Future of Capital Allocation
Your weekly newsletter on the fast-evolving world of investing
The week's developments in investing & technology, explained | 9.11.23
If you’re enjoying this briefing, sign up here — and share it with a friend. Reading time: ~5 minutes
Global fintech funding dropped 3% in Q3, levelling off after a sharp decline post-2021. But the return of mega-rounds to fintech signals recovery is on the horizon, hinging on investors maintaining the pace of funding.
Following last week's AI Safety Summit, startups are pushing for clarity on regulation. Proposals by industry experts include sector-specific rules and independent oversight for big tech models. Meanwhile, PM Rishi Sunak advised UK founders to ditch regular paychecks — unsurprisingly, founders are dubious.
Read on for more, including when to consider bootstrapping your startup and how GenAI is boosting productivity in financial services.
—Charlie and the Research & Intelligence Team
The investment ecosystem
💰 The return of the fintech mega-rounds: Global fintech funding dropped 3% in Q3, but mega-rounds surged by 50% compared to last quarter. Their return offers hope for funding stabilisation after sharp declines since late 2021 — but can investors keep this momentum going?
🎓 Are European universities failing entrepreneurs? New data ranks the funding raised by alumni founders, revealing that European universities trail behind those the US and Israel. The top-performing European university was Cambridge, which placed 28th on the list.
👩💻 Funding for female founders is still in shortfall: Just 3.5% of funding went to female-led startups in the first half of 2023, according to a new report. To fix the imbalance, experts suggest we make funding more accessible and offer specialised entrepreneurial education.
🚀 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
OpenAI's ChatGPT has rapidly reshaped how companies operate: AI mentions on earnings calls have surged by 29% since late 2022.
How AI is transforming investing
📜 What do startups want from AI regulation? In the wake of the UK's AI summit, startups are calling for clear, industry-tailored AI regulation. The focus, experts say, should be on practical rules regarding immediate safety concerns and risk management.
📈 GenAI is boosting productivity in financial services: An EY poll found that 88% of CEOs are integrating AI into their capital allocation, with 43% actively investing in the technology. But while many CEOs praise the tech as a force for good, some said they're hindered by the pace and uncertainty of its evolution.
💸 Should founders give up their pay? During an interview with tech billionaire Elon Musk, PM Rishi Sunak urged UK founders to ditch the security of their regular paycheck for riskier ventures. Fund managers warned this would be a costly gamble for loan-seeking entrepreneurs. (Echoing this, founder Andy Fishburn recommends building support and community over glorifying risk.)
🤔 How to bootstrap your startup: Bootstrapping is a great way for founders to maintain their independence and focus. But success hinges on optimising product development, adding value to customers’ lives and, most importantly, ensuring your startup solves a real-world problem.
Business Development Director | Indeed Flex | London | £100-180k
GTM Strategy Lead | DeepL | London | £90-120k
Director of Investor Relations | Liberty Global | London | £144-180k
Head of Corporate Sales | Asana | Dublin | £97-130k
Aleph Alpha, a German-based AI startup deploying LLMs in businesses, has raised £406.7m in series B funding co-led by Bosch Ventures and the Schwarz Group.
Vienna-based refurbished tech marketplace startup Refurbed closed a £47m Series C funding round led by Evli, C4 and Speedinvest.
Cast AI, a US-based startup helping companies optimise cloud spend, raised £30.9m in a Series B round led by Vintage Investment Partners.
Milan-based fintech Qomodo raised £30m in pre-seed funding led by Fasanara Capital.
We're thrilled to share a new UK AI success story from our very own community of readers: London-based Cykel AI, an NLP tech firm, hit the Aquis Exchange on October 25th, after raising gross proceeds of £1.75m. Following its very successful public listing via an IPO, its stock leapt 200% on debut, multiplying its market cap nearly threefold from £6.2m to £20m.
Do you have thoughts on AI's impact on investing? Reply and tell us — we’ll share them with the community next week.
✍️ Enjoying this newsletter? Subscribe to our free weekly briefings on Preparing for AI, Cinema & AI, The Race to Net Zero, AI & DeepTech and The Future of Work.
Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.