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Future of Capital Allocation

Your weekly newsletter on the fast-evolving world of investing

The week's developments in investing & technology, explained | 2.11.23

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Is the next Google, Apple or OpenAI in Europe? Mistral’s chief exec says it’s more possible than ever, predicting that AI will be the “great leveller” between European capitals and Silicon Valley.

Meanwhile, VCs are still scrambling to add AI startups to their portfolio. The latest USP? Providing chips on tap: VCs are investing in semiconductor companies to ensure the AI startups in their portfolio have access to compute as supplies dwindle.

Finally: how soon will AI take over the investment process? Two-thirds of investors are already comfortable using AI for advice, a new survey found.

Read on for the latest in investing news, including the top 25 UK startups to watch and what we need to do now to prevent AI from starting the next financial crisis.


—Charlie and the Research & Intelligence Team


The investment ecosystem

🔥 The most strategic way for VCs to land a hot AI startup? Give them priority access to supercomputers, of course. Smart VCs are strategically investing in companies that make the chips generative AI startups so desperately need.


🏦 UK VCs pledge to help pensions invest: Twenty firms, including Octopus, Balderton, and Amadeus Capital, will work with UK pension funds to inject more investment into high-growth startups. The scheme could unlock £50 billion in investment by 2030.


💸 ESG funds haemorrhaged £2.5 billion in the last six months: Investors are turning their backs on ESG — but that doesn’t mean climate-friendly investing is out of vogue. Climate transition funds alone pulled in £7.4 billion in the first half of 2023.

🚀 CogX Festival 2024 super early bird tickets: The CogX Festival is gearing up for another year of cutting-edge innovation and inspiration. Grab your super early bird tickets at 75% off now for a limited time!


Chart of the week

According to PwC research, global GDP could be up to 14% higher by 2023 as a result of AI — the equivalent of an additional £12.9 trillion. North America and China are poised to lead the way, with estimated economic gains totalling £8.5 trillion by 2030.


How AI is transforming investing 


📉 How to prevent AI from starting the next financial crisis: Our growing reliance on AI further concentrates power in the hands of tech giants with little oversight. A new approach to regulation focused on risks to stability is needed, the FT editorial board warns. 

🤖 Two-thirds of investors go to AI for advice: A new survey found that a majority of investors use AI to support the investment process, but remain against fully AI-driven analysis. UK investors are less likely to cede control to AI than their European or Asian counterparts. 


🌍 Could the next Google be in Europe? AI will be the great leveller, introducing a new wave of fast-moving startups, predicts Mistral chief executive Arthur Mensch. The next step will be harnessing advances in LLMs to build a Silicon Valley-style tech behemoth on European shores. 


📊 25 UK startups to watch: Bloomberg published its annual list spanning fintech, AI, data and autonomous vehicles. It features startups from Manchester-based AI company Peak, which raised £62 million in 2021, to OnlyFans, the adult content service that saw a 17% jump in revenues last year.




Noteworthy deals

  • UK fintech giant Uncapped secured £200m in debt from Fortress Investment Group for its revenue financing model.

  • Australian HR startup Employment Hero raised a £137m Series F found led by TCV. 

  • US 3D-printing startup Seuret raised a £81.3m Series C round led by Nvidia and Capricorn.

  • Indian personal care startup Honasa Consumer raised £75.8m from investors including Abu Dhabi Investment Authority, Fidelity and Norges Bank.

  • Switzerland’s SkyCell raised £47m from M&G's Catalyst Fund to expand its temperature-controlled container solutions.

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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.

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