Biweekly VC Insights by Uniborn #30

Inside: AI regulations, GenAI investments, and the ongoing pulse of venture capital
Barbara Krassner
🇬🇪 Uniborn Team
3 min read

Uber is set to join the S&P 500, Bitcoin has reached its highest rate in over a year, and ByteDance is gearing up to compete with ChatGPT-based bots. In other words, the last couple of weeks were a global rollercoaster. But we're about to spill the beans on some noticeable activity in the European venture capital industry. Subscribe so you don't miss the next update!

🔥 This week made both AI enthusiasts and alarmists sweat

As you might be aware, since 2019 the EU has been on a mission to craft the most perfect and comprehensive regulation for artificial intelligence in the world, a task that remained elusive until this week. The rapid growth in AI development has forced officials to go back to the drawing board multiple times over the years.

From this Wednesday, and Brussels was abuzz with discussions, dissecting the intricacies of the EU AI Act. The stakes are high — on one side, the worry about smothering innovation, and on the other, the fear of relinquishing control over the fast-advancing intelligent systems and the colossal amounts of data they accumulate. 

After a marathon negotiation session, lasting almost 20 grueling hours, it appears that EU members are on the brink of reaching an agreement on the final wording of the law. While we await the official announcement, Reuters is giving a sneak peek into the expected details:

  • The EU AI Act will not extend its reach to free and open-source licenses unless considered high-risk or utilized for purposes already deemed prohibited.
  • The European Commission will curate a catalog of AI models identified as posing "systemic risk." At the same time, vendors of general-purpose AI will be obligated to disclose comprehensive details about the content used in their training.
  • On the front of biometric surveillance, EU lawmakers are advocating for a blanket ban on the use of AI, but governments are pushing for an exemption in cases of national security, defense, and military applications. That's where the debate continues right now, though.

In any case, the law is not expected to take effect until 2025. In the meantime, business is doing its thing — gaining the market while regulations are ambiguous. For instance, according to Bloomberg, Paris-based star Mistral, a potential competitor for OpenAI, is on track to be valued at a staggering $2 billion even though the startup is just over six months old.

Find more details in the Reuters review.

🔥 GenAI gold rush is prompting Europeans to double their bets

A survey by Infosys Knowledge Institute of 1,000 executives in the UK, France, Germany, Belgium, and other European countries revealed that, on average, companies plan to invest 115% more in GenAI next year. A total investment will approach $2.8 billion.

Certainly, even at that point, European GenAI expenditure will be notably more restrained compared to the hefty $5.6 billion expected for North America. On the flip side, Europe exercises more caution with AI. So if a machine uprising kicks off, Europe is likely to stand resilient for longer 🙂.

Let’s take a closer look:

  • 88% of European respondents are gearing up to boost their GenAI spending in the coming year.
  • France and Germany are flexing their financial muscles as the heavyweight spenders on GenAI, with France eyeing a $730 million investment next year and Germany not far behind with $610 million.
  • Only a mere 6% of European companies see the commercial viability of their GenAI initiatives. France, Germany, and the UK lead the pack with 10% reporting value for their GenAI projects, but it seems like they are still trailing behind the robust 16% in North America.

For a visual representation of how the willingness to invest specific amounts will change, check out this graph 👇

Image: Generative AI Radar 2023 — Europe
Image: Generative AI Radar 2023 — Europe

Find more details in the Infosys Knowledge Institute report.

🔥 After a two-year storm, the European tech ecosystem has finally found equilibrium. And even more

The year 2021 was superb, but in 2022, we experienced a sharp downturn that we are finally bouncing back from, as Europe's slice of the global private equity funding pie has surged to 20.9% this year — just a hair’s breadth away from the typical share of around 23%. These stats are hot off the press from PitchBook's latest third-quarter report. But what's on the horizon for 2024?

The answer is on the pages of the annual Atomico State of European Tech report. It shows that the situation has stabilized. Moreover, nine of the ten most valuable European companies have amped up their average daily market capitalization in 2023 compared to the previous year, inching closer to the peak of 2021. 

That's not all — get ready for a wave of around 120 mature European tech companies making a splash on the IPO scene.

Image: State of European Tech 2023
Image: State of European Tech 2023

Take a look at the chart — while this year's investment volume is only half of the 2022 figure, 2023 is shaping up to be the third-highest in Atomico's track record, signaling long-term growth. 

And keep this in mind: Europe stands out as the only region in the world with an increase in investment (18%) over pre-2020 levels. 

Find more details in the Atomico study.

Cover image: Unsplash

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