With this kind of topic, one should be careful about generalization. In 
addition (& contrast) to Liam's answer, let me add a few points:

1) Some startups are indeed too French market-centric, but others have 
the opposite problem. This is a matter of debate even among the French 
ecosystem but French startups that have the biggest successes usually 
address the French market first (Free, OVH, Gandi, Vente Privée, Meetic, 
more recently Capitaine Train...).  Of course there are examples of the 
opposite too, eg. in recent news Sparrow or Criteo.

2) I strongly disagree with Liam on the quality of our CS education. 
Having studied at one of the top French schools and in UK, I can say we 
are actually severely lacking. We do have excellent research labs (eg. 
INRIA) and schools (eg. ENS Cachan), but they are very few and "CS" in 
most of the Grandes Écoles is sadly close to what you call "Java School" 
in the US. That being said, there *is* a vibrant, mostly self-taught 
hacker community and finding talent here is probably easier than in 
Silicon Valley. Also, see 3)... Oh, and for other domains than CS 
(electronics, mechanics, aeronautics, things like that) the French 
engineering system is not so bad.

3) Talent is cheap. Dirt cheap. A software engineer in France will cost 
you half of what it costs in SV. Moreover you will probably be able to 
get lots of subsidies from the state in the first years (Yes, we have 
high taxes, but later... As we say here, we tax what works and subsidize 
what doesn't.). If you make video games, the advantages are just 
enormous: special tax cuts, art-specific subsidies and so on. Yes, it 
kind of explains why the French video games scene is blooming.

4) Startups are slow, but the rest of their ecosystem is slower and 
encumbered by useless bureaucracy. Every time I see an American 
complaining about what a chore taxes are, it makes me laugh.

5) We do not have a small business act. Working for the State when you 
have concurrence from large companies such as "SSIIs" (they are 
basically IT services companies that sell semi-qualified workforce; they 
exist mostly to bypass French employment law... not expanding on this, 
it would require a lot more space) is impossible, you will not be 
considered as a viable candidate.

6) Research here is mostly public, and our public research is very good 
(at least in the fields I know such as networks and CS). Probably a 
little less so than in the 70s / 80s, but still. So you have a ton of 
researchers in labs payed peanuts. Most don't care because they live for 
Science and the "peanuts" are still enough for them to live decently. 
Some grow tired of ridiculous paychecks and boring bureaucracy (yes even 
for researchers...) so they create spin-offs, but they often don't know 
how to make something useful with their work and die. I guess one of the 
reasons Google recently opened a branch in Paris is because they want to 
take advantage of all this poorly used potential.