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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 | 11.01.24

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After a tough year for British startups, signs of revival are emerging in the venture capital landscape. Last week a new HSBC report revealed UK startups netted over $21bn in 2023 VC funding — the 3rd highest intake on record. While on Monday, UK Technology Secretary Michelle Donelan outlined a goal for VCs to inject an extra £5B annually into local startups — aiming to host over half of Europe's tech unicorns by the end of this decade.


Elsewhere, generative AI's ‘awkward teenage phase’ still has Big Tech and VC titans pouring billions into deciphering its future impact, European VCs might be in for a rebound in 2024 and Intel launches its next venture into artificial intelligence.


Read on for more — including the latest market trends and a founder's tips on how to preserve brand identity after AI takes over your content team.

 

—Charlie and the Research & Intelligence Team


 

The investment ecosystem


📈 Are UK VC investments on the rise? A new HSBC innovation banking report shows UK startups attracted over $21.3bn in 2023 — more VC money than France and Germany combined. In the past five years, close to 40% of all EU VC funding came from Britain.

 

💰 Investor predictions for European VC: Investors, once hesitant in 2023, are now gearing up for action in 2024 — buoyed by substantial unspent capital. But some in the venture capital scene believe the era of "Growth at all costs is over", with companies prioritising more sustainable and prudent investment strategies.

 

💸 UK targets major VC boost: British Technology Secretary Michelle Donelan wants VCs to invest an additional £5bn annually in UK startups to keep pace with US levels. This extra funding, she argues, should allow Britain to host over half of Europe's tech unicorns by 2030.


 

Chart of the week



Venture capital interest in Humanoid Robots seems to be waning as of late, falling 44% from its 2021 high. Despite the sector receiving over £2 billion of VC funds in the past six years, widespread adoption of humanoid robots remains more science fiction than reality.

 

How AI is transforming investing 

 

🪙 Investors are avidly chasing the potential of GenAI. The tech has magnetised major technology firms and investors, channelling a whopping $17.4 billion into AI startups in 2023 alone. But while everyone agrees AI will shift the investment world, few can tell exactly how.


🤖 Intel has unveiled its latest venture into AI by announcing Articul8 AI. The independent GenAI-focused enterprise was launched in partnership with asset manager DigitalBridge Group, and will be led by former Intel VP Arun Subramaniyan as CEO.


Startups


🤔 How to preserve your brand identity as AI takes over content production? Train AI to mirror your brand voice, craft a clear messaging playbook, and ensure human oversight whenever possible. Smart startups will stand out by blending AI's speed with human creativity and nuance.

 

📉 What happens to VC-funded startups when they don't offer hyper-growth returns? Hypergrowth unicorns are rare — most startups hit growth ceilings and then lose backing. But while the VC norm is to ignore the laggards, some are finding returns in backing companies orphaned by investors.

 

Jobs



 

Noteworthy deals


  • Saudi Arabia has invested £355m in Magic Leap, a US-based VR headset developer, through its sovereign wealth fund PIF.

  • Sakana AI, a Tokyo-based AI research company has raised £23.7m in a seed funding round led by Lux Capital. 

  • Vicarius, a vulnerability remediation platform, has raised £23.7m in a series B round led by Bright Pixel Capital.

  • LEM Surgical, a Switzerland-based surgical robotics company raised £20.3m in a series B funding round.

  • ZILO, a London-based asset and wealth management software has raised £25m in series A funding from investors including Citi Bank, State Street and Fidelity International Strategic Ventures (FISV).

  • Spot Technologies, an El Salvador-based AI security tech startup has raised £1.6m in funding from investors including Femsa Ventures, Bridge Latam, Daedalus, Kuiper and Casque.


 

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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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