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Slow summer days, folks are off holidaying and most of the deal announcements are PR residuals from the past months. Today we cover the UK switching AI gears, European bank consolidation moves and the almost extreme fear the market levels have gotten to. And more - as always, hit reply and let me know your thoughts and comments.

Dragos

Market talk

🇪🇺 Cheat sheets 

• what investors spent on defence tech in Europe in the past 18 months.

• what startups American investors backed in Europe in the first half of 2024 - TLDR: AI takes the share of the pie both at early and late stage, while the British startups raised the most in Europe from US investors.

🇬🇧 The Bank of England cut interest rates from 5.25% to 5% - the first cut in the UK since the Covid onset in 2020.

• also notably, the British government shelved £1.3 billion of funding promised by the Conservatives for AI projects.

• the usual eyes rolling ensued, alas the other side of the coin is that the funding could have been as well just some sort of a desperate election-related empty promise - the AI is part of a £22 billion package to be cut from the current budget.

• in the same context, also interesting to follow the current position visavis AI regulation - Rishi Sunak was rather liberal about it, while Keir Starmer is said to favor aligning to the isolationist European approach, as is seemingly interested to quietly rejoin the single market one industry at a time.

• that’s speculation though, fact is that Matt Clifford is now the man in charge for coming up with a new AI plan for the government - Matt’s career as a politician is shaping up quite nicely. 😀 

• what people don’t acknowledge is that before being able to compete with any other country on tech development, the UK needs badly to fix its fundamentals - it’s likely that the cut was made since the budget numbers don’t work.

• massive structural problems need to be worked out in order for the UK to become a functional country before ever dreaming of being cool with the tech kids still hoping that Britain is the place to be for building high growth tech startups.

• speaking of which, right now, in the grand scheme of things for ambitious European entrepreneurs, the approach I am seeing often is rather simple - build anywhere in Europe but the UK (too expensive), have a formal office on the cheap in London for taking investors sentiment while finding a minimum PMF that allows transitioning into the USA.

🇫🇷 BNP Paribas announced talks to acquire AXA IM for €5.1 billion.

• that would lead to €1,500 billion in AuM, second largest European money manager, after leader Amundi, owned by Credit Agricole and which handles some €2,100 billion.

• the European landscape is super fragmented on a consolidating trajectory, and American buyers are piling up their AuM in a market expected to lower the interest rates.

• AXA IM is Europe's second-biggest insurer while BNP is the biggest European bank.

• the would-be deal is part of BNP’s strategy to be the first European corporate and investment bank among global tier one players. It currently ranks fourth overall, behind JP Morgan, Goldman Sachs, and Citi, all American.

🇬🇧 FT is for sale Several Nikkei board members have grown impatient with the Financial Times’ economic performance and are pushing for consideration of a sale.

• fwiw, earlier this year FT also announced launching a ​new venture arm​ to invest in high-growth media and tech companies.

🇮🇸 Second female president in Iceland Meanwhile in Iceland, the country elected an entrepreneur and ex-investor as president.

• the second woman to serve as president in a country of 380k people - it’s mostly a ceremonial role as the PM has the executive power.

• she is a feminist - actually founded an investment company to back women-related startups in 2007 - while her campaign focused on issues such as the effects of social media on the mental health of youth, tourism development, and the role of artificial intelligence.

🇩🇪 The Germans are in trouble Germany’s economy problem is not high energy prices - the real challenges are aging, underinvestment, and too much red tape.

🇭🇺 Wizz Air of Hungary, one of the larger European low cost airlines, is planning to scale down its Britain operations after weakening demand for flights - fwiw, Wizz also tops the most minutes delays in the overall UK flights.

🇮🇹 Italian beachgoers face threat of sunbed rental strike:

• the reason: the EU is pressuring the Italian government to revoke its 30,000 beach management concessions - granted decades ago for a mere pittance - and to reallocate them through a competitive bidding process.

• it’s a sensible issue because it’s political - the beach resort operators are part of PM Meloni's electorate.

💲 Another AI startup waving the white flag Character AI’s founders sold the company to Google.

• deal pays investors 2.5X compared to what they bought for in 2023, founders get nothing but a job at the corporation while laying off three quarters of their team and the IP will be transferred via a licensing deal.

• this is actually a good outcome for a class of undifferentiated AI startups which will either fold or sell because they don’t generate revenue.

• also notably, CharacterAI follows the same acquihire/license model established by Inflection when it surrendered to Microsoft. AdeptAI being acquired by Amazon is another example.

👓 Microsoft's latest annual report includes brief mentions of OpenAI as a rival in AI.

• Microsoft invested $13 billion in OpenAI. Nothing’s changed in the relationship, it’s likely a move made for the eyes of the regulators.

🇬🇧 Speaking of which - UK regulators announced an early-stage investigation of whether Alphabet’s $2 billion investment in Anthropic is essentially a merger in disguise.

• this follows another investigation onto Microsoft’s relationship with OpenAI opened a couple of months ago.

• the Brits join USA’s FTC also looking into Microsoft, Google and Amazon about their ties to Anthropic and OpenAI.

• last month, UK's Competition and Markets Authority also opened an investigation into Microsoft's hiring of former Inflection AI employees and related agreements.

🚙 More Chinese product in Europe - Uber partnered with Chinese EV maker BYD to buy 100,000 vehicles for its ride-hailing platforms in Europe and Latin America.

• big deal for the Chinese, especially in the context of the recent EU/China spats over the EV custom tariffs.

🇨🇳 Meanwhile China does a lot of driverless rides Apollo Go, a unit of Chinese tech giant Baidu, is currently running a fleet of 500 driverless cars* in the city of Wuhan and aims to double it to 1,000 cars by the end of 2024.

• selling point is price - base fares start as low as 4 yuan (55 cents), compared with 18 yuan ($2.48) for a taxi driven by a human.

• Wuhan currently has around 17,000 regular cabs serving a population of over 11 million people.

• alas, the bus fare costs 2 yuan and subway fare is between 1 and 5 yuans.

*the original source CNN is basing its article on says 300 though.

Data

💲 the 2024 PE outlook.

 Apple's 3Q24:

• Total sales: $85.8B (up 5 percent yoy)

• iPhone: $39.3B

• Services: $24.2B

• Wearables / Home etc. $8.1B

• iPad: $7.2B

• Mac: $7.0B

• Cook very bullish on AI as a reason for the iPhone upgrade - there goes the hope for the venture returns from the AI personal assistant market.

😨 We’re almost at extreme fear levels in the market …

… almost as low as in October 2023, when Hamas attacked Israel.

🇬🇧 Revolut confirmed its secondary deal allowing employees to cash out at a $45 billion valuation, which would make it one of the UK’s most valuable banks, ahead of NatWest, Lloyds and Barclays.

🇬🇧 Nothing shipped 5X+ more yoy in H1 2024.

🇩🇪 Adele and Live Nation are building a large temporary stadium in Munich, Germany for her to perform a 10-day concert series.

• the arena costs some €100 million and was built in just 30 days.

• the shows, to be attended by roughly 750,000 people over 10 nights in August, will bring an estimated €500 million in ancillary revenue to the city of Munich.

• ticket prices start at €229 a pop.

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💭 Anecdote: TikTok has the best content of any social media platform because it's the only one without 1+ billion Indians affecting the algorithm - India banned TikTok because they hate China.

💲 Comcast said its Paris Games ad revenue beat the $1.25 billion it got in Tokyo in 2021.

🇮🇳 India’s startup scene is collapsing.

✈️ The American government wants to ban airlines from charging parents more to sit with their kids on flights.

💪 The Eastern European way - say what you think and don’t worry about how the society reacts to it, you always know what you get or sell. Delian is a good one.

🇺🇸 Brick-and-mortar drug stores taking extreme measures to thwart shoplifting have pushed customers to buy online. In US of A that is.

💲 Trump is bitter that nobody from Google called him even if Zuckerberg did.

🇷🇺 All of Europe has been deeply infiltrated by Russian spies, much more than people realize.

• Russia has been doing this for several generations since the beginning of communism, or even earlier than that - and there’s many Western people working for Russia, in a paid form, like some of the politicians in Germany and Austria.

🥟 Where Din Tai Fung's xiao long bao are cheapest - highly recommended if you’ve never tried it, the only European restaurant is in London over at the Covent Garden.

🦞 … never got to the hottest French restaurant though, Les Grands Buffets which is featuring a seven-tiered lobster tower, a chocolate fountain, and only what it considers traditional French food.

🖼️ Some nice Olympics pictures.

🇬🇧 The Brits hosted the world snail racing edition last month.

🤷 An American supreme court ruled that boneless chicken wings can have bones.

That’s all folks, have a wonderful week!

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