French pigeons (#geonpi) have gone silent, but not because they won, says Jean-David Chamboredon



By now you’re probably familiar with the French pigeon (in the French slang: #geonpi) movement, the revolt of entrepreneurs against a plan by François Hollande’s administration to nearly double the marginal tax rate on capital gains – from 34 percent to up to 62,2 percent in some cases. When Jean-David Chamboredon (ISAI) noticed the proposal in the 2013 budget for, he wrote the blog post that ignited a movement that would assemble almost 75 000 angry pigeons in one week.

The Facebook page of the pigeons is currently closed for business – but not because the pigeons won, explains Chamboredon to Whiteboard.

First, can you explain a bit how the #geonpi movement burst onto the political scene?

Jean-David Chamboredon

Jean-David Chamboredon (yes, that’s a feather in his mouth)

Jean-David Chamboredon: “When François Hollande was a presidential candidate, one of his campaign promises was to reform taxes on capital based revenue like dividends and interests so that they would resemble taxes on regular income like salaries more.”

A 62,2 % marginal tax rate on capital gains? Non, merci!

Jean-David Chamboredon: “But in preparing the budget for 2013, his administration applied that same principle to capital gains. Basically, the idea was to apply a marginal tax rate of up to 62,2 percent on whatever return on investment entrepreneurs and investors made on their capital.”

“I discovered that in the last week of September, and I submitted an op-ed to La Tribune saying: this is a catastrophy for two reasons. First: taxing entrepreneurs on their capital gains as if it’s a salary is a confiscatory tax. Second: if you tax the capital gains of angel investors at these rates, you take away all the incentive to invest.”

“Angel investments are by nature risky and illiquid. But adding this tax to the burden would simply kill angel investments in France. That’s a catastrophy for the internet sector in France, in which almost all businesses are seeded with angel money.”

Pigeon, #geonpi: fall guys and suckers

Jean-David Chamboredon: “I said something to the effect that entrepreneurs would be the pigeons – in French, that’s like the fall guy, or the sucker in the game. That hit a nerve with entrepreneurs and startups (laughs): no time the “pigeon” community became an instant hit on Facebook and Twitter – we racked up 73 000 likes or something. Of course, given the momentum on social media, the media started talking about it – we made the FT Europe. So in the end, the government had to react. Which it did, very rapidly but unfortunately wrongly.”

“They amended the project of law with some conditions to say there would be different taxations for entrepreneurs – who work in the company – and shareholders, who don’t work in the company and just give money.”

“That division works fine for traditional small business owners: they typically stay in their company for a very long time, and they have a large share in the capital. For tech startups, that situation is entirely different: they have more founders, so their share in the cap table is smaller. Also, they typically sell or leave the company sooner.”

“So, yes, the government amended the law project, and mostly SMB owners are happy with it, but we haven’t won any battles, really. The position of angels hasn’t changed in the proposed law, and we’re still in a situation where investing in a startup is the most taxed investment that you can do. Investments in art are tax free. Investments in real estate: you pay a lower flat tax with a 20 percent discount. Get dividends from a large company: you pay lower taxes, also with a 40 percent discount. But invest in a startup: sorry, any capital gains on that could be taxed like a salary.”

“This is obviously absurd. A dividend resembles a regular income much more closely than capital gains. For one, dividends are a regular income that comes to you as a shareholder. You get it every year, but your capital stays intact as stock. With capital gains, you dives, get your cash back and reinvest. Surely, you can’t consider that a salary or a steady income?”

Ruffled feathers

While there was no immediate progress made in the negotiations, the #geonpi movement decided to shut down its Facebook page for the time being, says Chamboredon.

Jean-David Chamboredon: “We needed to have a peaceful conversation with the politicians, and the noise was distracting. The Assemblée Nationale has to vote on the law, and the Senate still has to look at it. It’s very hard to predict how the outcome will be – most of the representatives in the Assemblée and the Senate are leftwing, civil servant types. They don’t know much about how companies exist. So maybe they’ll say: this is a good law and we’ll vote it.”
“I don’t understand the sudden move from the government. If they had said – we build in some progressivity in the taxes on capital gains, then I would have understood. We now have a fixed tax rate of 34% on capital gains. If they had said: we’ll use a fork of 20 to 40 percent, according to size and a minimal shareholding period. Even though France already has one of the highest capital gains tax rates in Europe. Even in the Nordics, it’s something like a 30 percent flat rate. In Belgium, it’s zero.”

“But as it is, they put in place a tax proposal that will kill the tax itself. Because if no one is motivated to invest, there won’t be any value creation at all, which means there will be no basis to tax. They’re killing the startup market. And let’s not forget: small businesse, startups are where most job creation in France is taking place.”

Did you take part in the talks with the administration yourself?

Jean-David Chamboredon: “No. As long as the geonpi page was online, they didn’t want to talk to me – they said I was right wing jerk. Then we shut down the page and I wrote another blogpost explaining that I just wanted a peaceful conversation and a rational decision – for me, it has nothing to do with politics, even, this is about business. Well, now they’re ready to talk to me. I had some meetings, some others are scheduled.”

What do you expect as an outcome?

Jean-David Chamboredon: “To be honest, I don’t know. First, we have to make sure that we’re understood by the people in power. I feel pretty confident that this will happen. But then, they would have to make a move that is politically acceptable to them. I really can’t predict how that will turn out.”

Who is Jean-David Chambordon?

49 years old, Ecole Polytechnique (Paris, France).

Started his career at Cap Gemini, where he spent 13 years in managing system integration projects and launched Cap Gemini presence in Silicon Valley (1997-1999). Joined the Venture Capital industry in 1999, first as CTO of Europatweb, then as Partner with Viventures. French Partner of the Venture/TMT practice at 3i Group plc (2003–2009). Co-founded and led ISAI, “the” French internet entrepreneurs’ fund (since 2009)

Track record includes SeLoger.com (IPO Euronext), Screentonic (acquired by Microsoft), Okyz(acquired by Adobe), Highdeal (acquired by SAP), Priceminister.com (acquired by Rakuten)…

Photo: Andrew Currie, Flickr

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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