like or I hate itartificial intelligence – especially genetic artificial intelligence – is The technological history of 2024.
OpenAI, with the launch of viral services like ChatGPT and billions in funding, may have gobbled up the lion’s share of attention and money so far. But according to a new report from leading VC Accel and analysts at Dealroom, in Europe and Israel there is a wave of hopefuls now emerging to make their mark.
Together, Europe and Israel typically account for about 45% of all venture funding annually, however when you translate that into the specific realm of AI, the figure drops to less than half of that (and genetic AI even less). . You can take this as a sign that Europe and Israel are lagging the market. Or, more optimistically, it means we’ll see a number of interesting developments in the coming months and years as the region gets closer.
Investors are now on the hunt for the next big thing, possibly at prices that are less inflated than in the US. Interestingly, Accel partner Harry Nelis tells me that one of the reasons this report materialized was because his firm was hard at work evaluating all the generative AI startups emerging across the region, for figure out what to invest in. So watch this space.
In the meantime, here are some of the more interesting data points from the report:
London is the city that has “spawned” the most GenAI startups.
Of the 221 Dealroom and Accel start-ups analyzed, around 27%, almost a third of the group, were created in London. Tel Aviv took second place with 13%. Berlin 12%; and Amsterdam 5%. Interestingly, although Paris is the city that everyone has been talking about for a long time as a hotbed of AI development, it was very much in the middle of the city ranking, at 10%.
But these startups are very successful.
GenAI startups founded in France are raising the most money
Collectively, French startups that call themselves working in the field of genetic artificial intelligence have raised $2.29 billion to date, the most of any country across Europe and more than Israel. Recent rounds included Mistral AI which raised $640M earlier this month (up from around $500M+ previously), ‘H’ which raised a $220M SEED ROUND a few weeks ago, and Poolside is also in the midst of gathering of a large round.
Other notable AI startups in Paris include Hugging Face, the open source repository for machine learning models, which raised $235 million in August 2023. and a new research-focused organization called Kyutai, which is armed with hundreds of millions of euros to make some waves in open source AI models.
Why is it that some places do so much better than others?
In total, France’s $2.29 billion is almost as much as the next three countries combined. The UK has seen $1.15 billion in productive AI startup funding (Stable Diffusion maker of Stability AI, Synthesia and PolyAI among the biggest players here). Israel $1.04 billion (with startups including AI21 and Run:ai, recently acquired by Nvidia). and Germany $636 million (with Aleph Alpha’s $500 million round last year accounting for most of that). Beyond that, other countries in the region have raised less than $160 million each — sometimes significantly less, with funding in the low seven-figure range.
Nelis believes the main reason is the perfect storm of strong educational institutions, which not only produce a lot of technical talent, but also attract big tech companies to build their own operations to tap into that talent.
“You can see the importance of real, long-term investment in education that brings many founders to Paris,” Nelis said. “The same goes for London which is fed by schools like Cambridge, Oxford and UCL.” The step between universities and founders, however, is not immediate: the intermediate stage was, for many, working at large tech companies, which set up shop to improve recruitment.
“Universities are clearly very important in attracting hyperscalers,” Nelis said, citing Facebook/Meta that early established its AI research labs in Paris, as well as Google eventually establishing a similar facility there, having already established a operation with DeepMind both. in London and Paris.
“Factories” – the hyperscale technology companies – are a big part of the story
Indeed, while startups may feel like the crucible of AI development, big tech companies have an important role to play in fueling those flames. Looking at the long line of GenAI startups, about 25% of them have founders who previously worked at Alphabet (DeepMind or Google), Apple, Amazon, Meta or Microsoft (let’s call them MAAMA). The higher you go, the more it gets. Among the top 10 of these startups, a full 60% of founders come from one of the MAAMAs.
In fact, one particular company stands out as a clear feeder of AI founders:
It is not a bright message for those coming from outside this group, although this, too, is likely to evolve and expand as the field matures and grows.
