40 young innovative companies

‘Young innovative company’ (YIC) status was introduced to encourage people to set up and expand SMEs that carry out R&D. In 2012, their R&D expenditure totalled €730 million and was focused primarily within the service sector.

When it was first introduced in 2004, ‘young innovative company’ (YIC) status helped 1,300 businesses. According to the Central Agency for Social Security Funds (Agence centrale des organismes de sécurité sociale – ACOSS), in 2012, 2,750 businesses benefited from €91 million in exemptions under this scheme.  ¹ This figure fell by 29.3% in 2012 after the scheme was reformed under the 2011 Finance Law. YICs spent €730 million on R&D in 2012 and employed 9,500 full-time equivalent (FTE) R&D personnel.

Due to the nature of the status, YICs are small businesses: nine out of ten YICs employ fewer than 20 people. YICs are deemed to be distinct from businesses of an equivalent size that carry out R&D but do not have this status. On average, YICs employed 7.8 people in 2012, had a turnover of €1.2 million and spent €300,000 on R&D (table 40.01). YICs therefore devoted 24% of their turnover to intramural R&D, as compared with 12% of businesses with fewer than 20 employees that carried out R&D.

A significant proportion of the personnel employed by YICs were dedicated to R&D. In 2012, YICs devoted on average 3.8 FTE posts to R&D (covering employees with all levels of qualifications), as compared with the 2.4 FTE posts devoted by businesses with fewer than 20 employees that carried out R&D. Those employed by YICs were also more highly qualified. On average, researchers and R&D engineers accounted for 2.8 FTE posts at YICs, in comparison with 1.6 at businesses with fewer than 20 employees.

YICs were more likely to collaborate with other institutions involved in carrying out R&D: 40% of them outsourced R&D to dedicated state research institutions or other businesses, as compared with only 33% of businesses with fewer than 20 employees.

Government funding accounted for the majority of funds paid to YICs for their R&D (excluding tax incentives such as the YIC scheme or the R&D tax credit). In 2012, they received €157 million in government funding for their R&D. This accounted for 18% of their total R&D expenditure (including the procurement of R&D from other businesses or dedicated state research institutions), as compared with 11% for businesses with fewer than 20 employees (table 40.02). 84% of government funding paid to YICs took the form of incentive credits from government departments and state institutions. By contrast, both YICs and businesses with fewer than 20 employees that carried out R&D received little funding relating to defence or big technology programmes. In addition to government funding, YICs also received €13 million for their R&D activities from businesses based in France (chart 40.03). This only accounted for 1% of their total R&D expenditure (for both performing and subcontracting R&D), as compared with 7% for businesses with fewer than 20 employees.

As with all businesses with fewer than 250 employees, the R&D carried out by YICs related primarily to service activities. In 2012, the top three R&D activities of YICs were (in decreasing order of intramural expenditure): ‘professional, scientific and technical activities’, ‘computer-related and information service activities’ and ‘publishing, audiovisual and broadcasting activities’ (chart 40.04). These three areas accounted for 74% of intramural business enterprise expenditure on R&D (BERD) by YICs, as compared with 64% of that spent by businesses with fewer than 20 employees.

Anna Testas

¹ Sources: Les exonérations de nouveau en recul en 2012 (‘Exemptions reduced again in 2012’), Acosstat No.181, November 2013, list of businesses with YIC status that are exempt from paying social security contributions, ACOSS.