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This week:
who invested in AI in Europe last year
EF does Silicon Valley
WW3 is here
… and much more. Thought and comments? Talk to me, I answer to any email and arguments, opposing or not, and I’m a sucker for love (and hate) mail! :-)
Thanks for reading,
Dragos
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Market talk
Who actually invests in AI startups in Europe?
2023 was undoubtedly the year of AI, so I had a look at who in Europe actually put the money where the mouth is, spending it on taking risks on AI startups. Looking by the main startup geographies, the usual seed-only investors got their lion share:
in the UK, Seedcamp, Notion, Hoxton or Fuel Ventures were the more active AI dealers involved with local startups.
in France, at the top we find Kima, Elaia or Newfund and, not surprising for many, Sequoia Capital is a non-French name very invested in the Paris AI, alongside Local Globe.
in Germany, Heartfelt, HTGF, seed + speed and La Famiglia also wrote a few early stage AI checks last year. Special mention for Tiny, technically a German investor in our books (they’re based both in Berlin and London), with a significant AI portfolio fairly distributed across the whole continent.
in the Nordics, Inventure, Skyfall and Sondo are the top names who made AI bets last year, but you should also keep an eye on Dreamcraft or J12 (which positions itself as an AI investor lately).
as for Americans, besides Sequoia, which btw has had an impressive European GTM since hiring Luciana to run their show, we find Khosla, GC and Lightspeed as top dogs - again, just like in Sequoia’s case, those are companies which have explicitly invested in their European market game in the past couple of years.
not least, speaking of multistage, besides the Americans, Octopus, Index, EQT and Northzone have also written at least 5 checks for European AI in 2023.
There’s many more than those names, of course - all this from a comprehensive look at the most interesting 250 AI startups that were funded in Europe in 2023, available in a handy cheat sheet.
Cheat sheets
most promising 250 AI startups (and their backers)
under the radar startups (updated every week)
AI legal startups - link
VC seed mark-ups - link (also comes with a file)
The best investors in Europe get access to our intel every week. Don’t be the one that’s left out, subscribe! 👇️
Other stories
🇬🇧 EF is doing a Demo Day event in San Francisco next week. I know I have talked to a bunch of folks in the past few weeks about EF opening a SF office, but not sure whether I mentioned it here or not, which they deserve - it’s a great move for EF, showing basic understanding that building business overseas ASAP is probably one the major pain points for any European ambitious startups. Besides, you cannot say you compete with YC, but from a different continent than where the real action is. 😀
They have 31 startups presenting but was not able to find a public list on a quick search - media will likely take over the story and follow up on that in the coming days.
🇬🇧 Microsoft opened yet another AI Hub, this time in London - led by Mustafa Suleyman, same guy who just called it quits the other day with a VC-backed AI startup in order to defect to MSFT and also who, prior to that, led Google’s Deepmind AI ops in London.
✊ Gas boilers are now banned from being installed in new-build homes in Scotland.
heat pumps are suggested as alternatives, and the Brits did a smart thing for building the demand, whereas one can book a visit with households that already have one installed.
I wrote about heat pumps being an investment thesis a year ago and know a few investors who got into it because of it. After I wrote, the market has exploded, Aira raised shitloads of money etc - here’s a heat pump cheat sheet, btw.
🇵🇱 A Polish company was scammed with $400 million as a result of an order that its Swiss trading unit paid for but never received.
🇸🇪 Background story on how Renewcell f-ed up an exciting juicy business in an emerging ecosystem within a year.
🇳🇴 The Norwegian finance minister behind the proposal of adding a 40% extra tax that would kill the local startup ecosystem says he cannot see that the proposed changes will entail any restrictions on the opportunity to create and operate in Norway.
Good reminder that the startup world is just a small lil’ bubble in the great scheme of things from the real world.
💪 CMA (British regulator) discovered an interconnected web of partnerships and investments within AI involving a handful of the same tech firms from America - reason to assess the market over the coming months. If that.
🤝 US and European consumer financial regulators said they will coordinate their oversight of buy-now-pay-later products, digital payments and AI.
🤖 Amazon CEO Andy Jassy on how the EU and US governments’ over-reach not only slows innovation but also (in the case of the denied iRobot acquisition) killed jobs and handed over consumer data to Chinese competitors. (full transcript here)
👁️🗨️ James Dimon on his annual shareholders letter (you should read the whole thing):
The Basel III endgame disadvantages American banks. The Basel III endgame has been 10 years in the making, and it still has not been completed. In my view, many of the rules are flawed and poorly calibrated.
If the Basel III endgame were implemented in its current form, it would hamper American banks: As proposed, it would increase our firm’s required capital by 25%, making our requirement 30% higher than it would be under the equivalent European Union proposal.
That means for every loan and asset financed in the United States by a major American bank, that bank would have to hold 30% more capital than any international competitor.
🦾 Wall Street is looking for AI as a growth driver in emerging markets - I mean, when everybody zigs, you gotta zag and compete at the edges, how hard can it be?
The more advisory-focused a project is, the less a client will trust a bot. The better opportunity for startups in this category is to play more of an enabler role- selling AI-enabled software to help existing service providers. There’s some golden opportunities here too – think of the software that could be sold to law firms, banks, Deloitte itself (!) to help them do more with less. The more repeatable a service, the more productizable. The more productizable, the better the startup opportunity.
➕ Related:
Google got the Germans from Bayer as customers for Gemini & will have WPP use Gemini for creating ads for brands like Coca-Cola, L’Oréal and Nestlé.
You can tell the Google sales guys got to work, right? While Google’s aggressive move for business is to be expected, this will come at a cost to the plethora of VC-backed startups not being able to produce the growth curves justifying their investors expectations.
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Data and anecdotes
Neo-banks:
Merchants are funding the economy through BNPL and embedded finance is finally a thing.
Revolut…
Food for thought: if you want to build a Revolut competitor, do you go after its business or after blue ocean markets?
“We are still taking customers from incumbents: 75% come from cash, banks and Western Union — that’s still the gorilla in the room.”
More than 1% of all card payments in Europe are now done with Bolt.
ESG:
Conventional approaches to ESG reporting is a process estimated by the EU to cost companies €320,000 per year. By the middle of 2027, when approximately 50,000 EU/European Economic Area companies must implement CSRD requirements, aggregate reporting costs are projected to be €9.9 billion of which 10 percent is expected to flow to SaaS providers.
Three hundred thousands! Btw, the EU enforced ESG regulation is a hot mess, to no one’s surprise.
Speaking of hot mess, how about that German bureaucracy?
LSE:
I’ve been the CEO of two UK listed biotech companies alongside a long career in the London financial markets. The UK markets are not just illiquid, they’re completely broken and closed. The situation is worse for small growth companies (in particular biotech) but even sizeable companies such as Shell and many others are saying the same thing.
We’re basically already in WW3, but fail to acknowledge it - you should really pay attention to this basic explainer.
Mo’ Sundaying
🇫🇷 More American Mistral coverage.
☕ Benedict Evans went to Matt’s podcast.
🤑 Microsoft wants to sell ads inside the Start menu on Windows 11.
💲 The return on investment at many elite private institutions outside the eight Ivies is no better than far-less selective public universities.
🏀 UConn-Iowa, Women's Final 4 Game became ESPN’s most watched basketball game, ever.
🇬🇧 2,000 iPhones are being reported stolen per day in London alone - the police predicts 1/4 are reported.
🇩🇪 An employee at a museum in Germany was fired for hanging his own art on the museum's walls.
🙈 Austria:
“If Austria were to be attacked militarily, should other EU member states support Austria militarily?”
72,28% say yes.
“Should Austria, in the case of an armed attack on an EU member state, support this state with armed troops?”
13,58% say yes.
💪 Man sues 50 women for $2.6 million after they called him a bad date in viral Facebook group.
🎥 The most popular TV show of the streaming era is NCIS. Btw, some series I am watching (or plan to):
Tokyo Vice season 2
That’s all folks, have a wonderful week!
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