Future of Capital Allocation
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How is AI disrupting investing?
Venture funding has dropped dramatically since 2021, leaving startups strapped for cash and more prone to failure. European IPOs fell to the lowest level since the 2009 financial crisis.
But there are bright spots: in our chart of the week, we break down the booming investment in generative AI. We also take a look at why London is the top place to build an AI startup in Europe, and Goldman Sachs' projection that AI-related investment could reach 1.5-2.5% of GDP for countries leading on AI.
We cover a new survey of VCs across Europe, a large portion of whom consider unicorns to be overvalued — and take a look at which firms are investing less and why. Is Slow Ventures smart to stay away from the AI blitz? Explore these topics and more in our CogX Must-Reads.
—Charlie and the Research & Intelligence Team
💸 European IPOs fall to the lowest level since 2009
Just 34 companies publicly listed in Europe during the first half of this year. They raised £2.2 billion through their listings, a 42% drop from the same period last year. This is the lowest total in 14 years, emphasising the dire state of the region’s IPO market amidst an economic slowdown and the lure of going public in New York.
🚀 Europe’s startup scene is too fragmented, say VCs
A new survey aims to tap into how investors make decisions. It found that 87% of VCs think the European startup ecosystem is disconnected — and 84% consider unicorns overvalued (including those who invested in unicorns themselves).
How AI is transforming investing
💬 AI investment will hit £157 billion globally by 2025
AI-related investment could account for 1.5% to 2.5% of GDP in countries that lead on AI, Goldman Sachs projects. Market interest in the technology has increased rapidly, with more than 16% of companies in the Russell 3000 mentioning AI on earnings calls. (In 2016, that figure was just 1%).
🤖 88% of CEOs are adapting their investment strategies to AI
A worldwide survey of CEOs found that they are optimistic about AI as a force for driving business — but are concerned about unintended consequences. Two-thirds of CEOs said that the business community needs to focus on the ethical implications of AI.
🦄 London is the best place in Europe to build an AI startup
AI talent across Europe is highly distributed, with startups increasingly hiring remote workers across the region. But measured by GitHub ratings and years of experience, London’s share of talent is a whopping 10%. Paris follows, with 2.7% of Europe’s AI talent.
🛑 Why your startup needs advisors, where to find them and what to look for
No matter how talented a founding team is, early-stage advisors are crucial to building credibility, securing meetings and defining markets. But it’s important that they match the team’s culture and have subject-matter expertise. What do you look for in investors?
•Finance Lead | V7 | London | £90-110k
•AI Management Consultant | Deeper Insights | London | £60k
•Entrepreneur-in-Residence, AI | Atlantic Labs | Berlin | £105-113k
•Senior Strategy Manager | Clarity AI | Madrid | £80-129k
•Investor Director, DeFi & AI | Hypergrowth | Remote, Europe | £70-125k
•Founder-in-Residence | AI Fund | Remote, US | £53-68k
•Vice President, Investor Relations | C3 AI | San Francisco | £200-275k
•Sales Manager, AI Products | Dropbox | San Francisco | £225-300k
The investment ecosystem
•Nile, a US-based AI-powered network startup, raised £138 million in a series C round of funding led by March Capital and Sanabil Investments.
•Canada’s Tenstorrent, a tech manufacturer that builds computers for AI, raised £79 million in a strategic funding round led by Hyundai Motor Group and Samsung Catalyst Fund.
•Propio, a US-based AI surgery software developer has raised £34 million in a series B investment round from backers like DCVC, BOLD Capital Partners, Cota Capital, Intel, and Alan Frazier.
•US-based Protect AI, which is building a suite of machine learning security tools for AI systems, secured £28 million of series A funding led by Evolution Equity Partners with participation from Salesforce Ventures and Acrew Capital.
•Dynamon, a UK-based software provider, raised £3.2 million in series A funding from BP to scale their low-carbon energy solution tools.
Pre-seed & seed
•Voia, a US-based startup developing AI tools for high-quality video production, has raised £2.4 million in pre-seed funding from private investors.
•Materials Nexus, a UK startup driving innovation in AI-powered material discovery, secured £2 million in seed funding led by Ada Ventures.
•Tilebox, an Austrian software development company, raised £1.3 million in a pre-seed funding round led by Cocoa Ventures, Possible Ventures and Remote First Capital.
•Inworld, a US company specialising in AI-driven non-player characters for games and other applications, secured another £23.7 million in funding from Lightspeed Venture Partners.
•London-based AutogenAI has raised £17.6 million from Blossom Capital to advance their generative AI tool aimed at helping businesses improve their proposal writing, to increase their chances of securing deals.