The two companies said they would invest an initial $200 million, and intend to invite undisclosed others to invest another $200 million.

Initially, the fund will target French and other European startups, but a Publicis rep confirmed that down the road (at least a year), expansion into the U.S. and Asian startup arenas is likely.

“French investment capital has been suffering for far too long from the absence of a solid ecosystem to link young companies together with larger groups, research centers and government systems,” stated France Telecom CEO Stéphane Richard. “From the point of view of France Télécom-Orange, the new fund complements our  investments in R&D, as well as creating a terrific opportunity to be present at the birth of growth projects.”

The companies said the fund’s main targets for investment will be companies focused on digital technology, content and services. Likely sectors include online marketing, e-commerce, mobile content and services, online gaming and social networks, as well as associated technologies and infrastructures such as middleware, cloud computing, security, and online payments.

Initially, the companies said, the fund will offer seed capital of up to $1.4 million to selected European fledgling companies in the early stages of development, as well as later-stage financing of up to $20 million for more established companies within the continent. Later on, the fund will explore investments in U.S. and Asia.

For Publicis, the initial focus on Europe makes sense. It has been backing startups in the U.S. via VivaKi Ventures (formerly Denuo) since 2006. The VivaKi Ventures approach is different, however. Instead of cash investments, the company usually takes stakes in startups in exchange for marketing consultation services.

Other holding companies also invest in startups -- notably Interpublic Group, which recently cashed out half its stake in Facebook at a sizeable profit. WPP Digital has taken stakes in startups, including Omniture, while sibling operation GroupM has minority holdings in several firms -- including Invidi, the addressable TV company. Omnicom Media Group has worked with several clients, including Pepsi and General Electric, to identify and back startups.

The Publicis France Telecom fund will be run by an independent entity. A Publicis Groupe rep said the companies are in “advanced discussions” with a team of executives currently operating a venture capital firm.

Commenting on the new venture Publicis Groupe CEO Maurice Lévy stated: “All over Europe, there are young companies with powerful, game-changing ideas, and they’re not getting the financial backing they deserve…We feel that this project is in the national and European interest, and I hope that we’ll be swiftly joined by other institutions and funds so that we can operate on an even more massive scale.”