardware  may  be  implemented 
using software and standard hardware. This has several advantages for the customers: the 
use of standard hardware decreases the cost of investment (Capex: capital expenditures). It 
also  makes  the  future  evolution  of  the  equipment  easier:  it  is  cheaper  and  faster  to 
upgrade  software  than  to  change  hardware,  thus  diminishing  operating  costs  (Opex: 
operating  expenditures)  as  well.  This  tendency  was  not  in  evidence  directly  in  the  10 
companies,  but  hardware  companies  such  as  Ateme  have  more  and  more  to  deal  with 
software companies such as Elemental, which provide a software-based encoding system. 

Therefore,  initial  technological  knowledge,  its  maintenance,  growth  and  update  are  behind  many 
activities in each company.  These include not only the use of in-house resources, but also a much 
larger  set  of methods  for  accessing  external  resources,  or  co-producing them.  In  this  last  case,  a 
significant activity is the embedding of the company in a dense network of external relations.  

2.2.1  Capitalizing on in-house technological knowledge  

The technological competence of the founders 

Most  of  our  companies  have  resulted  from  the  founder's  decision  to  start  a  business  based  on 
emerging technologies. These founders initially came from engineering schools. Their professional 
experience varies, from practically none as they have just completed their studies to  considerable 
industrial expertise accumulated over time. In both cases, they want (or are obliged) to start some 
new activity.   

Most  of  these  founders  are  not  “serial  entrepreneurs”.  They  are  still  managing  the  company  they 
created  years  ago:  some  of  them  still  keep  financial  control  over  the  company  (ownership).  The 
interviews reflect their strong personal commitment to the success of their company. None of them 
mentioned  selling  their  companies  and  a  strong  personal  relationship  (identification)  appears  to 
exist between them and their companies.11  

Examples:  

  Esker  was  founded  in  1985  by  two  engineers  to  develop innovative  software  products,  in 
relation to the emergence of the PC and unified operating systems (Unix). The aim was to 
create  a  software  editing  company.  The  first  product  (terminal  emulator  on  PC)  was  a 
worldwide success.  

10   IPTV  (Internet  Protocol  TV):  a  technology  that  makes  it  possible  to  provide  TV  services  over  managed 

Internet. 

11   Another  striking  anecdotal  aspect  is  that  in  many  cases,  the  selected  companies  were  created  by  2 

individuals, not only one. 

 8 

 
 
 
 
                                                        
  Awox  was founded  in 2003 by a team  with experience, that has been  previous managing 
(as CEO and R&D directors) Smartcode Technologies (1994), one of the first companies for 
Internet  software  which  later  became  Palm  Computing  Europe.  The  basic  idea  was  to 
provide software for connected home equipment. 

  Two engineers founded Ateme in 1991 after a few years of professional life. They wanted 
to develop innovative software, and were fond of technology. By offering advanced services, 
they managed to obtain a significant portfolio of IP on digital compression.  

 

Intrasense  was  created  in  2004  to  develop  tools  for  integrating  and  analyzing  medical 
imaging data from different imaging devices in a unified work environment. The founder of 
the company discovered the technology in the US and then  completed a PhD in France on 
digital  imaging  for  analysis  of  liver  cancer,  with  the  collaboration  of  very  motivated 
physicians. 

  Two  engineers  founded  Aquafadas  in  2006  to  develop  innovative  editing  software.  Their 

second product was a success. 

The only exception in the sample is Astellia. This company was created in 2000 as a spin-off from 
France Telecom, with a long privileged relationship (now ended) with Orange R&D.12 

Thus  it  appears  that  tech  companies  in  their  early  stages  rely  on  the  technological  knowledge  of 
their founder(s). Technology is part of their DNA and its creation could apparently not be generated 
by an imported resource, simply grabbed on the market. 

Incorporating skilled staff from the labour market 

A  second  source  of  technological  knowledge  comes  with  success,  hence  growth  and  staff 
recruitment.  Contrary  to  pessimistic  expectations,  the  issue  of  finding  talented  people  was  rarely 
been  mentioned  as  a  problem.  Taking  into  account  the  average  size  and  growth  rates  of  the 
interviewed companies, and their high technological level, the hypothesis of low recruitment levels 
or low expectations can be discarded. In France skilled ICT staff seem to be available. The Paris and 
Ile-de-France regions are often mentioned exceptions, mostly in terms of staff costs.  These views 
echo similar observations made in other research projects about France.13 

Developing core in-house R&D 

All the observed companies claim to run an in-house R&D department, which should not come as a 
surprise in companies belonging to the hi-tech sector. They have a variable, but generally high-level 
of  R&D.  Many  of  them  have  one  main  research  center,  where  most  of  the  in-house  R&D  and 
innovation is done. 

For  the  companies  which  provided  figures  for  R&D  expenses,  the  percentage  of  R&D  expenses 
compared to revenues ranged from 10% (Esker) to 39% (Awox).  

For  the  companies  which  provided  figures  for  the  number  of  R&D  employees,  the  percentage  of 
R&D employees to the total number of employees ranges from 33 percent to more than 50 percent. 
Companies with more than 50% employees in R&D include Vitec, Aquafadas and Intrasense. 

We have no figures for R&D by Kreactive and Wiztivi. For Wiztivi, one of the youngest and smallest 
companies in the selection, developers are part time researchers, depending on their work loads. As 
their customers are mainly large R&D labs, we can consider that these researchers contribute to a 
significant R&D effort. For Kreactive, the level of R&D should also be significant. 

Some companies mentioned explicitly the need to be technologically “one or two years in advance”, 
in order to be ready if a new market demand appears. Very advanced technological knowledge is, 

12   France Telecom changed its name in Orange, its mobile brand in 2013. 
13   See for example the EIPE experts interviews reports: http://is.jrc.ec.europa.eu/pages/ISG/EIPE.html 

 9 

 
 
                                                        
and will continue to be, a strategic resource that helps companies to survive and find success on the 
market. 

Examples: 

  Vitec and Ateme need to keep up with new developments in digital compression, which are 
often pushed by consumer equipment manufacturers. The speed (and success) of the move 
from analog TV to digital TV, to High Definition, to 3D (stereoscopic) and to UHD is difficult 
to predict.  

  Wiztivi develops new standards and technologies to allow the development of interactive TV 

and video on all terminals available.  

  Awox  develops advanced products for the connected home, and needs  to  be innovative in 

order to compete with giant companies such as Samsung or Google  

2.2.2  Access to external knowledge  

Many  different  ways  of  obtaining  technological  knowledge  from  outside  the  company  were 
observed.  Successful  ICT  companies  develop  proactively  a  technology  watch  function,  which 
includes  a  variety  of  ways  of  capturing  relevant  opportunities  in  a  rapidly  changing  technological 
sector.  The term 'open innovation' is not necessarily quoted, but the behaviour and motivations of 
these companies often remind us of an environment of this kind. 

Firm acquisition 

The acquisition of other firms in the same or in a complementary domain is always an option. 

Examples: 

  Esker  bought  an  US  company  which  sells  fax  servers,  and  became  a  world  leader  in  that 

domain. 

  Vitec,  in  order  to  master  the  growing  IPTV  technology  market,  bought  the  Israeli  company 
Optibase  (at  least  its  IPTV  part),  and  kept  part  of  Optibase's  research  team  in  Israel.  IPTV 
technology distributes digital TV through managed Internet networks. It therefore has a lot in 
common  with  digital  broadcast,  but  also  significant  technical  differences,  and  a  need  for 
specific research and continuous innovation. Optibase, founded in 1990, was an IPTV specialist, 
which  became  fully  owned  by  Vitec  in  2010.  The  company  is  still  doing  research  and 
manufacturing  in  Israel.  This  move  allowed  Vitec  to  increase  the  size  of  its  offer,  covering 
more of the video digital domain, and to increase the number of its potential customers, while 
also increasing its development and marketing capabilities. 

In both cases, the acquisition enabled the companies to address new markets, with a large number 
of technical and commercial connections.  

Technology acquisition from other firms or research centres 

External  technologies  can  be  bought  and  become  the  property  of  the  company.  This  option  is 
considered  when  the  company  wants  to  concentrate  on  its  key  competencies  (estimated  to  be 
critical  for  the  market)  and  also  complement  them  with  new  technologies  in  order  to  expand  or 
consolidate their market. 

This move often means that the company has to move from being a pure developer to becoming an 
integrator.  The  term  'integrator'  may  be  misleading.  In  numerous  industries,  integrators  are 
companies  which  answer  the  need  of  a  specific  customer  by  buying  and  assembling  the  best 
building blocks available on the market. The integrator in this study develops technology internally, 
integrates into it some externally developed technology, and produces the final product to be sold 
on the market.  

 10 

 
 
 
 
 
This  move  from technology  provider  to integrator  deserves  attention.  Two  main  factors  drive this 
evolution. 

First,  technological  knowledge  is  a  key  characteristic  of  all  the  founders.  They  are  all  highly 
educated people, mostly engineers. New companies usually rely on their internal knowledge as they 
generally do not have enough funds to buy knowledge from outside. This has a natural side effect: 
new companies usually sell one type of product or technology to other companies, which are able to 
provide the technological complement to the final customer. In order to grow, companies may need 
to  integrate  several  technologies.  Many  of  the  examples  selected  became  integrators,  when  they 
had acquired sufficient resources. 

Second,  all  the  surveyed  companies  claim  they  are  facing  rapid  (and  accelerating)  technological 
changes,  emergence  of  new  markets  and  usages,  and  new  demands  from  users.  Most  of  the 
companies  have  responded  by  keeping  the  same  product  lines  and  at  the  same  time  addressing 
progressively adjacent or new markets. This allows them to grow, and fulfil new customer demands.   

This  constraint  and  the  resulting  strategy  may  compel  the  companies  to  keep  and  develop  their 
basic know-how, while extending it to new adjacent markets. This extension to new technology and 
new  markets  is  often  associated  with  a  move  from  being  pure  technology  developers,  which  is 
feasible when companies develop one product based on one technology, to technology integrators, 
This move limits internal technological development to what is considered critical. It also gives more 
importance  to  the  consumer’s  requests  and  expectations,  as  these  become  more  complex  and 
sophisticated.  It  leads  to  an  increase  in  the  tendency  to  “learn  from  the  consumer”.  Market 
knowledge becomes essential. 

Examples: 

  From  2009,  Astellia  (monitoring  mobile  networks)  has  been  developing  a  methodology  to 
source  needed  new  technologies,  select  the  most  fitting,  buy  and  integrate  them.  The 
evolution  of  Astellia  was  strongly  motivated  by  its  need  to  master  numerous  evolving 
technologies. This mastery has enabled it to  extend its offer to all parts of the network and 
answer customers’ demands more rapidly.  

  Ateme  concentrates  on  the  heart  of  its  business:  developing  the  best  in  class  encoders.  In 
order  to  achieve  this,  it  bought  audio  technology  from  Fraunhofer  that  was  needed  but  not 
critical.14 Thus, the company, to keep its technological advantage, is becoming more and more 
an integrator. 

Technology watch through participation in standardization consortia 

Participation  in  industrial  consortia  developing  (de  facto)  standards  is  a  key  element  in  several 
companies’ strategies. This participation has both a financial and a human cost, as usually the most 
experienced  researchers  are  the  contributors  to  the  consortia.  But  it  also  has  several  positive 
impacts, giving the companies: 

-  A  precise  knowledge  of  the  technological  level  and  strategies  of  the  main  international 

players, 

-  Worldwide visibility, not only to potential competitors, but also consumers, 
- 

The  possibility  to  influence  the  standard  decisions  from  the  inside,  thus  obtaining  a 
technological advantage, 

-  Anticipated knowledge of emerging standards,  allowing them to adapt more rapidly to the 

market. 

Participating in standardization consortia is a strategic choice, not made by all the companies. Some 
prefer to work on the successive drafts published by the standardization organism and not invest 
too heavily in this type of (costly) activity. 

14   Buying technology from public research centres allows benefitting from R&D tax reduction. 

 11 

 
 
 
                                                        
Among the most active examples in our sample: 

  Awox  made  a  key  strategic  choice  to  become  a  main  player  in  standard  development  by 
supporting  DLNA  (Digital  Living  Network  Alliance),15 an  international  private  consortium 
founded in June 2004. Awox invested heavily in R&D activities in this domain and succeeded 
in becoming a major player. Awox is currently recognized worldwide as a technical leader for 
DLNA standards and implementation. This has allowed the company to develop building blocks 
for  large  electronic  companies,  and  more  recently  to  develop  advanced  products  for  the 
connected home. It is also involved in HbbTV.16 

  Ateme  is  very  active  in  standardization  committees  and  in  industry  forums  (DVB,  IABM, 

SMPTE). Ateme is also present in HEVC.17 

  Aquafadas is active with Idealliance18 and Wiztivi with HbbTV. 

Cooperative R&D Programmes 

International cooperative programmes 

Most  companies  never  participated  in  public  R&D  international  programmes  and  even  less  in  the 
European  ones  (EU  Framework  programme  or  Eureka).  The  key  reasons  for  not  using  these 
programmes  include  the  absence  of  timeliness  of  such  programmes,  their  administrative  burden, 
the  managers'  lack  of  knowledge  of  the  existing  instruments  (during  some  interviews,  existing 
mechanisms had to be explained, as they were totally unknown to the managers), the difficulty to 
find and obtain the right partners, and the expected ratio cost/benefit of gaining access.  

Finding relevant information is seen as an expensive task (as it uses a scarce resource, i.e. the best 
experts  of  the  company), always  followed  by even more  expensive  work  producing  an  acceptable 
proposal. In addition, attempts to obtain funding had failed in various cases.  

Cooperative programmes are seen as a waste of time and money, not compensated by the funding 
offered. Cooperation with other international  companies may  be necessary but  doing this  through 
direct contacts is seen as easier. 

Consultancy  companies  offer  services  as  intermediaries,  but  they  are  not  seen  as  efficient. 
Information days for the Framework programme do not raise significant interest.  

In  the  sample,  Vitec  is  the  main  exception.  It  is  the  only  company  that  has  successfully  used 
international  cooperative programmes.  By  chance  or  design,  it  had  a  staff member  who  was  well 
acquainted with the mechanisms and benefited from good contacts with qualified people 

Some quotes: 
“We don’t go to the Information Days, unless the domain is totally new”. 
“An Information Day is not the place where projects can be built”. 
“It is too difficult to find the good projects”. 

Examples: 
 

Intrasense:  their  only  European  proposal  was  made  in  2006  (FP6)  and  was  rejected.  A 
possible explanation is the poor support they received in making the proposal. Note that the 
company largely practices direct international research and development cooperation. 

15   http://www.dlna.org/ 
16   https://www.hbbtv.org/ Hybrid Broadcast Broadband TV or “HbbTV”, is a major new pan-European initiative 
aimed  at  harmonizing  the  broadcast  and  broadband  delivery  of  entertainment  to  the  end  consumer 
through connected TVs and set-top boxes. 

17   High Efficiency Video Coding (HEVC) is the current joint video coding standardization project of the ITU-T 

Video Coding Experts Group and ISO/IEC Moving Picture Experts Group 

18   http://www.idealliance.org 

 12 

 
 
 
 
 
                                                        
  Awox's proposal in FP7 was accepted, but not funded.19 

  Wiztivi contributes to standard consortium, but up until now, it has not tried to participate in 
European  projects  The  company  is  currently  trying  to  participate  with  the  support  of  a 
consulting company. 

  Awox  has  a  very  high  level  of  international  cooperation,  which  is  mainly  due  to  its  very 

active participation in an international industrial consortium. 

This situation seems to have evolved over the last few years.  Interviews with companies show that 
at least some of them feel the need for more international cooperation. They want to understand 
better the nature and (probably more importantly) the rate of change of the technologies they are 
working with.  This interest arises from the increasing complexity of new technologies, the need to 
master more domains and understand the market evolution through collaborative exchanges. 

Examples 

  Astellia intends to join its first European project in 2015. This decision may be related to the 
fact that the technological complexity of customer needs is increasing, and that cooperative 
innovation is a potential answer. 

National cooperative programmes 
At  the  national  level,  the  two  main  funding  mechanisms  are  FUI  and  ANR.  FUI20 (Fonds  Unique 
Interministériel) is more development-oriented and ANR21 (Agence Nationale de la Recherche) more 
research-oriented. Bpifrance may provide support to SMEs for building the cooperation. 

The  same  issues  appear  as  in  international  cooperation.  Companies,  which  position  themselves 
globally, do not mention national cooperation as a major factor. As with international cooperation, 
lately there is a possible tendency towards more cooperation.  

Examples: 

  Ateme,  which  was  up  until  now  very  reluctant  to  cooperate,  has  entered  a  cooperative 
project  4EVER  (for  Enhanced  Video  ExpeRience).  4Ever  is  supported  by  two  Poles  of 
Competitiveness,22 and  funded  by  Bpifrance,  European  Structural  Funds  and  the  Brittany 
region. 

 

Itesoft entered a large cooperative programme in 2010 with Sagemcom. 

Relationship with universities and research centres 

For the observed companies comments, universities are neither great sources of knowledge nor are 
they  strong  players  in  the  innovation  domain.  None  of  the  10  companies  has  a  significant 
relationship  with  any  university.  Relationships  with  public  research  centres  are  slightly  better,  but 
always mentioned as difficult. This observation echoes similar observations by Nesta.23 

19   Detailed  information  is  not  available.  The  project  might  have  received  a  good  evaluation,  passing  the 

requested thresholds, but without being accepted for funding. 

20   FUI Funds Unique Interministériel is more development oriented (http://competitivite.gouv.fr/les-appels-a-
research  oriented 

projets-de-r-d-fui/les-appels-a-projets-de-r-d-du-fui-380.html)  and  ANR  more 
(www.agence-nationale-recherche.fr/) 

21   www.agence-nationale-recherche.fr/ 
22   http://competitivite.gouv.fr/ 
23   Nesta Working Paper N° 14/01 “’Increasing the vital 6 per cent’: designing effective public policy to support 
high growth firms”. This documents states : "“there is a strong belief within public policy that universities 
play  a  strong  role  in  generating  HGF  (High  Growth  Firms).  Similarly  universities  are  seen  as  knowledge 
generator  of  IP,  which  is  then  licensed  by  new  start-up.”  The  NESTA  paper  states  that  this  belief  is  ill 
founded, and that drivers for innovation are suppliers, customers and end-users.  

 13 

 
 
 
 
 
 
                                                        
The  attempts  to  cooperate  with  universities  are  generally  described  as  disappointing,  for  several 
reasons, which include: 

  Companies and universities work to different time scales for specific projects: six months is 
quite a long time for an SME. Industry has widely adopted new programming methodologies 
such as Agile programming, which allows for much shorter software cycles, by facilitating 
quick  experiments.  This  has  led  to  software  cycles  of  months  not  years.  This  industrial 
acceleration does not fit well with the usual timing in universities. 
Example: In 2010, Esker moved to Agile technology to develop software.  

  Universities have a different purpose: company relationships with universities and research 
labs are seen as difficult, since they rarely agree to address industrialization aspects. Proof 
of concept is sufficient to make a good publication, which is the main goal for a researcher.  
For industry, however, the key issue is to prove a concept's practical applicability.  

Example: A representative from one of the ten companies illustrates this by saying that the 
research lab view is often unfortunately the following: “The method works fine with 1,000 
objects, I don’t care if it will work with 1 million objects”, and the lab is then not willing to 
continue the cooperation up to the industrial proof of concept. 

Some other quotes: 
“Working with Universities has always been a failure; rhythms were too different. Several attempts 
were made with selected researchers, and it was always impossible to synchronize.” 
“Cooperation  with  Universities  have  always  led  to  failure:  researcher  not  available,  timing  not 
compatible with industry” 

It  is  interesting  to  observe  that  most  company  founders  were  trained  in  robust  research  and 
national education institutions. Though the universities and other higher education institutions have 
played  a  major  role  in  generating  entrepreneurs  with  a  vision  about  new  technologies,  this  link 
seems to fail or fade out. 

There  was  no  example  of  public  research  licensing  to  be  found  in  the  companies.    There  are  a 
significant number of other cases in France, known to the author through his professional activity, 
where the start-up founder has wanted to license research results, usually developed previously by 
himself inside a research centre. The royalties requested by the research lab vary depending on the 
institution's strategy (University, research centre, engineering school) from low to significant, which 
can then compromise the economic development of any company.  

These  problems  have  been  recognized  in  France,  and  led  to  the  recent  creation  of  SATT  (see  the 
following box). 

Sociétés d’Accélération du Transfert de Technologies  

In France, the SATT (“Sociétés d’Accélération du Transfert de Technologies”) was recently created. A 
SATT  brings  together  private  companies  with  100%  public  funding,  which  have  a  major  goal: 
simplify,  accelerate  and  facilitate  the  transfer  of  technology  and  knowledge  from  academic 
institutions  to  industry.  SATTs  are  regional  independent  institutions,  which  may  have  different 
strategies.24 Currently 14 SATTs are operating. €856 million have been devoted to SATT creation in 
the context of the “Programme d’investissement d’avenir (PIA)” decided in 2010.  Their activity may 
include  managing  or  protecting  IP  for  the  companies  or  funding  the  development  of  prototypes. 
Their range of activities varies depending on local policies and is still evolving. 

24   http://www.satt.fr/que-sont-les-satt/ 

 14 

 
 
 
 
 
 
 
 
                                                        
Learning through surveys of competitors  

All companies carry out an ongoing survey of their competitors using the same technology, and of 
new  technologies,  which  may  compete  with  the  existing  ones.  This  is  mostly  done  empirically, 
through  Internet  search  (news,  websites  of  the  competitors,  websites  of  standard  organizations), 
participation in international conferences. It is difficult to assess the level and cost of this effort. 

2.2.3  Technological knowledge: concluding remarks  

This set of anecdotal evidence collected from the observation of 10 companies offers some points 
worth noting: 

-  As expected,  technological knowledge is an important  resource for these innovative SMEs. 
The founders' initial technological expertise has been a central factor in the creation of the 
company.  
Technological knowledge continues to be a central factor for survival and success. Keeping 
“more than up to date” with the technology is considered fundamental. It also reflects the 
needs of the business itself as it matures from technology provider to integrator. 

- 

-  All the companies host a research department and are highly R&D intensive in comparison 

to non-tech SMEs. 

-  More importantly, all companies claim they have developed a variety of methods to acquire 
technological knowledge from outside the company: from informal techno-watch to formal 
participation  in  lengthy  standardization  processes,  up  to  technology  and  firm  acquisitions. 
These  companies  therefore  carry  out  considerable  networking  activity,  the  methods  and 
aims of which reflect the forms of open innovation. 

-  At  the  same  time,  the  companies  underline  their  lack  of  contacts  –  if  not  trust  –  in 
universities and research centres (due to issues  with differentiated timing and objectives).  
They  also  seem  to  avoid  entering  EU  R&D  programmes  (for  reasons  of  administrative 
burden,  lack  of  cost  effectiveness,  slowness,  etc.).  Such  claims  probably  illustrate  the 
distance  between  the  everyday  management  of  an  innovative  SME  and  the  perceived 
accessibility  of  the  system  of  innovation  and  its  pillars:  the  universities  and  the  public 
authorities. 
Finally,  local  clusters  were  never  mentioned  by  any  of  the  interviewees  as  a  source  of 
knowledge exchange.  

- 

2.3  Access to finance 

In  this  chapter,  we  now  address  first  the  private  and  then  the  public  funding  tools  that  were 
mentioned by the interviewed companies. Of course, they are not mutually exclusive. Money from 
banks, from investors, from other companies and from public support is usually combined.25 

2.3.1  Private funding 

Early revenues through services provision  

Several  companies  have  started  with  a  business  model  based  on  providing  services.  Providing 
services  allows  them  to  benefit  from  immediate  sources  of  revenues,  especially  for  young 
companies with strong expertise in a new development.  

25   We  have  not  studied  here  the  large  number of  small  subsidies  (funding  proof  of  concept  or preliminary 
market study…) or lending provided by local authorities, which facilitated the creation of the company and 
its  first  step,  but  did  not  go  further.  A  document  about  the  French  situation  is  available  at: 
http://frenchfunding.fr/le-parcours-du-financement/#.VC1yWOeXL9Q 

 15 

 
 
 
 
                                                        
Awox, Kreactive, Itesoft, Esker, Wiztivi and Ateme started by offering services. These services were 
mainly  for  developing  advanced  pieces  of  software or  hardware  for  specific  needs,  and  based  on 
new technologies the founders had mastered. Based on the knowledge acquired, they were able to 
develop internally and sell algorithms or methods, and/or software and hardware. 

Examples: 
 

Itesoft,  created  in  1988  was  first  called  ITA  (Informatique  et  Technologies  Avancées).  It 
aimed  to  develop  advanced  projects  for  unique  customers.  The  first  projects  dealt  with 
character recognition. These projects allowed the founders to identify needs and customers, 
especially  large  administrative  organizations  ((CNAMTS26,  URSSAF27).).  A  market  study 
followed  and  led  to  the  decision  to  develop  and  sell  software  dealing  with  document 
understanding, based on the knowledge acquired. 

  Ateme,  was  founded  in  1991,  and  was  dedicated  to  encoding  video  It  is  an example  of a 
move from services offering to IP selling and finally  to product  selling. (The name ATEME 
means  “Assistance  Technique  et  Etudes  de  Matériels  Electroniques”  -  technical  assistance 
and  studies  of  electronic  equipment).  The  company  started  by  offering  design  services, 
which  were  ad-hoc  developments  fully  developed  by  Ateme,  with  very  positive  results. 
Ateme was a growing and successful  service company, which tried  rapidly to develop  and 
sell  a  product  based  on  a  previous  development.  This  was  a  commercial  failure,  probably 
due  to  the  absence  of  a  specific  market  study.  The  company  kept  the  ownership  of  the 
software/hardware  components  developed  as  services.  In  2000,  they  owned  a  significant 
portfolio,  based  on  components  for  which  they  kept  the  IP.  They  then  started  then  a  new 
business model selling IP to be used by their customers.  Services activities contributed to 
the  knowledge  of  the  customer’s  needs.  The  move  to  IP  developing  and  selling  was  not 
satisfying  (no  market  visibility,  no  control  over  the  use  of  the  technology  by  customers, 
large players buying the technology just to fill a time gap). The company decided to develop 
its own brand and put its digital compression products on the market in 2007, which led to 
success after “suffering for a couple of years”. 

  Esker, was founded in 1985, as a software editing company. Initially, it provided software 
services and training. PCs and Unix were emerging at that time, dedicated terminals were 
widely  used.  The  company  sold  services,  based  on  a  Unix  dialect  (SCO  Unix)  that  could 
manage  time-sharing  systems  (typically  5  to  10  terminals/PCs  in  a  lab).  The  services 
revenues funded the product development, an emulator of a terminal on a PC, which was a 
worldwide success, with sales in Europe, US and Australia. 

The company (a few people at the start) in each of these three examples owned a new technology 
competency  on  document  understanding,  digital  encoding  or  PC  Unix-based  software.  Providing 
services allowed for early revenues which served initially as the main source of funding, and also 
allowed the companies to better understand their customer’s needs. 

Ateme, which now sells hardware-based products, experienced what could have been “death valley” 
when it made the move from services to hardware products. Services provide immediate revenues, 
but  revenues  from  the  sales  of  products  are  only  received  a  long  time  after  product  definition, 
development and commercialization. The complementary know-how needed is a second issue: how 
to  (re)-define  a  business  model,  how  to  select  the  right  product  specifications,  how  to  set  up  a 
marketing  activity,  then  a  manufacturing  activity  and  finally  a  commercialization  activity.  The 
volume of issues raised implies a significant risk and  broad  competences are required to address 
them. The move from service to product implies a significant level of innovation, which is not only 
technical,  but  also  business-related.  This  death  valley  crossing  is  quite  visible  in  Ateme's  results. 
There was a significant revenue drop in 2008 and 2009, related to the discontinuation of service 

26   CNAMTS Caisse nationale de l'assurance maladie des travailleurs salariés 
27   URSSAF Unions de recouvrement des cotisations de sécurité sociale et d’allocations familiales 

 16 

 
 
 
                                                        
offer, which was only partly compensated by the revenues associated with product sales. In 2010, 
however, Ateme resumed its growth. 

Initial support from a large company, followed by venture capital 

Engineers trying to develop new technologies within an existing company can launch a start-up with 
the support of that company (Intrapreneurship).  

Examples: 

  Wiztivi was created in 2007 by two people, who worked for a large group (Proservia). They 
convinced  the  CEO  of  the  group  to  create  an  innovative  company  as  a  subsidiary  of 
Proservia.28   Wiztivi's  main  objective  was  to  allow  the  TV  viewers  to  have  access  to  web 
sites  on  their  TVs  using  only  their  regular  remote  control,  through  the  use  of  software 
downloaded to their ADSL box. One of the arguments used to convince Proservia was that 
customers of WizTiVi would need services such as the building of specific web sites.  Since 
then,  the  project  has  gone  through  several  evolutions  related  to  the  demands  of  the  key 
players:  TV  manufacturers,  ISP  and  content  providers.  The  first  version  included  a  unique 
Wiztivi  portal,  which  distributed  the  connections  to  the  various  TV  sites.  This  feature  was 
refused  by  the  ISPs.  However,  the  work  allowed  Wiztivi  to  acquire  unique  knowledge  in  a 
complex  domain  by  combining  different  major  players,  and  new  technologies  as  they 
evolved: emergence of connected TV sets, connected game consoles and connected boxes, 
emergence of widgets on the TV sets. 
In 2011, Proservia (acquired by Manpower Group) decided that its main activities were too 
far away from Wiztivi, and SFR development29 (a venture capitalist fund) agreed to become 
the main shareholder, while leaving the company strategic freedom. Currently, the company 
advertises  itself as the worldwide specialist in interactive user interfaces dedicated to set 
top boxes, TVs and other connected devices. 

Early stage love money 

“Love  money”  describes  funding  from  people  interested  in  supporting  the  project,  for  various 
reasons, the most common being that they are friends of the founders, or members of their family. 
Usually this kind of investor does not request financial return. 

Example: 
 

Intrasense was supported by “love money”.  It was founded in 2004, and carries out digital 
imaging of pathologies, for example, cancers. The first investors (after initial creation) were 
two  physicians  who  believed  in  the  company's  potential  and  wanted  to  contribute  to  the 
research against cancer. Funding also included early revenues from service provision. In this 
case,  the  service  provision  was  not  related  to  the  company's  current  activity,  but  still 
provided an important source of revenues. 

Unemployment benefit 

Another funding method, not used in the ten cases selected, but observed frequently in companies 
created  by  former  employees  is  to  use  their  severance  payment  from  the  former  company.  In 
France, specific regulations allow the  transfer of unemployment benefit into capital.30 Though this 

28   The CEO of Proservia was at the beginning the CEO of Wiztivi 
29   SFR  Development  is  a  venture  capitalist  arm  of  the  French  telco  operator  SFR.  See  more  at: 

http://groupenumericable.sfr.fr/reseau/open-innovation/les-societes-du-fonds-sfr-developpement 

30   http://www.pole-emploi.fr/candidat/les-aides-financieres-a-la-creation-d-entreprise-

@/suarticle.jspz?id=27043 

 17 

 
 
 
 
 
 
                                                        
measure was not mentioned by the 10 companies considered, it has nonetheless often been used 
by recent start-ups.  

Example: 

  For  Intrasense:  being  unemployed  was  mentioned  by  the  founder  as  an  important 
motivation  to  create  Intrasense,  but  unemployment  benefit  was  not  available.  Later, 
research  tax  credit  and  JEI  status  allowed  him  to  accelerate  R&D  activities.  Intrasense 
actively invested in research and development (more than €9 million since its creation) and 
developed from the start an international commercial strategy based on industrial (Original 
Equipment Manufacturers) and commercial partnerships (distributors).  

Venture capital 

Business  angels  usually  fund  recent  start-ups  at  a  low  level  (typically  between  €100,000  and 
€500,000).  However,  Venture  Capital  (VC)  targets  companies  which  have  already  proved  they  are 
working businesses, but which need cash to continue to grow.  

Out of the ten companies, VCs funded six, with various levels of funding.  They were mostly French 
organisations, such as Innovacom, which invested in Astellia and Awox. Innovacom is one of the few 
French VCs with international activities. It was a subsidiary of France Telecom (Orange), founded in 
1988 to contribute to the development of innovative start-ups able to complete France Telecom's 
offer. It was bought by its managers in 2012. Orange still contributes to the new developments of 
Innovacom. 

In  all  cases,  the  VCs  intervention  did  not  seem  to  imply  a  loss  of  control  of  the  company  by  the 
founders, who are still fully managing their companies. 

Examples: 

  The  founders  of  Awox  (created  2003),  who  were  previously  managers  of  a  large 
company,  used  their  strong  financial  knowledge  and  contacts  to  raise  funds.  They 
carried  out  fund raising in 2004, 2006, 2009 and 2011. On  some of these occasions, 
fund raising was related to subsidiary openings (2006 Singapore, 2009 USA). The level 
of funding was respectively 900k€, 1M€, 4M€ and 2M€. The first fund raising in 2004 
benefitted  from  Awox  being  an  innovative  company  (FCPI  -  Fonds  Commun  de 
Placement dans l’Innovation31): private investors were therefore able to claim a rebate 
on their revenues or their fortune. 

  Astellia (created 2000, a spin off from France Télécom), was funded by VCs (Innovacom) 
related  to  France  Telecom  (now  Orange),  essentially  to  develop  market  and  sales.  In 
June 2013, founders and employees still own 32% of voting shares. 

  Kreactive (created 2004) raised €3 million in 2013. This followed a major change in the 
company  strategy  in 2012,  which aimed  to offer  “lifelong learning”  through  dedicated 
sites  owned  by  the  company  under  a  framework  combining  advertising,  monetizing, 
automatic inclusion of new contents and deep analysis of usages. The investors include 
French investors, Turenne Capital,32 Alto Invest and business angels. 

 

Intrasense  (created  2004)  raised  €4.4  million  in  2008.  Since  its  creation,  Intrasense 
recorded a very high growth, but with almost permanent losses up to 2013. 

  Wiztivi (created 2007) was supported for 3 years by Proservia (see above) and then was 
bought in 2010 by SFR Development. Since its creation, Wiztivi  has recorded very high 
growth,  but  with  continuous  losses  up  to  2013.  In  2013  EBITDA  became  positive,  and 
2014 will see the first profit. 

31   http://www.mes-fcpi.fr/principes/principes.php 
32   According to its web site (http://www.turennecapital.com/en/) Turenne Capital is dedicated to being a long-
term shareholder that provides expertise, advice and follow-up to directors in the developmental stages of 
their company. 

 18 

 
 
                                                        
  Vitec  (created  1988)  was  partly  funded  by  VCs,  but  the  founders  bought  back  their 

shares in 2005. The VCs were considered as having too short-term goals. 

Initial public offering  

An  Initial  Public  Offering  (IPO)  is  a  usual  way  of  raising  private  money.  Half  of  the  ten  selected 
companies went for an IPO after they reached a significant development level.  

Examples: 

  Esker  (created  1985)  entered  Euronext  in  1997.  Itesoft  (created  1984)  was  introduced  in 
February  2001  at  Nouveau  Marche  de  Paris  (now  Euronext33)  by  a  financial  consultancy. 
Astellia (2000) entered NYSE Alternext in 2007.  

  Since this study began, two more companies have launched successful IPOs (in 2014): Awox 
and  Ateme.  They  obtained  €25  million  and  €13.3  million  respectively.  A  specific  goal  of 
Awox was to develop its activity towards consumers, which is typically cash consuming. 

The fund raisings had different goals depending on the company strategy, but usually they allowed 
the  companies  to  launch  or  follow  significant  strategic  move.  With  the  exception  of  Astellia,  all 
companies were more than 10 years old, and Astellia was a spin-off from France Telecom, which 
already had a significant internal history. 

2.3.2  Public funding 

There are many public schemes that support R&D and innovation in France and at European level. 
Describing  them  all  is  outside  the  scope  of  this  paper.34 This  section  concentrates  on  those  that 
have been mentioned by the interviewees as having had an important impact. 

They are: 
- 
- 
- 

the Zero rate lending for R&D costs  
the Research Tax Credit 
the “Concours national d'aide à la création d'entreprises innovantes”. 

These alre not funding instruments in a regular sense, but they provide major support, and are used 
by almost all companies. We also describe briefly two additional support schemes: JEI and Jeremie. 

Bpifrance is not directly in charge of all the actions mentioned below, but it is always a key player, 
providing expertise and funding. 

Bpifrance 

Bpifrance is a public investment bank and a trusted partner for entrepreneurs. It resulted from the 
merger of OSEO financing professions, the Strategic Investment Fund (FSI), the FSI Regions and CDC 
Entreprises (Caisse des Dépôts et Consignations) activities. Since the 1 January 2013, Bpifrance has 
been  the  main  instrument  of  the  French  State  for  competitiveness  and  growth  services  for 
companies.  

Bpifrance  manages  a  large  and  rapidly  evolving  set  of  tools  to  support  innovative  companies, 
mainly  SMEs.  Its  web  site  provides  an  overview  of  the  existing  support  possibilities.  A  complete 
description may be found at the dedicated page of Bpifrance.35  

With 2 200 employees, Bpifrance has three goals: 
    To accompany businesses in their growth; 

33   NYSE and Euronext merged in 2006. 
34   There  exists  a  significant  number  of  subventions  for  start-ups  from  local  authorities  or  organizations, 
which  facilitates  the  creation  of  a  company.  Level  of  funding  is  usually  very  low  (around  a  few  ten 
thousands  Euros),  quite  efficient  to  facilitate  the  work  before  the  creation  (market  feasibility,  technical 
feasibility),  but  have 
for  example: 
http://frenchfunding.fr/le-parcours-du-financement/#.VC1yWOeXL9Q 

the  creation.  For  France,  see 

influence  after 

less 

35   www.bpifrance.fr  

 19 

 
 
                                                        
    To prepare tomorrow’s competitiveness; 
    To develop an ecosystem that favours entrepreneurship. 

Bpifrance assists businesses of all sizes, primarily micro-businesses, SMEs, and mid-caps but also 
big firms that are considered strategic in terms of the national economy, territories or employment. 

Bpifrance  finances  businesses  from the  seed  phase  to transfer  to  stock  exchange  listing,  through 
loans, guarantees and equity. 

Bpifrance, whose two equal shareholders are the French State and the Deposits and Consignment 
Fund (Caisse des Dépôts), acts in support of public policy established by the State and the Regions. 

Source: http://www.nefi.eu/our-members/france-bpifrance/ 

Zero rate lending for R&D costs 

The  official  name  is  “Aide  pour  le  développement  de  l’innovation”  (Support  for  innovation 
development) and includes zero rate lending and lending with no reimbursement  if a project fails, 
the last option being less and less used. 

The company needs to present a strongly innovative project to be eligible for this support.  

Bpifrance manages, on behalf of the public authorities, the availability of zero rate lending for R&D 
costs. It includes delayed reimbursement beginning a couple of years later. This support covers up 
to  50%  of  the  total  development  cost,  excluding  marketing  and  commercialization  costs.  It  is  an 
attractive tool, and indeed widely used, since it allows companies to develop products and only start 
repaying the loans when they collect their first revenues. 

Bpifrance Zero rate lending of R&D costs was used by the majority of the interviewed companies, 
who  all  considered  it  to  be  a  very  helpful  support.  It  was  an  important  tool  for  developing  new 
products  and/or  moving  from  services  to  products  (the  valley  of  death  described  earlier).  Used  in 
combination with service activities, the companies said it was a very powerful tool for development, 
and an alternative to bank lending or fund raising. Zero rate lending is largely used for  successive 
projects. It allows the company to develop projects and start repaying the loan 3 years later, when 
its commercial results start to manifest themselves. 

If  the  funded  project  fails,  the  funding  does  not  have  to  be  repaid.  None  of  the  interviewed 
companies has ever declared business failure, and has always paid back the loans received.  

Almost all the companies used this support several times at various levels of funding, which may 
reach  above  €1  million  (which  implies  more  than  €2  million  development  cost).  Here  are  some 
examples: 

  Astellia decided in 2012 to develop a complete new system architecture based on the latest 

technologies put together. 

  Ateme decided around 2006 to develop a “best of class” encoder.  
  Esker completed specific major developments for document understanding. 
 

Intrasense developed new medical imaging technology for specific medical issues 

  Kreactive  developed  a  new  platform  for  designing,  manufacturing  and  managing  widgets 

for all types of terminals with new automated features and innovative services. 

  Over  the  last  ten  years,  Vitec  has  presented  several  projects,  each  for  a  new  specific 

development and all successful. 

Recently,  this  tool  has  benefitted  from  the  support  of  the  European  Union,36 as  mentioned  on 
Bpifrance's  website.  This  support  by  the  European  Union  and  the  European  Investment  Bank  is 
dedicated  to  risk  sharing.  It  offers  banks  “a  guarantee  on  part  of  their  new  loans  and  leases  to 

36   http://europa.eu/rapid/press-release_IP-11-1505_en.htm. See the press release “European Commission, EIB 

and EIF launch new scheme to help SME get loans for research and innovation” (5/12/2011). 

 20 

 
 
                                                        
innovative  SMEs,  allowing  the  banks  to  lend  more  and  to  do  so  at  more  attractive  rates”.  It  is 
interesting to note that this support (guarantee) was totally unknown to the interviewed companies. 

The companies mentioned during the interviews that the tool's attractiveness diminishes under two 
possible circumstances: a very low lending rate offered by the banks37 and a comfortable level of 
cash owned by the company.  

Research Tax Credit 

The  Research  Tax  Credit  (RTC)38 allows  companies,  whatever  their  nationalities,  to  reclaim  a 
percentage of R&D expenses made in France. The rules for these claims have evolved over time, but 
still offer very significant support for many companies.39 RTC is used to attract foreign investors.40 

The French Ministry of Finance funds the Research Tax Credit. There are specific and detailed rules 
on what is considered to be R&D.  

Research Tax Credit is based on a tax credit of 30% on R&D expenditure up to €100 million, and of 
5%  above  this  threshold.  According  to  AFII  (Agence  Française  pour  les  Investissements 
Internationaux  -  Invest  in  France  Agency),  it  is  the  “most  used  funding  mechanism  in  Europe”.  It 
benefits  more  than  2,000  foreign  companies  operating  in  France.  64%  of  French  companies  said 
they also benefit from it, according to AFII. 

The  scope  of  SME  spending  eligible  for  the  research  tax  credit  has  been  extended  as  of  2013  to 
cover  innovation  expenses  arising  from  designing  prototypes,  as  well  as  pilot  plants  for  new 
products. These expenses are now included in the research tax credit base, at a rate of 20% (up to 
€400,000 a year). 

France’s  research  tax  credit  is  also  an  incentive  for  research  partnerships,  as  all  expenditure 
contracted out to public sector bodies is double-counted, thereby effectively doubling the research 
tax credit (up to €12 million). 

The  research  tax  credit  can  be  combined  with  the  “innovative  new  companies”  scheme  (jeunes 
entreprises innovantes – JEIs, see under), which provides for reduced taxes (corporate tax and local 
taxes) and social security contributions over an eight-year period. 

Research Tax Credit (Credit Impôt Recherche – CRI) is not limited to tax credit: it may also lead to 
the  reimbursement  of  R&D  expenditures  for  those  companies  which  do  not  pay  taxes  on  their 
revenues.  

According to a study led by Ernst & Young-France Digital, 77% of start-ups used the RTC in 2013. 
All 10 companies in our sample also did so. 

Quoting some statements of the interviewees:  

- “Research Tax reduction allows us to employ more research engineers” 

- “The Research Tax Credit is very efficient, but it should not be made difficult by long and complex 
control systems (as happened in 2013)." 

37   One  may  wonder  why  companies  prefer  bank  lending  even  at  a  low  rate  to  zero  rate  lending  from 
Bpifrance. One possible explanation is that Bpifrance support implies some administrative work, in order to 
describe and explain the project, which takes time from the company’s best people. 

38   http://www.invest-in-france.org/Medias/Publications/153/France-research-tax-credit-2013.pdf 
39   For more details see “Guide du CIR 2014” http://www.bpifrance.fr/Toutes-nos-solutions/Rescrit-direct-du-

Credit-d-impot-recherche 

40   http://www.france.fr/en/working-and-succeeding-france/research-tax-credit.html 

 21 

 
 
                                                        
Prices as a support tool 

Since 1999, Bpifrance41 has been managing an annual competition named “Concours national d'aide 
à  la  création  d'entreprises  innovantes”.  It  aims  to  support  the  best  projects  for  creating  an 
innovative company, and accepts two categories of project: 

 

 

“creation-development”:  winners  of  this  competition  may  obtain  up  to  60%  of  their 
innovation programme (up to €450,000) if their company is to be launched shortly. 

“emergence”: up to €45,000 can be obtained for validation, whether technical, economic or 
legal before planning the company creation. 

This competition is rather popular: more than a thousand candidates participate each year. Among 
the four companies created after 2000 in our sample, two were candidates and winners. They both 
underline the significant impacts of their success: the funding obtained is in itself important, but it 
also  provides  credibility,  makes  fund  raising  easier,  facilitates  cooperation  development  and 
improves personal confidence. It is seen as especially needed at the critical time of creation. 

Example:  
 

In  2004,  Intrasense  won  the  award  “emergence”.  The  award  attracted  other  motivated 
people,  facilitated  very  efficient  support  from  the  local  incubator,  and  created  a  “visibility 
effect”, attracting new contacts. 

The  public  competitions  have  a  non-financing  private  equivalent  worth  mentioning,  as  they  were 
brought up in the companies’ interviews. Awards and “firsts” are another way to exhibit innovation 
successes. Such competitions have a commercial value, appreciated by the companies and used to 
prove  the  quality  of  their  innovation,  product  or  service.  Large  organizations  or  conferences,  and 
private  large  companies42 distribute  these  awards,  for  example  the  National  Association  of 
Broadcasters Technology Innovation Award or the IBC Innovation Award. 

Example: 

  Ateme stresses the fact that, in 2014, it was the first company to provide 4K encoders to 
the first commercial  4K channel  (in Korea). This  company  received the “Growth Excellence 
Leadership Award, Broadcast and DTT Video Encoder, Global, 2014 from Frost&Sullivan. 

Jeune Entreprise Innovante -”JEI status  

The status of JEI (Jeune Entreprise Innovante) allows companies to obtain significant tax reductions 
during the first 8 years of their existence.43 

This status was created in 2004, in order to facilitate the creation of companies doing innovative 
work. These companies should be SMEs less than 8 years old and spend a minimum of 15% of their 
expenses on R&D (the same method of computation for R&D expenses is used as for the Research 
Tax Credit). According to French “Ministère de l’Enseignement Supérieur et de la Recherche”, 3,000 
companies  were  recognized  as  JEI  in  2013,  with  a  total  tax  deduction  of  €108  million.  These 
deductions are applied to social taxes, such as on salaries. 

All new companies  are interested in applying for JEI  label. All the interviewed companies founded 
after 2000 requested and obtained it. All of them commented that the impact, in terms of financial 
support, is significant. 

Financial public support from the European Commission 

JEREMIE44 -  Joint  European  Resources  for  Micro  to  Medium  Enterprises,  is  an  example  of  public 
support  from  the  European  Commission,  developed  in  cooperation  with  the  European  Investment 

41   http://www.bpifrance.fr/ 
42   Companies like Oracle or SAP provides mainly awards for innovation complementing their own products 
43   http://www.enseignementsup-recherche.gouv.fr/cid5738/le-statut-de-la-jeune-entreprise-innovante-

jei.html 

 22 

 
 
 
                                                        
Fund. EU countries can use part of their European structural fund allocations to improve access to 
finance for SMEs, going through instruments such as venture capital, loan or guarantee funds. 

Usually, this mechanism is not well understood or known by companies (funds are provided through 
local authorities).  

Example  
Awox : Jeremie funding made up part of the funds Awox raised in 2011, through Jeremie-LR, a local 
VC, funded equally by European Structural Funds and the Region Languedoc Roussillon. 

It  is  quite  difficult  to  assess  the  impact  of  Jeremie,  as  it  comes  together  with  other  support 
schemes,  but  the  professional  experience  of  the  author  tends  to  confirm  that  it  constitutes  an 
important support for innovative start-ups. 

2.3.3  Access to finances: concluding remarks  

The  author's  experience,  based  on  a  much  larger  sample  of  companies,  shows  that  a  significant 
cause  for  companies  to  close  down  is  not  technical  failure,  but  the  difficulty  of  raising  enough 
funding  for  continuous  growth.  Disappearance  does  not  mean  necessarily  market  or  technical 
failure, but a lack of capacity to raise funds at the right moment. Raising funds is especially difficult 
for  companies  which  have  limited,  but  real  growth  with  relatively  good  future  expectations  for 
continuous slow growth.  

Compared  to  the  vast  range  of  solutions  that  have  been  developed  for  accessing  technological 
knowledge, those for accessing financial resources look scarce and dispersed.  

The  majority  of  the  interviewed  companies  relied  mostly  on  their  own  revenues  and  R&D  public 
support to fund their commercial and technical development.  We must keep in mind that we have 
selected  successful  companies.  Many  others  disappeared,  some  of  which  were  bought  by  larger 
companies, which makes it difficult to estimate their success or failure. 

Public funding seems efficient for the support of start-ups and new companies, and largely focused 
on R&D. The two most-used tools by all companies are Research Tax and the Zero rate lending for 
innovation.  These  are  simple tools,  available  at  local  level,  well  known  by  the  managers  of  SMEs, 
and quite efficiently managed. A general statement could be that the companies see public funding 
of  R&D  as  satisfactory.  The  high  level  of  R&D  public  support  in  France  probably  contributes  to  a 
specific result: a significant number of start-up and of older companies, even if they decide to base 
themselves  in  the  US  or  to  address  primarily  the  US  market,  keep  (and  develop)  their  R&D  in 
France.45 R&D public support is open to all companies  which carry out their R&D in France, with a 
limited  amount  for  large  companies  (none  among  the  interviewed  companies  were  concerned  by 
this limitation).  

Private funding is more complex and quite differentiated  depending on the stage of development. 
There is a first (low) level of private funding at the initial stages of the company. Companies may 
try  IPOs after  about 10 years, during which time both profitability and growth should be built up. 
IPOs  have  been  used  successfully,  but  may  take  place  only  after  a  significant  level  of  company 
development, and often to support a major strategic move, such as  an international  effort. In the 
meantime,  the  companies  interviewed  say  that  Venture  Capital  is  difficult  to  obtain.  Several 
stressed  that  US  investors  are  more  likely  to  take  risks  than  investors  based  in  France  and  that 
there  was  a  lack  of  private  investment  to  support  their  international  (and/or  risky)  development. 

44   See: 

http://ec.europa.eu/regional_policy/thefunds/doc/instruments/jeremie/20111019_jeremie_state_of_%20pla
y.pdf 

45   This is not the case for any of the 10 companies in this study, but a significant number of other French 
companies selected this option. It is the case for US company like Envivio or Besport, whose founders are 
French.  Other  examples  include  Criteo,  which  entered  Nasdaq  in  2013,  Scality  (software  for  servers)  or 
Talend. A journalistic presentation is to be found in the newspaper "Le Monde" of  23 July 2014  

 23 

 
 
 
 
                                                                                                                                                                             
Aquafadas, for example, was  a growing company,  which needed  funding to accelerate its growth, 
and failed to raise the funds it needed. The company was bought by a large group, but was allowed 
to continue its independent growth (which explains why the company was kept in the sample). 

Of course, in the sample, there is no counterfactual proof that any of these companies would have 
grown dramatically if they had accessed much larger amounts of money, but we could expect that 
their growth would have been faster, both through acquisitions and internal development. 

2.4  Access to market knowledge 

The market is a major uncertainty for innovative companies developing new products and services. 
They are in a very different position from companies which sell existing products at known prices on 
existing markets and have known competitors. 

Hence,  access  to  market  knowledge  plays  a  major  role,  and  a  key  success  factor  is  timing  the 
introduction  of  new  products  right.  If  mastering  the  technology  is  a  key  preliminary  condition, 
understanding  the  current  ratio  price/usage,  relating  current  potential  needs  with  innovative 
technologies and evaluating current user acceptance is mentioned by all CEOs as critical. 

Most  interviewees  insist  on  the  fact  that  customers  or  users  are  the  most  useful  providers  of 
knowledge, since they are able to define how and when a new technology may be sold to them. A 
key  lesson  seems  to  be  that  being  the  first  with  a  technology  does  not  necessarily  mean  a 
commercial success: it must be combined with appropriate knowledge of timing, such as when the 
user will accept/buy it, at what price, in what context and so on. 

As  a  consequence,  the  customer  needs  to  become  the  main  party  with  whom  these  companies 
really  must  exchange  information  and  knowledge.  Technological  knowledge  is  a  necessity,  but 
market understanding is the key to success.  

The uncertainty becomes even greater since the market is naturally international. 

All  this  was  frequently  echoed  in  the  interviews:  innovation,  in  order  to  be  successful,  needs  to 
combine  understanding  of  the  customer,  mastering  the  enabling  technology,  and  managing  the 
timing to match both. Understanding the customer allows  the company  to provide an “acceptable 
(technological) answer to existing and anticipated needs”. 

Some quotes from interviews 

“My key guides are the customers and their needs”. 
“We are driven by marketing, then we develop internally”. 
“Ideas come from us, the market helps to define them”. 
“All research projects are internally defined and selected based on market analysis.” 

2.4.1  Early product failure 

For  start  up  companies,  with  managers  who  are  mainly  technically  oriented,  market  learning  is 
often acquired the hard way, by initial commercial failure of products, putting the company through 
hard times.  

Examples: 

  Aquafadas  tried  first  to  develop  and  sell  software  for  generating  automatic  video 
storytelling. It was a commercial failure, and meant a difficult year for the company, but the 
second product (a super slideshow using video) was a success and allowed the company to 
regain its equilibrium. 

  Ateme developed significantly and successfully by selling services. Its first attempt to sell a 
product, however, was a failure. It seems that the launch was made without enough market 

 24 

 
 
 
 
research. The service activity allowed the company to survive and not to suffer excessively 
from this failure. 

  Awox  started  developing  a  terminal  named  Media  CTRL,  a  remote  control  which  could 
manage the interaction between TV and PC. This was either sold directly by the company or 
used by larger companies and potentially incorporated in digital TV set. This kind of product 
was  not  successful.  The  company  adopted  a  strategy  of  long-term  partnership  with  large 
companies (Texas Instruments, Philips, Legrand and others). 

The  other  interviewed  companies  did  not  suffer  initially  from  this  type  of  problem  for  different 
reasons,  one  of  them  being  the  fact  that  they  already  provided  services,  which  gave  them  a 
relatively good knowledge of the users. 

Examples: 

  Astellia  as  a  spin  off  from  France  telecom  was  well  aware  of  user  needs  from  other 

telecom operators, who were its customers 

  Some companies were successful with their first product: e.g. Esker, Intrasense or Vitec. 

 

Itesoft decided to move from providing services to providing a product, basing its decision 
on a detailed market study (the company was called Informatique et Technologies Avancées 
(ITA). It changed its name to Itesoft to advertise the change. 

2.4.2  Collaborating with the customer 

A rich diversity of customer relations to avoid linear R&D 

All  interviewed  companies  have  developed  a  variety  of  configurations  to  allow  customers  to   
express themselves from the very early stages, and importantly to build trust: 

Taking advantage of standardization consortium, 

-  Permanent direct contacts, 
- 
-  Collaborative research including customers, 
-  Development methods allowing customer implication, 
-  Acknowledgement of customers' expertise and inputs. 

This variety illustrates the huge efforts innovative companies must make to ensure the validity of 
their innovation on the market. None of them, beyond the first failed trials, follows an illusory linear 
path to R&D and innovation. 

Of course, these methods are not mutually exclusive.  Each company combines them, based on their 
strategy. Here are some examples: 

Taking advantage of standardization consortium 

Being a player in an international consortium, allows that company to contribute to the consortium's 
activity, which includes defining interfaces, developing validation tests and interoperability tests. On 
the  one  hand,  this  allows  the  participating  company  to  be  recognized  as  a  significant  player,  to 
possibly  enter  into  specific  cooperation  tasks,  and  on  the  other  hand  to  understand  precisely  the 
needs and constraints of the “engaged/educated customer”. International standardization consortia 
do  not  limit  themselves  to  technology  by  any  means.  They  also  define  and  continually  develop 
“commercial requirements” for future technologies, and identify “use cases”. 

Examples:  

  Awox  activity  in  the  international  consortium  DLNA  has  been  already  described  in  the 
technical knowledge section. Participation in a consortium of this kind implies close contacts 
with  technically-involved  potential  consumers.  Other  members  of  the  consortium  were 
Philips  and  Samsung,  among  many  others  involved  in  the  “Digital  Living  Network”.  DLNA 

 25 

 
 
 
 
organized,  as  did  several  other  consortia,  “plugtests”  or  “plugfests”,  which  put  together 
developers worldwide for interoperability and debug tests. 

  Aquafadas  considers  its  participation  in  international  standardization  groups,  such  as 

Idealliance46 as very important for development. 

  Ateme  is  a  member  of  DVB.47 (Digital  Video  Broadcasting),  which  is  well-known  for  its 
technical specifications for digital video.  It has also developed a commercial module, where 
the commercial issues around a DVB work item are discussed. The consensus arising out of 
this discussion is put together in  a set  of "Commercial  Requirements" governing each and 
every DVB specification. 

Collaborative research including customers 

VITEC specializes in the development and industrialization of advanced digital video solutions in the 
MPEG  field  for  OEMs  and  integrators.  The  company  aims  to  respond  fully  to  customer-specific 
needs 
in  all  sectors  that  use  video:  health,  administration,  broadcast,  Telco,  education, 
transportation,  entertainment  and  military.  Its  sales  are  mainly  to  OEMs  and  integrators  in  the 
various  domains  addressed.  This  is  coupled  with  a  very  high  level  of  R&D,  in  order  to  provide 
advanced  solutions  for  a  wide  range  of  applications.  A  very  efficient  approach  to  providing 
technologies  to  domains  not  familiar  with it  is to  develop  collaborative  research  projects (Eureka, 
PCRD, national) with potential customers in this specific domain.  

Permanent direct contacts 

Permanent direct contacts are an often-used method to keep in touch with main customers’ needs. 
It impacts market choices, and also R&D priorities.  

Examples: 

  Vitec’s main customers are specialized integrators and OEMs. Research and market choices 
are  based  on  direct  contacts  with  them  and  the  anticipation  of  their  future  demands, 
associated to a very good technical knowledge. Contacts may be made at conferences and 
exhibitions, but also in a more systematic way.  
Note that this does not mean that advanced research should not be done. Vitec developed 
stereoscopic 3D technology, which was the buzz four years ago but finally turned out to be 
a failure in the broadcast domain. However, it was a success in the medical domain. 

 

Intrasense  develops  tools  under  the  brand  Myrian®  for  integrating  and  analyzing  medical 
imaging data from different imaging devices in a unified work environment. The company 
deals primarily with issues related to cancers. 
The  company  created  networks  with  leading  research  laboratories  and  industrial  partners, 
and also a network of distribution partners selected on the basis of their capacity to roll out 
Myrian® solutions in different conditions of use and according to the strictest quality criteria. 
Partners are continually trained and are supported on a daily basis by Intrasense teams.  

46   www.idealliance.org  Idealliance,  a  not-for-profit  association,  is  aimed  at    identifying  best  practices  for 
efficient  end-to-end  digital  media  workflows  —  from  content  creation  through  distribution.  It  runs 
committees,  educational  conferences,  online  training,  and  certification  programmes,  trying  to  provide  its 
members the forum for the exchange of information that results in the creation of the media production 
industry’s most valued standards. 

47   www.dvb.org DVB consortium (Digital Video Broadcasting) includes 4 main modules. The technical one is 
only  one  among  the  four  modules.  The  three  others  are  commercial,  IPR  module  and  communication 
modules. The commercial module and the technical module are together the driving force. The commercial 
module  provides  commercial  requirements,  and  validates  each  technical  specification  against  these 
commercial requirements. 

 26 

 
 
                                                        
Development methods allowing customer implication 

An  example  of  systematized  customer  implication  is  the  use  of  new  innovative  design  methods. 
Innovative methods in design began to appear 20 years ago, for example Design thinking takes the 
the user’s experience as a guide. The methodology relies on cycles where users are involved from 
the start and developers only discuss the feasibility of the features. Applying this methodology was 
strongly  facilitated  by  new  technological  developments  in  programming,  especially  the  Agile 
programming  methodology  and its  various versions,  which  facilitates  adaptive  development,  early 
delivery and continuous improvement, and continuous customer involvement. 

Example of design thinking cycle: 
A short (and repeated as much as needed) cycle: 

Learn 
Define 
Innovate  
Build 
Validate by users 

what is the goal? 
what are the hard points? 
brainstorming 
not a prototype, but a light illustrating software 

In this process developers are only involved to discuss the feasibility. 

Examples: 

  Esker  Software  is  a  company  whose  main  activity  is  to  help  organizations  improve  the 
processing  and  exchange  of  business  information  via  cloud-based  document  process 
automation  solutions.  The  company  can  replace  any  business  process  that  runs  on 
documents with one integrated collaborative platform, provided as “software as a service” 
(SaaS).  The company has maintained continuous growth through a very efficient selection 
of new products, and adoption of new methodologies. Up  until  2010, the process decision 
was  based  both  on  internal  research  and  customer  implication.  In  2010,  the  company 
introduced  a  new  “Agile  based”  development  methodology48 using  the  above  mentioned 
method. 

Introducing innovative business models 

Some  companies  adapted  their methods to  address  a  target  market,  without  needing  to  do  R&D. 
These  methods  affect  the  business  model  and  the  marketing-distribution  methods.  They  can  be 
seen  as  important  building  blocks  of  the  innovation  model,  in  particular  because  of  their  strong 
business drive.  

Example: 
A major change in software distribution started with the selling of “software as a service” (SaaS), 
where  software  is  provided  “on  demand”  by  servers  managed  by  the  software  provider.  Esker 
adopted this practice early on. It originated in the 90’s with ASP (Application Service Providers): the 
providers hosted the  software and distributed them on line. Currently SaaS providers develop  and 
manage  their  own  software,  and  distribute  them  through  Internet  and  the  use  of  a  web  browser. 
The move to SaaS instead of  software licensing has  had  a significant impact on  Esker's  business 
model and results, but has allowed it to provide a service that companies appreciate. Their software 
costs  are  based  on  actual  usage,  and  they  do  not  have  to  buy  a  license,  thus  their  capital 
expenditures  are  reduced,  and  they  have  more  precise  control  over  operational  expenses.  The 
development of sales of software products using SaaS as a business model has been an innovative 
and successful move.  

Furthermore, usage of the cloud modifies the relationship to the final customer, and modifies the 
business model. None of the interviewed companies mentioned it as critical, but Esker, Aquafadas 
and Ateme develop offers using the cloud. 

48   Agile software  development  includes a family of  software development tools, aimed  at  developing  high 
quality  embedded  software  in  markedly  shorter  times  and  at  much  lower  costs  than  possible  with 
traditional techniques. It is now widely used by both small and large companies. 

 27 

 
 
 
 
 
 
 
 
 
 
                                                        
2.4.3  Expanding market reach: Going global 

Among the ten interviewed companies, nine sell to the international market. These companies have 
gone  global  and  are  growing.  Kreactive  is  the  only  exception,  with  its  growth  mainly  located  in 
France.   

The  explanation  might  rely  in  the  nature  of  their  activity:  producing  encoders,  test  equipment  for 
mobile networks or systems for networked homes or connected TVs for a national market does not 
make sense. Staying on a national market is a strong limitation to growth and carries the risk of the 
arrival of a foreign competitor. The technological features of these companies in some ways forces 
them  to  go  global:  this  would  not  be  the  case  if  they  were  providing  services  or  products  with 
specific characteristics for national or local demand.  

Examples: 
This international reach is visible in the financial results and in the structure of the companies: 

  Aquafadas  earns  50%  of  its  revenues  outside  France,  and  is  trying  to  fight  back  to  a 

previous share above 85%. 

  Ateme  makes  less  than  10%  of  its  revenues  in  France,  and  is  very  active  in  industry 

international forums. 

  Astellia  makes  less  than  23%  of  its  revenues  in  France,  and  owns  offices  all  around  the 

world. 

  Awox  was from the beginning an international  company with its participation  in  the DLNA 

standard development. 

  Esker earns 35% of its revenues in France and has subsidiaries in Europe, Asia and America. 
 
Intrasense created offices in Berlin, Istanbul, Kuala Lumpur, Moscow, São Paulo, Shanghai, 
Tokyo and the USA in 9 years. Asia and Russia represent 60% of its revenues. 
Itesoft concentrated its internationalization on Germany and UK. 

 
  Vitec has subsidiaries in USA, Germany, Israel, United Kingdom and Russia.  
  Wiztivi's  customers  are  large  Asian  and  European  companies,  but  it  did  not  open  foreign 

subsidiaries and it remains in some ways a "national" company. 

The globalization process did not start at the launch of each company for practical reasons, such as 
lack  of  funding  for  opening  foreign  subsidiaries,  and  the  need  to  gain  credibility  beforehand. 
However, this process was intended from the start. 

The strategy used to develop internationally differed: 

  Buying UK and German companies mainly to obtain market shares.  
  Buying  foreign  companies  with  a  world  market  to  obtain  their  knowledge  in  an  adjacent 

domain. 

  Creating offices through maximum cooperation with local  players, therefore accessing the 

knowledge about local customers. 

  Creating  relationships  through  a  high  level  of  contribution  to  international  standard 

consortia. 

For most companies considered, not going global was simply not considered as an option. And going 
global raised the complexity of the customer relation exponentially.  

Examples: 

  Awox  started  almost  immediately  to  contribute  strongly  to  the  international  consortium 
DLNA  (see  above).  It  provides  the  company  with  contacts  in  the  R&D  centres  of  large 
international companies, which were their first customers. 

  Ateme began from scratch to address the world market, which consists of a limited number 
of  very large broadcasters  with  high  level  requests for  technical  quality.  These  customers 

 28 

 
 
 
 
are very demanding, and are actively testing and comparing the new equipment. The way to 
success was based on quality, mainly rooted in in-house R&D. 

  Astellia  was  a  spin-off  of  France  Telecom,  which  targeted  the  global  Telco  market.  The 
technology  already  existed,  and  the  money  collected  from  VCs  was  mainly  used  for 
marketing. Astellia was created in 2000 and over the next 8 years it opened offices in New 
York, Singapore, Beirut, Rio, and Johannesburg. 

  Esker  Software,  created in  1985,  launched  a  software  tool  in  1990,  which met  with  huge 
success.  The  subsidiary  created in  the  US  in  1991 was  rapidly  followed  by  subsidiaries  in 
Germany, the UK, Italy and Spain, in 1997 in Australia and in 2005 in Singapore (JV with 
Lippo Group, an Indonesian conglomerate). In 1998-2000, the company bought several US 
companies, mainly to facilitate distribution and increase market size, but also to obtain new 
technologies (fax server). 

  Vitec, created in 1988, started to sell products with good results, especially at  export. The 
first significant success, an MPEG1 encoder, happened in 1992 and export began in 1993. 
Sales  began through distributors, but  went  rapidly  to  value-added  resellers  or  integrators. 
The company created subsidiaries in USA, Germany, Israel, China  and the United Kingdom, 
but  continued  to  rely  on  its  network  of  international  partners.  The  company  bought  the 
Israeli company Optibase (and some other companies), mainly to obtain a complementary 
technology. 

 

Intrasense created a distribution network covering around 20 countries, including BRICs, and 
has  collaborators  in  Amsterdam,  Berlin,  Kuala-Lumpur,  Moscow  and  Tokyo.  Part  of  its 
success is due to close cooperation with local players, and its ability to adapt the technology 
to  the  specific  working  conditions  of  geographic  regions  (organization  of  tasks,  clinical 
workflow, display format). 

2.4.4  Some conclusions 

Market knowledge, which might be seen as a "soft factor" (as compared to technology or finances), 
is  vital.  In  the  trajectory  from  invention  to  commercialization,  a  major  challenge  is  to  match 
adequately, in a timely and convincing way, the proposed technological solution with the expressed 
need of a customer and at a competitive price. This calls for acute market knowledge. 

Collaborating  with  the  customer  is  done  through  a  diversity  of  channels  and  methods  to  allow  a 
better understanding of the customers' needs and of their level of acceptance of new technologies.  

When companies become more experience and establish relationships with at least some customers, 
more sophisticated methods may be used such as having customers in the design process, either 
internally  or  through  a  cooperative  R&D  effort.  Participation  in  standardization  bodies  is  another 
way to understand the needs of the customers.  

Going  global  is  in  the  DNA  of  most  of  these  companies.  Consequently,  they  extend  their  market 
knowledge  fairly  rapidly  and  are  forced  into  capturing  very  quickly  the  necessary  information  to 
adapt  and  react  relevantly  to  those  new  markets.  At  the  international  level,  strategies  vary 
depending on the structure of the market and the strategy of the company. 

 29 

 
 
 
3.  Beyond the model of innovation 

As stated in the early pages of this report, the concept of "models of innovation" refers to the way 
the innovators (individuals or companies) manage inventions from conception to commercialization. 
Innovators  make  decisions  on  how  to  create  the  conditions  for  value  making,  within  an  overall 
context – the Innovation System – about which they may have patchy knowledge. 

Looking at models of innovation is a micro-level approach. Nonetheless, observing companies also 
allows  us  to  gather  significant  information  about  their  perception  of  the  context  in  a  broader 
perspective, at meso level.  

This  chapter  describes  several  of  these  observations  briefly  as  they  help  position  the  model  of 
innovation  of  these  companies  in  the  broader  context  within  which  they  evolve.  As  with  any 
qualitative exploratory study, these issues are food for further debate. 

3.1   The case of Specialized Technology Suppliers (STS)  

The study observed 10 companies, selected on a pragmatic basis as illustrations of innovative ICT 
SMEs in France. These companies have survived and grown in a competitive environment, and have 
consolidated  into  well-established  global  providers  of  innovative  technological  products  and/or 
services. 

To  get  to  this  position,  they  have  cultivated  technological  excellence  in  their  domain  through  a 
multiplicity  of  strategies.    They  have  demonstrated  they  could  grow  by  maintaining  a  balance 
between their own revenues and some limited access to external  financial  resources. Finally, they 
have built up their market knowledge over time and shown interest in establishing collaborative and 
trusted relationships with their customers. 

The point we raise here is that this report is probably about one specific type of innovative ICT firm. 
These  10  SMEs  have  aspects  in  common  worth  unveiling,  and  we  must  also  say  that  there  are 
additional and different populations of innovative firms. The important conclusion is that innovative 
companies are diverse and need to be understood as such. 

A first observation is that the ten companies all have a high level of R&D. They are therefore able to 
benefit from large tax credit. This level of R&D was not a criterion for the initial selection of the ten 
companies. Had it been a criterion, it would have left out of this study the innovative ICT firms with 
no R&D.49  

A second observation is that these companies offer mainly or exclusively B2B services and products. 
Those  that  became  B2C  did  so  at  a  very  late  stage  of  their  development.  Only  two  companies 
among the ten interviewed companies move from a full B2B situation to a B2C model, or at least a 
mix of them: 

  Awox has started to develop and commercialize consumer products. This (recent) move has 
proved so far to be successful in terms of growth and results. It may be considered as an 
example of an evolution towards a consumer electronics company. 

  Kreactive provides services on Internet both to consumers (students) and editors (managing 

the existing content and monetizing it).  

Third,  the  sample  includes  no  companies  which  belong  to  or  serve  exclusively  major  industrial 
sectors,  such  as  the  automotive  or  aerospace.  These  sectors  are  highly  structured  industries  with 

49   One could imagine companies developing innovative services, especially on Internet, using state of the art 
technology. A potential source of examples may be small companies developing on line services for mobile 
use. 

 30 

 
 
 
 
 
 
 
 
                                                        
well-defined types of players, from OEMs to suppliers of various levels. Here again, innovation may 
proceed from a very different model. For example, based on the empirical experience of the author, 
one would expect the existence of clusters to provide significant access to potential customers. Ad 
hoc  standardization  is  an  essential  resource.  The  existence  of  a  very  structured  system  of 
relationships  facilitates  participation  in  collaborative  research  projects,  and  especially  finding 
industrial partners, etc. 

The above observations lead us to conclude that the ten companies may belong to a specific type of 
innovative company and that their model of innovation matches their specific profile and needs. Our 
assumption is that they are Specialized Technology Suppliers (STS). 

Specialized  Technology  Suppliers  (STS)  may  be  defined  as  independent  specialized  hi-tech  R&D-
intensive companies that deliver their technology tailored to the demands of a variety of customer 
sectors across the economy. STS act mainly or only as B2B players. They deliver technology under 
different forms from IPs to products to development services. 

While  the  overall  STS  concept  covers  many  technologies  and  industries  (material,  chemical, 
mechanical),  the  discussion  here  is  limited  to  companies  developing  ICT  tools  for  any  activity: 
administrative, industrial, or aimed at agriculture, health or food processing. In this context, these 
STS appear to be essential players for introducing new ICT into the economy across all sectors. They 
are engines of ICT as a General Purpose Technology. 

If  we  consider  the  10  companies,  they  started  by  using  some  of  the  most  advanced  features  of 
specialized  software  and  hardware  and  applied  it  to  existing  industries,  or  contributed  to  the 
emergence of new industries: 

  Astellia developed innovative hardware and software tools to monitor mobile networks. 
  Aquafadas developed set of software tools to manage digital edition. 
  Ateme  and  Vitec  developed  software  and  hardware  for  video  compression,  using  new 

algorithms made possible by new powerful hardware and software. 

  Esker  and  Itesoft  developed  software  and  hardware  for  document  processing,  using 

technologies such as artificial intelligence and natural language analysis. 

 

Intrasense developed software for medical analysis of multiple and complex digital images 
of the body. 

  Kreactive developed software and tools to manage widgets, then to translate schoolbooks 

or references into interactive online services. 

  Awox developed software and hardware to create domestic audiovisual networks. 
  WizTivi developed software which made the development of interactive, online TV possible. 

3.2  Behaving within a broader ecosystem 

3.2.1  Coexisting with multinationals (MNE)?  

Multinationals as competitors 

The  10  observed  companies  belong  to  8  different  technical  domains,  each  of  them  populated  by 
different MNEs.50 The following lines offer a brief overview of these contexts and try to explain how 
the ten companies succeed in positioning themselves vis-à-vis MNEs. 

50  Definitions of MNE (multinational enterprise group, economy specific enterprise group, multinational group, 
etc.) provided by OECD (http://www.oecd.org/corporate/mne/48004323.pdf) or Eurostat do not allow us to 
clearly distinguish what makes a company 'multinational'. Most of our 10 SMEs have production and/or 
markets in several countries within and outside the EU. The criteria of size (large enterprises) are also left 
unclear. In this report, we therefore use our “common sense” and take large Telcos (FT, BT, Telefonica), or 
companies such as Apple, Samsung as MNEs. Our SMEs are hence not MNEs. 

 31 

 
 
 
 
                                                        
Digital publishing: Aquafadas 

For digital publishing tools, only one MNE – Adobe - is well known, and it has a much wider scope 
than Aquafadas, which is more focused on books, newspaper, magazines, and comics. 

Aquafadas was successful, but needed funding to continue growing. Its failure to raise money led to 
the  decision  to  sell  the  company.  The  company  was  bought  by  an  MNE  (Kobo,  owned  by  the 
Japanese  giant,  Rakusen).  Kobo  was  only  interested  in  the  integration  of  the  technology  into  its 
specific products, e-books and tablets, and allowed Aquafadas to continue to develop and sell their 
products  to  other  companies  in  other  application  domains,  including,  more  recently,  corporate 
communication. 

Digital compression: Vitec, Ateme 

Digital  compression  equipment  is  traditionally  developed  and  produced  by  small  and  specialized 
companies,  whose  operations  are  usually  limited  to  the  audiovisual  equipment  market.  There  are 
some possible explanations: 

  The  size  of  the  market  is  limited,  as  compared  to  other  industries  (for  example.  the 
audiovisual equipment market is significantly smaller than telecom equipment market). 
In these markets, there is a need to manage high levels of technology and cope with very 
fast evolving technologies, which facilitates the emergence of start-ups. 

 

  Suppliers must have very close relationships with customers, which are national and follow 

 

national demands and rules. The TV market is a national market. 
It  is  relatively  easy  for  a  customer  to  move  from  one  supplier  to  another,  since  interface 
standards are well established. 

This is not to say that MNEs will not try to enter the market. Indeed, Cisco, Ericsson, and Microsoft 
have entered the market, but are not dominant.  

Digital imaging for medical applications: Intrasense 

In this domain, there are a few very large players such as Philips and General Electric. The success 
of Intrasense cannot be explained by the absence of MNEs, as it has had to deal with competition 
from MNEs. 

An important factor for its success was the combination of existing techniques (digital imaging) and 
the practical expertise of high level and highly motivated physicians. Another factor is the capacity 
of  the  company  to  listen,51 and  also  its  scientific  quality  (more  than  100  publications).  It  was 
observed that physicians, highly involved in supporting their patients, were ready to spend time and 
money if they  felt there was a significant chance of progress.  Furthermore, the company  entered 
various  countries  very  quickly,  using  close  cooperation  with  local  partners.  Capacity  to  network 
efficiently was a major factor in the company’s success. 

Monitoring mobile networks: Astellia 

The domain of mobile network monitoring has seen significant growth in parallel with the growth of 
mobile  market.  There  has  also  been  a  growing  demand  for  quality  measurement.  The  growing 
importance  of  SLA  (Service  Level  Agreement)  initiated  by  fixed  line  telcos in the  80’s  pushed the 
development of quality measurement tools. Large operators first developed their own measurement 
tools, but  then  relied more  and more  on  external  providers  for this  activity,  which  was  not  at the 
heart of their business.  

The key players are MNEs such as Tektronix Communications (Danaher Group USA), JDS Uniphase 
(USA)  and  Anritsu  (Japan),  which  are  large  manufacturers  of  test  equipment  and  other  types  of 
equipment. Astellia is, on the contrary, dedicated to only one type of testing equipment. 

51   This contrasted with the behaviour of large companies and was the result of an explicit choice. 

 32 

 
 
                                                        
MNEs manufacturing telecom equipment already have products for monitoring, and, of course, close 
relationships with their customers, the telecom operators. However, telecom operators prefer to rely 
on  independent  and  dedicated  providers  to  check  the  quality  of  equipment/network,  which  do  not 
use  equipment  provided  by  the  MNEs  being  monitored.  This  leaves  the  market  open  to  smaller 
companies, such as Astellia. Another reason is that Astellia is a spin-off of France Telecom, which 
was developing internally a high quality product, allowing the company to gain a significant market 
worldwide.  The  growing  competition,  associated  with  fast  evolving  technology,  means  that  the 
company must keep up a strong level of R&D. 

Digital management of documents: Esker and Itesoft 

These  two  companies  were  created  in  the  80’s.  Their  current  business  is  processing  electronic 
documents.  

The market for document understanding is highly fragmented and not well defined. Itesoft claims to 
be  the  European  leader  with  5%  of  the  total  market.    A  significant  level  of  R&D  is  needed  to 
understand text, and new artificial intelligence technologies produce continual evolution in this field. 
There are no MNEs in this sector.  

In  this  case,  the  reasons  for  fragmentation may  include,  apart  from the  technological  constraints 
mentioned  above  which  imply  a  high  level  of  R&D  expenses,  the  existence  of  national  standards, 
habits and rules, and also the limited size of the market, which de-incentivizes the entry of MNEs. 

On line learning: Kreactive 

Customers in the e-learning market currently are mainly large companies (usually more than 5,000 
employees). E-learning material has very specialized content, and relies on complex systems, such 
as LMS (Learning Management System). MOOC (Massive Open Online Course) which have appeared 
since 2012. However, business models for this market are still very uncertain. 

Kreactive has considerable expertise in collecting, monetizing and diffusing content to all types of 
terminal.  It owns a significant number of web sites aimed at children and students. The company 
decided  to  address  the  “Lifelong  Learning”  market,  which  is  not  very  well  understood  or  defined. 
There are no MNEs in this market. 

Domestic networks: Awox 

The domestic audiovisual network sector has been “a future success” for years. Awox was founded 
in  2003  by  people  who  were  convinced  that  “it  was  the  moment”,  and  believed  in  the  need  for 
standards  to  succeed  in  the  market.  Awox's  creation  (2003)  was  almost  simultaneous  with  the 
launch  of  the  DLNA  consortium52 (Digital  Living  Network  Alliance),  an  international  consortium 
founded in June 2004. Awox was from the start a key player in the DLNA consortium and the HbbTV 
consortium.53  

Awox's revenues initially came from contracts R&D labs of MNEs such as Samsung and Philips, and 
from developing products sold by other companies under their own brand. This led to a permanent, 
but  relatively  slow  growth.  In  2013,  Awox  created  a  brand  and  began  to  sell  its  own  product, 
presented as “smart home objects”. This move has been very successful so far, but it implies that 
Awox  must  stay  permanently  ahead  of  competitors,  especially  MNEs,  in  terms  of  technology  and 
design. 

52   http://www.dlna.org/ 
53   https://www.hbbtv.org/ Hybrid Broadcast Broadband TV or “HbbTV”, is a major new pan-European initiative 
aimed  at  harmonizing  the  broadcast  and  broadband  delivery  of  entertainment  to  the  end  consumer 
through connected TVs and set-top boxes. 

 33 

 
 
 
 
                                                        
Connected TV and other audiovisual devices: WizTiVi 

There  have  been  a  large  number  of  successive  failures  in  this  sector.  Several  MNEs  and  other 
companies tried to develop connected TVs and failed (Microsoft, OpenTV, Thomson, Intel and many 
more). 

However,  the  context  has  been  modified  by  numerous  evolutions,  including  increased  high 
bandwidth access, the appearance of “connected” TV sets and other devices. However, there are still 
some major issues, one of which is putting together three very different types of players: consumer 
electronics equipment manufacturers such as Samsung, Internet Service Providers such as Orange 
or Numericable, and content providers (broadcasters) in order to address both technical and market 
problems. A connected TV manufactured by any CE manufacturer cannot operate without a network 
able to support the interactive features and a channel providing content for it. The non-existence of 
accepted standards contributes to the difficulty. 

WizTiVi is able to offer a high level of technological knowledge in all the domains involved, a precise 
knowledge  of  the  players  involved  and  the  ability  to  address  them,  without  being  a  MNE  and  a 
potentially dangerous competitor.  

Multinationals as customers 

In fact, most of the companies observed were suppliers to MNEs.  

A variety of situations was observed. 

Astellia provides tools for surveying mobile networks to its customers, which are mainly MNEs that 
are  active  in  only  one  sector  -  telecommunication  services.  These  MNEs  abandoned  the  huge 
internal  R&D  effort  they  were  making  a  long  time  ago  (before  the  worldwide  move  towards 
privatization) and are therefore neither willing to compete with dedicated hardware providers such 
as Astellia, nor to control them. 

The customers of a company  like Esker, which  provides  tools for managing all  types of input and 
output  documents,  are  potentially  MNEs  from  all  economic  sectors.  Again,  customer  MNEs  have 
little interest in competing with their suppliers, since they would have to significantly increase their 
development efforts, with no clear market gain. 

Supplier companies are mainly concerned about the sale of IP and licences to MNEs, because they 
have serious difficulties in obtaining a significant share of the value created by the final product.  At 
least  two  companies,  Awox  and  Ateme  have  dealt  with  this  problem  by  moving  to  product 
development.  Awox's  products  are  aimed  at  the  consumer  market,  and  Ateme's  products  at  the 
industrial  market.  Both  have  been  very  successful.  A  condition  of  success  for  developing  new 
products is to preserve a time advantage over the MNEs.  

In both cases, this decision was partly motivated by the predatory behaviour of MNEs. They often 
buy  innovative  technologies,  but  provide  little  in  return,  and  at  the  same  time  develop  these 
technologies internally at full speed, in order to control them.  

Some observations 

The  above-mentioned  cases  lead  us  to  hypothesise  about  the  way  ICT  Specialized  Technology 
Suppliers (STS) shape their model of innovation and behave within a broader industrial ecosystem 
where  MNEs  could  threaten  their  survival.  The  baseline  is  that  none  of  the  10  firms  is  directly 
competing with an MNE. This may be considered as a basic fact: a small company will not develop a 
product (launch an innovation) in direct competition with an MNE.54 

54   A problem arises when the MNE comes later into the market. In that case, the small company may move 
to another product, or accelerate the speed of innovation. This rule may have some exceptions when new 

 34 

 
 
 
 
 
 
                                                        
  MNEs  do  not  occupy  (by  any  means)  all  the  market  space.55 STS  select  their  markets 
carefully  and  develop  the best possible  knowledge  about the markets  they  can  address  – 
and how – to avoid frontal collision with MNEs. 

  Among the 10 companies selected, the few  which have a direct relationship with an MNE 
were IP suppliers, and this situation was felt to be uncomfortable. A move from selling IP to 
selling products was an efficient strategy for at least two of them. 

  Most markets addressed by these 10 companies are relatively small or emergent. 
  Some of the addressed markets are fragmented markets with no or few large competitors.  
  The  game  is  different  when  technical  or  usage  evolution  leads  to  the  creation  of  a  new 
ecosystem,  combining  new  large  players,  which  are  unable  to  master  all  the technologies 
needed. In the audiovisual equipment domain, we have witnessed the entrance of telecom 
players, providing cheaper transmission means and IT players, providing software adapted 
to manage the complexity. These circumstances create a new ecosystem where innovative 
SMEs  need  to  find  and  keep  a  significant  place.  In  these  cases,  companies  like  Awox  and 
Wiztivi try to maintain a permanent technical lead. 

  For specific products, industrial customers may not want to buy from MNEs. This is the case 
for  monitoring mobile  networks,  where  large  players  are  competing (Huawei, Ericsson).  As 
they  are  providing  the  equipment  and  managing  it,  those  MNEs  are  at  a  competitive 
disadvantage  when  selling services  to monitor their own products  when used by a  mobile 
operator. 

  The risk of being bought by an MNE is real, especially if buying the company represents a 
competitive advantage for the MNE over its competitors. Another potential motivation of the 
MNE  is  to  take  control  of  a  market  expected  to  grow  very  rapidly.  The  MNE  can  also  use 
efficient people from the company for its own development.  

 

In  the  ten  observed  cases,  the  founders/managers  have  kept  control  of  their  companies, 
which all show healthy growth. 

3.2.2  Benefiting from the innovation system? 

The  acknowledged  concept  of  Innovation  Systems56 refers  to  "the  supporting  network  of  scientific 
and technical institutions, the infrastructure, and the social environment” (Freeman 1990, quoted by 
Carlsson,  2003).  Therefore  the  study  of  innovation  systems  emphasizes  and  analyses  the  role  of 
institutions.  

The  observations  in  this  study  have  paid  little  attention  to  this  aspect,  even  though  some  of  the 
collected  information,  directly  or  indirectly,  offers  indications  about  the  relation  of  these  firms  to 
the system of innovation that surrounds them. 

It  appears  that  the  innovation  system,  the  full  set  of  public  tools  aimed  at  supporting  innovation 
and R&D, is often too complex and too costly to afford – in time, costs and learning curve - for a 
start-up or an SME.  

In the case of the observed firms, information and probably implementation of support should have 
come from three main sources: 

products, while competing with existing ones, bring new innovative features, which make them different. 
That is not the case of the 10 companies. 

55   The  existence  of  different  levels of  demand  may  contribute  to  it.  Inside  a  country  several  categories of 
buyers exist with different key criteria for selecting equipment (cost, simplicity of use, number of features). 
There are also large differentiation in the demand from rich countries and developing countries. We may 
think here of the typical classification in 3 tiers of telcos or Internet operators.  

56   For a thorough literature review, see: 

http://faculty.weatherhead.case.edu/carlsson/documents/InnovationSystemsSurveypaper6.pdf 

 35 

 
 
 
                                                                                                                                                                             
  The local public authorities such as incubators or local public support to development, 
  Bpifrance (national support agency), 
 

International support provided by the European Commission. 

This was not evident in most of the cases. 

The functioning and evolution of the innovation system and of public support (even more to young 
and/or  innovative  companies)  is  seen  as  unpredictable  and  obscure,  locally,  nationally  and  at 
European level.   

The (non)-use of public support in various areas, assumed to be of interest in the initial steps of the 
study, can be interpreted as the consequences of this situation. 

Demand-side policy 

Demand-side  innovation  policies  include  public  procurement,  regulation,  standards,  consumer 
policies and user-led innovation initiatives. 

According  to  the  OECD  report57 on  demand-side  innovation  policies,  “This  interest  in  demand-side 
innovation  policy  has  emerged  as  part  of  a  greater  awareness  of  the  importance  of  feedback 
linkages  between  supply  and  demand  in  the  innovation  process.  Demand-side  innovation  policies 
are  part  of  an  evolution  from  a  linear  model  of  innovation,  usually  focused  on  R&D,  to  a  more 
broad-based  approach  that  considers  the  full  scope  of  the  innovation  cycle.  This  focus  on  the 
demand  side  also  reflects  a  general  perception  that  traditional  supply-side  policies  –  despite 
refinements  in  their  design  over  recent  decades  –  have  not  been  able  to  bring  innovation 
performance and productivity to desired levels.” 

Demand-side policies fit well with the strong tendency towards user-led innovation, which has been 
mentioned as key by several companies.  

Two examples of comments on impacts are described here. 

Example  

  A  manager  from  Esker,  a  company  working  on  document  understanding,  mentioned  the 
issue  of  regulation  in  relation  to  electronic  signatures.  It  was  pointed  out  that  some 
countries have made electronic signatures mandatory, thus boosting the associated market, 
and also giving a significant competitive advantage to companies in these countries.  

  For companies such as Awox  or Wiztivi, public standards may have an important effect  if 
they have worked on their elaboration. This work gives them the opportunity to be among 
the  first  companies to  propose  a  product  following the  new  standard,  and  to  acquire  and 
commercialize  a  strong  expertise  in  a  highly  technical  field.  Awox  made  the  choice  to 
concentrate  on  the  DLNA  consortium.  In  both  cases,  the  “standard”  implied  an  industry-
driven definition, leaving little room for policy action.  

It is striking that no example of public procurement was observed. 

Participation to cooperative research and innovation  

Cooperative international research and innovation programmes include European programmes such 
as ESPRIT or the successive Framework Programmes. They also include international programmes, 
which are nationally funded such as Eureka, and especially in the ICT domain, Eureka clusters. 

All companies were aware of the existence of European programmes such as ESPRIT or the various 
Framework  Programmes,  even  if  the  difference  with  Eureka  programmes  was  not  always  clear. 
They  had  very  different  opinions  about  these  programmes.  Some  explicitly  expressed  complete 
rejection. Esker Software has never participated in a European research project. Others  made the 

57   DEMAND-SIDE INNOVATION POLICIES – © OECD 2011.  

 36 

 
 
 
 
 
                                                        
same  choice  in  the  past  (e.g.  Ateme  but  it  may  apply  for  funding  in  the  future),  arguing  these 
programmes  were  loaded  with  too  many  overheads  which  made  them  a  waste  of  time  and 
resources that could be better invested in "real" work.   

A  few  companies  (Awox,  Intrasense)  did  try  to  participate  in  European  projects,  but  their  projects 
were  rejected.  Their  assessment  is  that  they  just  did  not  understand  the  rules,  and  possibly  that 
they selected the wrong consultant to help them. Wiztivi managers were dissuaded by difficulties in 
finding the “right project”. 

One company, Vitec, has participated significantly in European projects (it had several successfully-
funded projects in parallel). In this case, the presence of an employee who was both familiar with 
the process and with the people involved in other companies has been decisive.  

A more recent move towards future participation has been observed.  Notably, representatives from 
Astellia, Ateme and Wiztivi expressed an interest in participating in future European projects. There 
are several reasons for this move: 

  The technological world is getting more complex, with the appearance and development of 
new  technologies  (big  data,  cloud),  and  the  acceleration  of  some  technical  and  market 
changes  (move  from  3G  to  4G  to  5G  for  mobile  operators,  move  from  High  Definition  to 
Ultra High Definition 4K than 8K). 

  R&D  projects  that  involve  potential  customers  allow  companies  to  define  and  understand 
precisely  their  needs.  This  helps  companies  to  be  first-movers  and  provide  the  right 
products.  This  fits  perfectly  with companies  which  have  developed  a core technology,  and 
wish to apply it to several vertical domains. 

  R&D projects may be a protection against surprises, such as a technology developing faster 

than expected.  

  Collaborative  research  may  help  share  and  reduce  the  pressure  of  speed  of  technology 

evolution, and the uncertainty of technology adoption. 

These arguments may also apply to national cooperative programmes. However, these do not allow 
access to European players.    

European financing through local authorities 

The European Commission is also providing specific financial  support through national  or regional 
support. The companies have only to discuss their financing needs with their local authorities, which 
make access to support much simpler.  

Two examples were identified during the interviews. 

The zero rate lending for R&D development benefits from the support of the European Union,58 as 
mentioned on the web site of Bpifrance.59 The support is based on an SME risk-sharing instrument, 
and offers banks “a guarantee on part of their new loans and leases to innovative SMEs, allowing 
the banks to lend more and to do so at more attractive rates”. The interviewed companies, intensive 
users of the scheme, did not know that it was supported by the European Union and the European 
Investment Bank. 

The second example deals with European Structural Funds. 

Example:  the  European  Structural  Funds  (FEDER  Fonds  Européen  de  Développement  Régional) 
contributed  to  Awox  fund  raising  in  2011,  through  Jeremie-LR,  a  local  VC,  funded  equally  by 
European Structural Funds and the Region Languedoc Roussillon. 

58   http://europa.eu/rapid/press-release_IP-11-1505_en.htm 
59   http://www.bpifrance.fr/Toutes-nos-solutions/Pret-Innovation.  See  also:  See  the  press  release  “European 
Commission,  EIB  and  EIF  launch  new  scheme  to  help  SME  get  loans  for  research  and  innovation” 
(5/12/2011). 

 37 

 
 
 
                                                        
JEREMIE60 -  the  Joint  European  Resources  for  Micro  to  Medium  Enterprises,  is  an  example  of  a 
public support from the European Commission. JEREMIE is an initiative of the European Commission 
developed together with the European Investment Fund. EU countries can use part of their European 
structural  fund  allocations  to  improve  access  to  finance  for  SMEs,  through  instruments  such  as 
venture capital, loan or guarantee funds. This mechanism is usually not well understood  or known 
by companies (funds are provided through local authorities), but a few of them mentioned they had 
benefitted from it though they could not assess the size or impact of that support. 

Relationship with universities and research centres 

As mentioned earlier, universities are not seen by our 10 companies as either important sources of 
knowledge or collaboration, or as strong players in the innovation domain. None of the companies 
has a significant relationship with any university. Relationships with public French research centres 
are  slightly  better,  but  always  mentioned  as  difficult.  Interviewees  named  better  and  worse 
research  institutes  in  terms  of  cooperation  and  royalty  sharing,  implying  this  issue  belongs  to  a 
research centre's own in-house policy. This observation echoes similar observations by Nesta.61 

The attempts to cooperate with universities are generally described as disappointing because they: 

  Work to a different time scale  
  Have a different purpose 

Based on the companies we met, we may say that universities and public research institutions play 
a major role in generating engineers with a vision about new technologies but do not seem (up to 
now) to be active actors in fostering, encouraging and accompanying entrepreneurship and growing 
innovative ICT companies. 

Taxation regimes 

Taxation is organized at the national level, and each country is (relatively) free to select tax credits 
related  to  R&D.  Interviews  have  led  to  international  comparisons,  but  with  not  enough  data  to 
attempt  any  conclusion.  In  France,  research  tax  credit  is  an  important  feature  for  most  of  the 
companies we met. It was considered to be a highly satisfactorily scheme by all the companies we 
met, even though tax credit is mostly limited to R&D expenses. 

Technology transfer 

In the observed cases, technology transfer is practiced mainly through acquisitions of companies or 
technologies.  Vitec  bought  the  Israeli  company  Optibase  and  obtained  its  IPTV  technology.  Ateme 
bought  knowledge  from  Fraunhofer  Institute,  knowledge  which  was  not  at  the  heart  of  the 
company’s strategy. 

Some observations 

Looking at the cases, it is again possible to hypothesise about the way innovative ICT firms shape 
their models of innovation by consciously taking advantage of the surrounding  innovation system, 
theoretically dedicated and designed to facilitate their growth and success. 

As a baseline, all  of the firms do benefit in one or another way  from this support, but not in any 
structured or comprehensive way. A small and innovative company has no resources to access and 

60   See: 

http://ec.europa.eu/regional_policy/thefunds/doc/instruments/jeremie/20111019_jeremie_state_of_%20pla
y.pdf 

61   Nesta Working Paper N° 14/01 “Increasing the vital 6 per cent: designing effective public policy to support 
high growth firms”. This documents states : “there is a strong belief within public policy that universities 
play  a  strong  role  in  generating  HGF  (High  Growth  Firms).  Similarly  universities  are  seen  as  knowledge 
generators  of  IP,  which  is  then  licensed  by  new  start-ups.”  The  NESTA  paper  states that  this belief  is ill 
founded, and that drivers for innovation are suppliers, customers and end-users.  

 38 

 
 
                                                        
interpret  a  set  of  supportive  instruments  embedded  in  a  changing  and  usually  bureaucratic 
environment. It acts, fast, where it sees opportunities, having assessed the risks. 

This may be especially true of European support instruments. Among all the knowledge needed by a 
company,  it  is  easier,  faster,  and  cheaper  to  know  and  understand  a  national  system,  when  it  is 
used  by  other  nearby  companies  and managed by  local  people.  MNEs,  on  the  other  hand,  have a 
huge advantage as regards European support instruments. 

The starting assumption of this study is that, at firm level, the construction of a winning model of 
innovation  is  the  key  to  success,  and  perceived  as  such.  Innovation  systems  come  second,  as  a 
potential,  but  often  too  costly  set  of  information  and  support  instruments.  To  access  these, 
intermediaries  are  necessary.  Some  companies  may  –  by  chance  –  have  members  of  the  staff 
qualified to do this. More often, they will use external consultants, well or ill informed.  

The system of innovation, as a concept and as an institutional realty, is not central to the thinking 
and  management  decisions  of  the  innovator.  Our  conclusion  here  is  that  innovators  are  not  as 
aware  of  the  institutional  context  as  they  are  of  their  technological  knowledge,  of  their  financial 
resources and of their market (customers and competitors).  

The innovative process - that of bringing innovations to the market - has more to do with the model 
of  innovation  developed  by  an  innovator  than  with  the  system  of  innovation  within  which  it 
develops. 

 39 

 
 
 
 
 
 
 
 
4.  Conclusions: a triangle of uncertainties 

This report offers a qualitative observation of ten ICT innovative and successful SMEs in France, to 
provide the basis for a better understanding of the nature of the models of innovation that allowed 
these companies to innovate, survive and prosper. 

The concept of "models of innovation" refers to the way the innovators (individuals or companies) 
manage inventions from their conception to their commercialization. Innovators make decisions on 
how to create the conditions for value making, within an overall context – in particular an Innovation 
System – about which they may have patchy knowledge, if any. 

Though the ten observed companies have very different trajectories, markets, products, and growth 
rates, they also seem to share commonalities when it comes to their models of innovation. 

As shown in the report, most of the observations on the 10 case studies are related to three main 
categories of access that can drive progress if adequately addressed by the innovating company: 

1.  Access to technological knowledge 
2.  Access to finances 
3.  Access to market knowledge 

These dimensions make up a triangular model of innovation for each firm: they motivate many of 
the decisions and behaviours of the innovators (individuals or companies). 

Additionally, timing is repeatedly mentioned as a transversal dimension.  It is seen as a constraint, 
expressed  as  an  issue  of  matching  (to  find  the  right  timing),  not  necessarily  of  speed  (being  the 
faster62). 

This  model  seems  to  convincingly  encompass  all  the  statements  and  behaviours  collected  in  the 
observations. The innovation system is only called upon in addition, when easy to understand and 
use, in order to facilitate a solution to any of the three main dimensions. 

The  extensive  anecdotal  evidence  collected  from  the  observation  of  10  companies  offers  points 
worth noting: 

On Technological knowledge: 

  Technological  knowledge  remains  a  central  factor  for  ensuring  survival  and  success. 
Keeping  “more  than  up  to  date”  with  the  technology  is  considered  fundamental.  It  also 
reflects  the  needs  of  the  business  itself  as  it  matures  from  technology  provider  to 
integrator. 

  The  founder's  initial  technological  expertise  is  a  central  factor  in  the  creation  of  the 

company.  

  All these companies have research departments and are highly R&D intensive, which makes 

them unusual as compared to other SMEs. 

  More  importantly,  all  the  companies  claim  to  have  developed  a  variety  of  methods  for 
acquiring technological knowledge from outside the company: from informal techno-watch 
to  formal  participation  in  lengthy  standardization  processes,  up  to  technology  and  firm 
acquisitions.  These  companies  therefore  carry  out  extensive  networking  activity,  the 
methods and aims of which reflect forms of open innovation. 

  At  the  same  time,  the  companies  underline  their  lack  of  contacts  –  if  not  trust  –  in 
universities and research centres (claiming issues of different time scales and also different 
objectives).  In  addition,  they  seem to  avoid  entering  any  of  the  EU  R&D  programmes  (for 
reasons of administrative burden, cost effectiveness, slowness, etc.). These claims probably 
illustrate  the  distance  between  the  everyday  management  of  an  innovative  SME  and  the 

62   The notion of first mover did not appear, but it might still be very relevant. 

 40 

 
 
                                                        
perceived  accessibility  of the  local  system  of innovation  and  its  pillars: the  university,  the 
public authorities. 

  All together many of our observations of the companies indicate open innovation behaviour 

on their part. 

On access to financing: 

  The difficulty of raising enough funding for continuous growth is, in the author's experience, 
a major reason for failure and disappearance. Disappearance does not originate necessarily 
in a business model or technical failure. 

  A  majority  of  the  interviewed  companies  rely  on  their  own  revenues  to  fund  their 
commercial and technical development at least in the first years. Raising money is always a 
difficult task. 

  Financial resources, both public and private, appear scarce, dispersed, and not well suited. 
  Public funding seems efficient for the support of start-ups and new companies, and largely 
focused  on  R&D.  It  can  be  said  that  generally  companies  see  public  funding  of  R&D  as 
satisfying.    Research  tax  credit  and  zero  rate  lending  for  R&D  are  widely  used  and  much 
appreciated. 

  Raising  private  funds  is  more  difficult,  especially  raising  funds  for  commercial  and 
international development. Most of the private funding observed happened during the initial 
stages  of  the  company,  but  getting  funding  thereafter  for  more  ambitious  growth  seems 
almost impossible.  

 

IPOs  were  used  successfully,  but  they  can  take  place  only  after  a  significant  level  of 
company development has been reached.  They are often used to support a major strategic 
move, such as an international venture.  

On access to market knowledge: 

  Understanding of the market can be acquired through collaborating with the customer. 
  Collaboration  can  take  place  through  a  diversity  of  channels  and  sometimes  methods  to 
allow a better understanding of the needs and of the level of customer acceptance of new 
technologies.  

  With time, this collaboration can become a codified method (design process,…), allowing for 

faster and more efficient processes. 

  Standardization bodies are another way  of exploring the needs of the customers. Most of 

the industry consortium work routinely with commercial requirements and use cases. 

  Global  market  knowledge  is  essential  very  early  on:  it  is  part  of  the  global  DNA  of  these 
companies.  It  adds  a  layer  of  additional  complexity  to  market  knowledge  management. 
Local presence and collaboration apparently help. 

Contextual  aspects  probably  also  drive  the  above  features  of  the  model  of  innovation  of  the 
observed companies. Some  of the study's  observations indicate that these companies behave  like 
Specialized  Technology  Suppliers,  defined  as  independent  specialized  hi-tech  R&D-intensive 
companies that tailor their technology to the demands of a variety of customer sectors across the 
economy. STS act mainly or only as B2B players. They deliver technology in different forms from IPs 
to products to development services. The move to B2C is difficult but may bring significant rewards 
if successful. 

These  companies  probably  behave  independently,  as  compared  for  example,  with  technology 
suppliers that are strongly embedded in large industrial value chains dedicated to a major industry 
such as the automotive or aeronautics.  

 41 

 
 
 
The study also showed the very relative independence of our companies from large multinationals, 
which  are  more  customers  than  competitors.    This  is  due  to  the  specificity  of  our  companies' 
products, services and markets. 

Finally, while occupying a strategic role in the digitalization of the economy as a whole, due to their 
cross-sector adaptability, these companies seem little integrated in the processes, constraints and 
benefits of the local and national innovation systems. 

Though these observations should be considered with caution,63 they have some policy implications.  

The very diversity of the companies acting as innovators in the economy, illustrated here by a group 
of Specialized Technology Suppliers, calls for some caution regarding a one-size-fits-all perspective 
about ICT innovation. 

Most of the 10 companies have mastered the issues of access to technological  knowledge rather 
well. The major role that in-house R&D continues to play deserves attention: the current policy focus 
on  innovation  and  entrepreneurship,  probably  combined  with  some  disappointment  about  the 
growth rate of R&D expenditures in EU during the crisis period, may distract policy attention from 
R&D.  However, it remains crucial to these companies. 

In addition, the open innovation strategies deployed by the companies confirm an outreaching trend. 
Here global reach may be seen as a challenge to (past) policy making. 

Access to financing is still an issue in Europe. This finding does not come as a surprise. 

One  wonders  about  the  financial  fate  of  these  companies  though  their  global  success  cannot  be 
challenged. Their survival and growth is to be admired. However their limited size could be related 
to the funding constraints to which they have been confronted since their creation. 

A  major uncertainty  for innovators  is  how  the market  will  react  to  their  innovations.   Without  the 
market there is no innovation, but only invention. If innovation is  central to the business model of 
that 
is  central  to 
these  companies,  commercialization 
commercialization  is  by  no  means  straightforward:  the  possibilities  of  failure  are  high  and 
companies can expect to pass through 'the valley of death' when they have to adapt to  what the 
market will really take up. Policy makers should not see this as only an issue of public procurement. 
It  may  be  an  issue  of  financing,  of  timing,  of  coaching  or  of  global  outreach.  Many  of  the 
interviewees would also say it is a question of luck and serendipity.  

their  growth.  Our  cases  show 

In  any  case  ,  the  commercialization  aspect  looks  little  known  or  integrated  in  policy  support 
instruments to new and to experienced entrepreneurs confronted with demand, competitors, pricing 
issues and global reach of products and services that are new to the market. 

63   As this is a qualitative study, it cannot support generalisation. 

 42 

 
 
 
 
 
                                                        
5.  Annex: Company descriptions 

Each company description is divided into 5 parts: a brief history, its current status, financial results, 
a more detailed chronology and a tentative of innovation model. 

Obviously, these are simple summaries of the author's much broader set of notes. 

Unless otherwise indicated, figures are for the year 2013. 

5.1  Aquafadas 

Company description 

Aquafadas  was  launched  in  2004,  and  its  headquarters  are  in  the  south  of  France.  The  company 
develops  software  for  digital  publishing,  tablets  and  smartphones,  and  creative  software  for 
animations  in  Flash®  and  HTML5,  video  creation  and  more.  Aquafadas  is  the  leader  in  the  digital 
comics  market  with  AveComics,  used  by  French  and  international  publishers  to  publish  comics  to 
tablets  and  smartphones.  Products  are  sold  worldwide  in  key  markets  such  as  the  U.S.,  Japan, 
Germany, and the UK. 

In 2012, the company failed to get funding for further growth and was acquired by the Canadian 
company Kobo, which belongs to the Japanese group Rakuten. Kobo used Aquafadas' features and 
tools  for  its  own  software,  but then  the  company  was  allowed  to  continue its  growth  and  access 
world research done by the Rakuten group. 

Current status (2013) 

10 years old 
Offices in Montpellier, Paris and New York. 
Employees: 62 
R&D: 42  
€4 million revenues and €40,000 net result  

Financial Results  

Chronology 

Aquafadas 

2004 

Key time points 
Two people searched for innovative software 
to develop. First try: software to exploit family 
video and generate automatic story telling 

(Tentative) access to external resources 

2005 
2006  Company creation 

First product stopped, market failure 

Aide à la Creation d’Entreprises Innovantes 
2005 (Concours OSEO) 
Awards Mac Innovators 

 43 

 
 
 
 
 
 
  
 
 
  
  
  
  
Second product : super slideshow including 
video: commercial success 

2007 

Publishing digital books 
Development aimed at publishing comic 
books: a technical success and commercial 
failure (not enough content available) 

2007-2009 

2007-2010 

A full digital publishing system, "one of the 
most innovative systems for digital 
publishing". Digital books, magazines, comic 
books and corporate communication. "Create, 
publish, distribute and analyze” 

2011 

Research Program Book Digital 2.0, base 1.6 
million euros, OSEO Anvar 

funded by CNC (35%) 

Failure of cooperation with universities 

2012    
2012  Cloud authoring tool 

International Digital Publishing Forum 
member. Co-animator of the group «ePUB 
fixed Layout» 

Bought by Canadian company Kobo (owned by 
the Japanese group Rakuten) 

Sale following a failure to raise enough 
funding for growth 

2012 

2013    

Company still free to continue its key 
activities 

2013 

Member of Idealliance to develop an 
innovative new standard format for digital 
magazine: Open EFT 
Important access to world research through 
Rakuten 

Innovation model 

Technological knowledge 

internal survey, R&D, standardization group 

Finance  

R&D funding, sale of the company: failure to raise enough money for    
growth 

Market knowledge 

Failure of the first product, success of the second, market evolution  
towards adjacent markets 

Specific 

Creation 

Two engineers wanting to innovate 

Death Valley 

Several difficult moments 

 44 

 
 
  
  
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.2  Astellia 

Company description 

Astellia is a leading provider of service assurance solutions that helps mobile operators monitor and 
manage  network  QoS  and  customer  experience.  Founded  in  2000,  Astellia  has  experienced 
tremendous revenue growth to become one of the leading providers of service assurance solutions 
designed to optimize mobile network QoS and customer experience. 

Astellia has been operating on a global scale for more than ten years, collaborating with over 200 
mobile  operators  and  equipment  vendors  worldwide.  Astellia  supports  its  customers  in  optimizing 
their  network  performance  by  assuring  an  end-to-end  monitoring  of  their  multi-technology 
networks. 

Astellia is a pure player in 2G, 3G and 4G mobile network optimization, with a unique expertise in 
Radio Access Network (RAN) where most of the quality degradations come from. 

Current status (2013) 

14 years old 
Offices  in  Paris,  New-York,  Singapore,  Beirut,  Rio,  Johannesburg,  New  Delhi,  Prague,  Saint 
Petersburg  (export 77%) 
Employees: 290 (plus 50 independent workers working only for Astellia) 
R&D: €68 million 
Revenues: €47 million, net result €2 million  

Financial results 

Chronology 

Astellia  Key time points 

(Tentative) access to external resources 

Public  Telco  France  Telecom  (FT)  R&D  developed 
software  for mobile traffic analysis Cigale. In another 
move,  FT  funded  the  company  Edixia  to  develop 
hardware probes 

Qositel:  spin  off  from  FT  R&D  continued  the  work  on 
Cigale (2G 2,5G) 

Edixia  Telecom  Technologies  created  the  first  remote 
massive  capture  probe  (largely  funded  by  France 
Telecom) 

1997 

1998 

1998 

2000 

Qositel  merged  with  Edixia  Telecom  to  become 
Astellia, employing researchers from FT 

Two  major  support  actions:  the  company 
achieved 
(Jeune 
the  status  of  JEI 
Entreprise  Innovante)  and  the  Research 
tax credit 

 45 

 
 
 
 
 
 
 
  
  
 
Developments  funded  by  VC  related  to  FT,  mainly  for 
marketing and sales 

2000-
2009 

Innovation  went  on  permanently,  following 
the 
technical  evolution  of  mobile:  GSM,  GPRS,  Edge,  3G, 
3G+,… funded internally 

Offices  in  New-York,  Singapore,  Beirut, 
Rio, Johannesburg 

Last  technological  transfer  from  Orange  Labs  took 
place,  when  Orange  stopped  its  activities  in  the 
domain  

incremental 

An 
innovation:  evaluate  technologies, 
select  some  and  apply  them.  An  empirical  transition 
from internal development to buying development 

sourcing  methodology  was 

The  above  informal  process  reached  its  limits.  A 
formal 
developed 
(subcontracted  to  Cap  Gemini).  At  the  same  time,  the 
company  went 
through  a  major  change:  from 
developer to integrator 

2005? 

2000-
2009 

2009 

Listed  on 
Euronext Paris 

the  NYSE  Alternext  and 

2011 

The  "Strategic  marketing  and  Innovation"  action  was 
launched (4G came faster than expected) 

Offices 
Petersburg 

in  New  Delhi,  Prague,  Saint 

2012 

2012 

The  world's  complexity  was  increasing:  big  data  and 
the    cloud,  and  collaborative  innovation  was  a  (new) 
answer 

The  company  used  zero  rate  lending  to 
develop a completely new architecture, as 
the  old  one  had  become  obsolete  and 
non-competitive.  

supported 

OSEO 
Nova4G 

the  new  product, 

Decision made to join a European project 
in 2015 

Innovation Model 

Technological knowledge 

Orange Labs (spin off), internal R&D and later buying technology. 

Finance  

Research tax credit, revenues from sales, then an IPO. 

Market  knowledge 

Quick international development. 

Specific 

Creation 

spin-off from France Télécom  

 46 

 
 
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
5.3  Ateme 

Company description 

Founded in 1991, Ateme competes worldwide with large multinational companies in a very specific 
and highly technical market: encoders for first tier broadcasters - the most demanding market for 
encoders. The company has been carrying out commercial and support activities around the world 
since 2004-2007. It faces strong international competition from players such as Ericsson-Tandberg, 
Envivio, Elemental, NTT and Fujitsu. 

Ateme announced it had 200 customers in over 60 countries. 

The  company  has  a  policy  of  being  seen  as  technological  leader  (“being  the  first”):    it  regularly 
publishes  white  papers,  participates  in international  standardization,  and  presents  the  “technology 
firsts”  it  has  achieved  on  its  web  site.  Ateme  is  the  winner  of  various  “awards”  from  technical 
publications. 

This  relatively  new  domain  (combining  video,  telecommunication  and  IT)  is  characterized  by  very 
fast technical evolution. Compression standards from MPEG2 to HEVC and video formats from SD 
to HD, UHD and more, are very important. 

Current status (2013) 

22 years old 
93% of sales out of France 
Offices in the US, China and South Korea 
Employees: 125 
Revenues: €21 million 

Financial results 

The  decline  in  the  results  for  2008-2009  corresponds  to  the  cancelling  of  profitable  services 
activities, and in 2011 to the sale of security activities.  

(Tentative) 
external resources 

access 

to 

Chronology 

Ateme 

Key Time Points 

1991 

1991-
2000 

2000 

Two  engineers  who  wanted  to  develop  innovative  software 
and  were  fond  of  technology,  after  a  few  years  of 
professional life, created Ateme. 

A  growing  and  successful  service  company,  failure  to 
develop products. 

New business model:  no firm visibility, no control of the real 
use  of  the  IP,  business  model  bringing  in  not  enough 
revenues 

2000 
2007 

- 

Unsatisfying results: no firm visibility, no control of the real 
use  of  the  IP,  business  model  not  gathering  enough 

 47 

 
 
 
 
 
 
 
 
 
 
 
momentum.   

Decision to develop own brand and products:  suffered for a 
couple of years… 

First products 

- 

A  continuous  policy 
to  master 
compression aiming at the high-level market: broadcasters 

the  heart  of  video 

- 

Move for specific products to an integrator behaviour. 

- 

Considering European projects 

2006 

2007 

2004 
2011 

2011 
2014 

2012 
2014 

Several  zero  rate  borrowings 
from  OSEO:  all  reimbursed.    CIR 
(research 
tax  credit)  –  very 
helpful. 

to  address 

larger 
In  order 
markets 
(VOD,  catch-up  TV), 
buying  products  and  integrating 
them. 

Contribution 

HEVC: 
elaboration  of 
French R&D project 4ever. 

to 
the 
the  standard, 

Innovation Model 

Technological knowledge 

Internal R&D (best in class)  

Finance  

Services, zero rate lending, tax credit, IPO 2014 

Market knowledge 

First services, then IP and finally own brand product, first tier broadcasters mainly 

Specific  

Creation 
Death Valley  Difficult move from IP to product sales 

Two engineers fond of technology 

 48 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
5.4  Awox 

Company description 

Previous  managers  of  Smartcode  Technologies  (PDG  and  R&D  director),  then  Palm  Computing 
Europe, created Awox in 2003, following the closure of this company. 

The  basic  idea  was  to  provide  software  for  home  equipment,  taking  advantage  of  the  growth  of 
high-speed  broadband  access,  digital  networks  and  digital  content.  In  2003,  when  the  company 
started, it was a new idea. This meant it had to work with very different companies: e.g. telcos, ISP, 
consumer electronics, equipment manufacturers. 

Awox aims to supply products to the market for connected objects at home. Its activities include the 
design,  manufacture  and  commercialization  of  objects,  and  the  development  and  licensing  of 
software dedicated to object connection. The company sold more than 129 million licenses in 2014 
(52 million in 2013). 

In 2013, it made a significant move to selling products under its own brand. 

Current status (figures 2013) 

10 years old 
Subsidiaries in Singapore and Palo Alto 
Employees: 42 
Revenues: €7 million 
R&D: €2.8 million 

Figures 

Chronology 

Awox 

Key time points 

(Tentative) access to external resources 

Creation of Awox by previous managers of 
Smartcode Technologies (PDG and R&D 
director), then Palm Computing Europe. Goal 
of the company: connected home equipment 
based on standards 

2003 

2004  Fund raising 

A decision by people with strong knowledge of 
large companies and investors 

supported by the OSEO label (Innovative 
company) €900,000 

creation of a subsidiary in Singapore, support 
of DLNA (Digital Living Network Alliance), an 
international consortium founded June 2004 

2006 

Second fund raising - €1 million 

2004-2008 

Developing building blocks for large electronic 
companies 

Cooperation with large groups Philips, 
Samsung, Orange 

Creation of a subsidiary in the US, Awox 
becomes Testbed Reference Device for DLNA 

2008 

Third fund raising - €4 million 

 49 

 
 
 
 
 
Work on Hbbtv (Hybrid Broadcast Broadband 
TV or “HbbTV”) a major  pan-European 
initiative 

2011 

Fourth fund raising - €2 million 

cofounder of MCC - Media Cloud Cluster - 
Languedoc Roussillon 

Major evolution: launch of products sold on 
the consumer market under its own brand.  

2013 

2014   

Initial Public Offering on Euronext - 
€25 million raised 

Innovation Model 

Technological knowledge 

internal, participation in a standardization consortium, cooperation with MNEs 

Market knowledge 

Standardization consortium, first customers MNEs 

Finance  

4 successive fund raising efforts were made, and an IPO carried out in 2014 

Specific  

Major strategic choice to contribute to a standardization consortium (DLNA) 

Successful move to consumer products in 2013 

large number of patents 

Creation by previous managers of large international company  

5.5  Esker Document Process Automation 

Company description 

Esker  was  founded  in  1985  as  a  software  service  house.  Its  main  activity  now  is  to  help 
organizations  improve  the  processing  and  exchange  of  business  information  via  cloud-based 
document process automation solutions. The company  can replace any business process that runs 
on documents with one that integrates a collaborative platform, provided as SaaS. 

The company has succeeded in maintaining continuous growth through a very efficient selection of 
new products, and adoption of new methodologies. 

Current status (figures 2013) 

29 years old 
Subsidiaries: Germany, UK, Italy, Spain, USA, Australia, Singapore, Malaysia, Canada 
Employees: 307 
Revenues: €41.1 million, of which €14.5 million in France (35%) 
R&D: €4.1 million 

 50 

 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial results 

Chronology 

ESKER 
Software  Key time points 

(Tentative) access to external resources 

Two young engineers create a software editing 
company based on their knowledge of the 
emergence of PC and Unix 

Launch the first product, terminal emulator on 
PC (funded by services revenues), large success 

Introduction to Nouveau Marché de la Bourse 
de Paris (now Euronext) 

Buy several US companies (facilitate distribution, 
increase market and sales) by product: fax 
server unit 

Research tax credit: starts and continues: 
efficient, except when controls become 
heavier (as in 2013) 

Emergence of a new idea (internal discussions, 
customers): a piece of equipment connected to a 
company which automatically manages outputs 
-and later input- of fax, e-mail, SMS, post mail: a 
continuous development process still going on: 
OCR, machine learning, IA techniques, etc. 

First product for large companies was a success: 
Deliveryware 

Addressing SMEs: offer Flydoc (unique at that 
time) as a SaaS  

1985 

1990 

1997 

1998-
2000 

2000-
2005 

2001 

2005 

Continuous improvements for document 
understanding. Name changed to  "Esker 
Document Process Automation" 

2005-now 

Major change in process: move to Agile 
methodology  (Salesforce started in 2008) very 
well accepted by employees and successful 
(allowed them to answer customer requests 
faster)  

A new major change in process: design thinking 
(made popular by Apple) 

2010 

2013 

2006-2008: two requests for zero rate 
lending for specific developments, one was 
successful and the loan was paid back, the 
other was abandoned (market change) and 
the loan was returned immediately. 

Regret : There is no support for process 
innovation 

 51 

 
 
 
  
  
  
  
  
  
  
 
 
Innovation Model 

Technological knowledge   

the founders, internal, bought  

Finance 

Internal revenues, zero rate lending for R&D, then IPO 

Market   knowledge 

Close relationship to the customers 

Specific 

Creation by two engineers: services and immediately products    

innovation in process and design 

The  company  is  strongly  against  the  software  patent:  it  creates  an  uncertainty  for 

innovators, and creates risks in potentially adjacent patents. It slows the development process. 

 52 

 
 
 
 
 
 
 
  
 
5.6 

Intrasense 

Company description 

The  company  was  created  in  2004  by  Stephen  Chemouny  to  develop  tools  for  integrating  and 
analyzing  medical  imaging  data  from  different  imaging  devices  in  a  unified  work  environment.  It 
can be adapted to every modality, every organ and every pathology. It can be used on a workstation 
PC or on a server for interpretation of results and post processing. A unique product name - Myrian 
-  covers a range of specialized products. 

Since 2006, it has probably been one of the fastest growing companies. 

The  key  source  of  innovation  has  been  a  network  of  physicians,  who  collaborated  and  spent  an 
enormous amount of time on it. The capacity of the company members to listen and to innovate 
accordingly was a major success factor. The company also creates networks with leading research 
laboratories and industrial partners.  

Intrasense has developed a network of distribution partners selected on the basis of their capacity 
to  roll  out  Myrian®  solutions  in  different  conditions  of  use  and  according  to  the  strictest  quality 
criteria.  Ongoing training is offered to partners, who are supported on a daily basis  by  Intrasense 
teams. 

Current status (figures 2013) 

9 years old 
Offices: Berlin – Istanbul – Kuala Lumpur – Moscow – São Paulo – Shanghai – Tokyo - USA  
Asia and Russia represents 60% of revenues 
Employees: 57 
Revenues: €4.1 million 
R&D: 50% of the employees (more than 100 scientific publications) 

Financial results 

Chronology 

Intrasense 

Key time points 

(Tentative) access to external resources 

Stephen Chemouny works in the US on digital 
imaging and finds the subject new and 
interesting 
He did a PhD on automatic analysis of liver 
radios for cancer analysis 
Fails to get a job 

1995 

1997-2001 
2001-2003 

No support from computer labs: no interest, 
funded by agricultural labs! 

 53 

 
 
 
  
 
 
  
Decides to launch the company based on the 
two awards mentioned right 

2004 

Complementary revenues from alimentary 
activities 

2005  Obtains Class IIa medical device CE label 

2006  Sales begin of the Myrian product line 

strategic choices made to orient company 
towards pathology (in particular cancer) and 
technology, and its commercial position 
(intense local adaptation, international 
coverage) 

2006 

2006    
2007    

Obtains the award as an emerging company 
(money and fame), and gets very efficient 
support from the local incubator. 
The award attracted other motivated people 
Love money from two physicians 

CIR (Research Tax Credit) and JEI  (Jeune 
Entreprise Innovante) funding allowed the 
company to double or triple its R&D effort 

Use of VIE (Volontariat International en 
Entreprises) was very efficient in foreign 
countries 

proposal to FP6: rejected (supposed cause: 
poor support in making the proposal) 

creation of an informal network of doctors 
working on cancer, very successful (the 
competitor GE was not listening to French 
doctors) 
FDA certification 

2008  Product line broken down on a per organ basis  €4.4 million raised 

2006-2014 

'Develop Myrian' launched, a multimodality 
platform for medical imaging, permanent high 
level of R&D investment 
2009  Partnership with Toshiba Europe 
2010  Subsidiary in Shanghai 

2011  Subsidiaries in Malaysia, Germany and Brazil 

2012  Subsidiary in Japan 
2013  Subsidiary in the US 
2014    

Introduction to NYSE Alternext 

€4 million raised 

Innovation Model 

Technological knowledge 

Internal  research  in  close  collaboration  with  a  network  of  physicians  and  companies  from 
several countries, including BRICs 

Finance 

Raising money twice 

Market knowledge 

Use of VIE64 for international network of distribution partners 

Specific  

Creation by a person interested in the subject 
A very efficient creation of international networks. 

64   http://www.ubifrance.fr/formule-vie/vie-en-bref.html 

 54 

 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
                                                        
5.7 

Itesoft 

Company description 

Itesoft  offers  software  solutions  for  digitizing,  automatically  processing  and  managing  all  its 
customers’  incoming  documents:  letters,  forms,  invoices,  and  payments.  Its  main  offer,  Freemind, 
targets  large  companies  or  organizations.  It  integrates  fully  into  companies'  Information  Systems 
(ERP, CRM). 

Itesoft  is  one  of  the  leaders  in  this  rather  fragmented  and  ill-defined  market  in  France  and  in 
Europe.  

Current status (figures 2013) 

25 years old 
Offices: Germany, the UK 
Employees: 196 
Revenues: €21.6 million 
R&D: 60 employees 

Figures 

Chronology 

Itesoft 

Key time points 

(Tentative) access to external 
resources 

ITA (Informatique et Technologies Avancées) created to 
develop advanced software projects 

First project developed for automatic reading of 
documents using artificial intelligence techniques 

Anvar subvention and Zero rate 
lending 

Since development of first project, continuous research 
has been carried out on the recognition of typewritten and 
handwritten characters 

Following a market study, decision made to develop and 
sell a software package. ITA becomes Itesoft and a 
software editor: creation of a dedicated department with 
R&D activities 

1988 

1989 

1994 

1998-… 

2001 

2002 

HRH Business Technology bought and renamed Itesoft, UK 
FormsConsult Software GmbH bought and renamed 
Itesoft Germany 

Partnership with research labs, 
several zero rate lendings from 
OSEO, always leading to successful 
results and fully paid back 
Listed in Euronext Paris Nouveau 
Marché 

 55 

 
 
 
  
  
  
  
  
  
A large cooperative project (5 years) launched: Document 
on Demand, i.e. a large set of new functionalities for 
document analysis, targeting TPE and small SMEs (less 
than 25 people) 
Yooz launched to access the PME market by providing 
SaaS services 

2010 

2010 

Funded by OSEO, includes a large 
number of research institutes and 
Sagemcom 

Innovation Model 

Technological knowledge 

internal R&D, customers 

Finance 

IPO, zero rate lending for R&D 

Market knowledge 

Addressing large companies, buying subsidiaries (the UK, Germany) 

Specific  

A service company for advanced projects  
Rapid move from services to products 

 56 

 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
5.8  Kreactive 

Company description 

The company Kreactive was created in 2004 to provide services for RSS and widgets. In 2007, the 
decision was made to develop a platform for designing, manufacturing and managing widgets for 
all types of terminal. This platform included an advertising agency and audience measurements.  

In 2011, it was decided to completely change the direction of the company and move to “lifelong 
learning”.  This  move  was  based  on  the  existence  of  numerous  sites  for  students  and  pupils,  with 
significant audience but low technical level and low monetization. Buying these sites and providing 
them  with  a  unique  and  advanced  framework  was  a  first  step,  then  advertising  and  monetizing 
them  allowed  the  company  to  automatically include  new  contents  and  carry  out  deep  analysis  of 
usages. 

The current offer, branded Digischool, allows owners of knowledge to transform it into applications 
available on all terminals, making it easily monetized and managed. The work is done by a team of 
experts  who  index  and  annotate  content  in  each  country,  with  a  set  of  computerized  tools. 
Digischool is mainly dedicated to supporting young people during their studies. 

The  company  aimed  from  the  start  to  offer  this  product  in  10  countries:  United  States,  England, 
Germany, France, Spain, Brazil, Russia, China, India and Morocco. 

The “historical” offer is still provided by the company (development of applications), but the goal is 
to get revenues from advertising and content distribution. Existing content may be bought or new 
content developed, possibly by funding teachers. 

Current status (figures 2013) 

6 years old 

Offices: Lyon 

Employees: 43 

Revenues: €2 million 

Figures 

Chronology 

Kreactive 

Key time points 

(Tentative) access to external resources 

Anthony Kuntz, an employee in a SSII, 
becomes convinced of the future of RSS 
streams 

He established the company Kreactive, 
offering consultancy on RSS and widgets 

2004 

 57 

 
 
  
  
  
It was decided to develop a platform for  
designing, manufacturing and managing 
widgets for all types of terminals 

2007 

2008  the platform included an advertising agency 

OSEO zero rate lending 

A new platform was developed with new 
automated features and innovative services 

OSEO zero rate lending permitted this 
development 

2010 

Anthony Kuntz set up an association with 
Thierry Debarnot, owner of Media Etudiant, a 
company with several sites for students with 
large audiences and a low technical levels 

fund raising €3 million 

end 2011 

Media Etudiant (Efficaweb) was bought. 

The company selected a new brand name: 
Digischool aimed at "lifelong learning" 

2012 

2011-2013 

Small sites dedicated to learning were bought 

A unique framework was built for all owned 
sites combining advertising, monetizing, 
automatic inclusion of new contents and deep 
analysis of usages 

2013 

2014  several partnerships for educational sites 

Innovation Model 

Technological knowledge   

Internal knowledge and R&D 

Finance 

Zero rate lending for R&D, Fund raising much later 

Market knowledge 

From “pure agency” to B2C, a previous consulting activity, a great capacity to address new 

opportunities 
Specific  

An extreme ability to move and adapt, associated with a high technological level 
The selected business model is part of the innovation: selecting specialists and paying them 

to provide content, which will be entered in the company platform then distributed.  

 58 

 
 
  
  
  
  
 
 
 
 
 
 
 
 
5.9  Vitec 

Company description 

Founded in 1988 by Philippe Wetzel, VITEC specializes in the development and industrialization of 
advanced  digital  video  solutions  in  the  MPEG  field  for  OEMs  and  integrators.  Since  1988,  VITEC 
Multimedia has been devoted to the development of MPEG encoding and decoding solutions and the 
creation  of  innovative  concepts  intended  for  digital  video  applications.  Since  1990,  VITEC  has 
focused its efforts on digital video and conforming to ISO standards such as MPEG. 

The  company  aims  to  respond  fully  to  customer-specific  needs,  in  all  sectors  using  video:  health, 
administration, broadcast, Telco, education, transportation, entertainment and military. Its sales are 
mainly to OEMs and integrators in the various domains listed above. This is coupled with a very high 
level of R&D, which provides advanced solutions for a wide range of applications. 

Current status (figures 2013) 

Note:  the  figures  below  are  estimates,  and  include  foreign  subsidiaries,  whereas  the  table  in  the 
section headed “Financial results” does not include foreign subsidiaries. 

25 years old 

Subsidiaries: France, USA, Germany, Israel, and the United Kingdom 

Employees: 175 (worldwide) 

R&D employees: 100 (worldwide) 

Revenues: €30 million (worldwide) 

Financial results 

Vitec is a private company,  which does not publish its results. The following data are provided by 
Societe.com,  which  considers  only  the  results  of  the  French  branch  (including  exports).  The 
consolidated  data,  taking into  account  subsidiaries  in  Israel,  Germany  and  Russia  are  significantly 
higher. 

Chronology 

VITEC 

Key time points 

(Tentative) access to external resources 

1980's 

1988 

Philippe Wetzel worked at Matra Espace and 
contributed to European programmes (RACE) 

He created his own company offering digital 
imaging compression (no standard existing at that 
time) 

1988-1992 

Electronic cards for videophone 

1992 

First MPEG1 encoder on PC: international success 

 59 

 
 
  
  
  
  
1988-1998  Subsidies were a significant source of funding 

1997 

Opened the US subsidiary (followed by a couple of 
years with a negative financial balance) 

RACE, then ESPRIT, Zero rate lending from OSEO : one 
project per year 

More and more technology bought from Fraunhofer 
(not the core job, but mainly audio). Funding accepted 
for the CIR (Research Tax Credit). Fraunhofer has to 
find money from the companies, and then may obtain 
subsidies, which lead to very usable results. No 
equivalence in France 

The company is used to build consortium and/or to 
contribute to some.  

CIR (Research Tax Credit) proved very useful: allowed 
the company to carry out more research 

Vitec acquired the Israeli company Optibase (and 
kept the brand) 

Knowledge acquired in adjacent domains (IPTV), R&D 
continued in Israel 

Vitec acquired the military and security activity of 
ATEME 
Hired an engineer from Thales, who showed to be 
highly networked and proved very successful in 
mounting European projects (6 successful attempts 
out of 8 in 2013) 

2010 

2010 

2012 

Innovation Model 

Technological knowledge 

internal R&D, R&D international programmes with potential customers for new development, 

buying companies for adjacent markets 

Finance 

Sales and zero rate lending the first ten years 

Market knowledge 

Major cooperation with customers (integrators and value added resellers) 

Specific 

Creation by an engineer experienced in both technology and European programmes 

Strategy: provide the best technology available to all industrial sectors, with the notable 

exception of 1st tier broadcasters.   

 60 

 
 
  
  
  
  
  
  
 
 
 
 
 
 
 
5.10  Wiztivi 

Company description 

WizTivi was founded in 2007 to develop and commercialize products and systems allowing an easy 
vision of Internet sites on TV set, with a significant level of quality. The company evolved rapidly to 
included multiscreen development in its activities.  

Currently,  the  company  presents  itself  as  the  worldwide  specialist  in  interactive  user  interfaces 
dedicated  to  set-top  boxes,  connected  TVs  and  other  connected  devices  (STBs,  game  consoles, 
tablets,  smart  phones…).  It  develops  multi-screen  applications,  provides  an  SDK  (software 
development kit), and works with operators, TV channels, content providers and CE manufacturers. A 
key feature of the offer is the permanent search for best image quality and fluidity.  

Another original aspect of its innovation is a “creative studio”. This design studio is equipped with all 
the tools needed to have the best operative quality for any application developed. 

Up  to  now,  Wiztivi  works  mainly  through  direct  contracts  with  R&D  labs  of  large  international 
companies: Samsung, LG, Toshiba. 

A  significant  part  of  Wiztivi's  revenues  come  from  the  sale  of  IP  and  especially  the  SDK.  The 
company announced it broke even in 2013. 

A key strategic advantage is its knowledge of the ecosystem. The company's strength is its ability to 
initiate connections between these players. Most specific innovations have been made possible by 
finding  a  partner:  for  a  customer  (such  as  an  ISP),  the  company  finds  a  CE  manufacturer  and 
develops the technical aspects of the interface. Another key feature of Wiztivi is its contribution to 
the development of standards. 

Current status (2013) 

6 years old 
Applications used in 17 countries and 4 continents 
Employees: 50 
R&D: developers are doing part time R&D  
Revenues: €5.2 million (estimate) 

Financial results 

 61 

 
 
 
 
 
 
Chronology 

Wiztivi 

Key time points 
Starting point : an encounter between an R&D 
manager at France Telecom, then Proservia (selling 
R&D services on video processing) and a researcher 
on smart cards in Silicon Valley and an idea:  
Internet video content on TV should be provided in 
an easy and efficient way 

2006    
2007  Creation of Wiztivi as a subsidiary of Proservia 

Several evolutions took place, related to the 
demand of the key players. TV manufacturers, ISP 
and content providers 

2007-2009 

2009 

2009-2014 

SFR was a customer, but Wiztivi was allowed to 
work for all players. 
The company succeeded in putting together content 
owners, ISPs and TV set manufacturers, and 
provided the technical development needed.  

2010 

SFR Development became the main shareholder 
instead of Proservia 

2009  Taking into account all connected devices 

WTV creative studio, a team addressing UI/UX (User 
Interface/ User Experience) was created, which had 
the technical expertise and the up to date 
equipment 

2009 

(Tentative) access to external resources 

Two researchers with significant technological 
expertise developed the project. They 
succeeded in convincing the owner of the 
group (an SSII) of the interest of the project, 
based on previous successful developments.  
Contacts made with ISPs: positive reactions  

SFR development bought 3% of Wiztivi's 
capital 

Partnerships were built with Philips, Intel, 
Yahoo, SFR. 

Developments made for TV on demand, catch up 
TV, interactive TV, with en emphasis on image 
quality and fluidity 
Developing for Toshiba worldwide the UI and back-
end for Toshiba Place 

2009-2014 

2010-2014 

2013-2014 

Strong contribution to HbbTV standard. Some 
funding by an FUI R&D project.  No 
participation in European projects: too difficult 
to find a good project 
SFR Development bought the capital retained 
by Proservia 
Tentative decision made to go for European 
projects through the support of a consulting 
company 

Innovation Model 

Technological knowledge 

Internal,  partnership  with  MNE,  then  participation  in  a  standardization  consortium,  a  new 

ecosystem implied combining knowledge from several domains 
Finance 

Initial support by a large company (SSII), 3 years later bought by a Venture Capitalist 

Market knowledge  

Customers are large Consumer Electronics companies and Telecoms.  

Specific  

Creation  by  two  researchers  with  a  specific  interest,  who  succeeded  in  convincing  a  large 

company to support the project. 

Their  key  skill  was  that  they  understood  a  new  ecosystem,  and  were  able  to  manage 
working relationships with key players, content owners, ISPs and TV set manufacturers, associated 
with the best available technological competences. 

 62 

 
 
  
  
  
 
  
  
  
 
 
 
 
 
 
 
Europe Direct is a service to help you find answers to your questions about the European Union 
Freephone number (*): 00 800 6 7 8 9 10 11 

(*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed. 

A great deal of additional information on the European Union is available on the Internet. 
It can be accessed through the Europa server  http://europa.eu. 

How to obtain EU publications 

Our publications are available from EU Bookshop (http://bookshop.europa.eu), 
where you can place an order with the sales agent of your choice. 

The Publications Office has a worldwide network of sales agents. 
You can obtain their contact details by sending a fax to (352) 29 29-42758. 

European Commission 
EUR 27233 EN – Joint Research Centre – Institute for Prospective Technological Studies 

Title: Models of ICT Innovation: Ten cases of successful innovative ICT SMEs in France 

Author: Alain Puissochet 

Luxembourg: Publications Office of the European Union 
2015 – 62 pp. – 21.0 x 29.7 cm 

EUR – Scientific and Technical Research series – ISSN 1831-9424 (online) 
ISBN 978-92-79-48166-6 (PDF) 
doi:10.2791/672955 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
L
F
-
N
A
-
2
7
2
3
3
-
E
N
-
N

JRC Mission 

As the Commission’s  
in-house science service,  
the Joint Research Centre’s  
mission is to provide EU  
policies with independent,  
evidence-based scientific  
and technical support  
throughout the whole  
policy cycle. 

Working in close  
cooperation with policy  
Directorates-General,  
the JRC addresses key  
societal challenges while  
stimulating innovation  
through developing  
new methods, tools  
and standards, and sharing  
its know-how with  
the Member States,  
the scientific community  
and international partners. 

Serving society  
Stimulating innovation  
Supporting legislation 

doi:10.2791/672955 
ISBN 978-92-79-48166-6