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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 | 08.02.24

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Plenty of words have been written about US VCs taking over EU ventures and plenty still about European founders moving stateside — but recent investment data could be hinting a reversal in the trend. American VC deal participation in Europe plunged 40% as investors pivoted towards lower-risk domestic bets. Could this capital retreat impact startups in the continent?

Elsewhere, Silicon Valley investors have amassed a record $300 billion in unused capital as they shun emerging startups in favour of less risky enterprises. Plus, upcoming changes to the UK’s angel investor thresholds have sparked backlash — critics say it could restrict access for women and underrepresented groups eyeing early-stage backing.

Read on for more — including how the EU is protecting Deeptech startups from foreign takeovers and why VC investors are setting their sights on specialised AI applications.

 

—Charlie and the Research & Intelligence Team


 

The investment ecosystem


📉  US investors scale back on European ventures. In 2023, US venture capitalists dropped their involvement in European VC deals by nearly 40% — opting for lower-risk investments and a renewed focus on domestic opportunities.

 

💰 Silicon Valley investors amass $300 billion in cash amid start-up funding drought. US VCs are sitting on a record amount of ‘dry powder’ as they avoid high-risk investments in emerging startups. But with a challenging exit environment looming, there's mounting pressure to generate returns for their backers.


💸  UK angel investor threshold to go up despite industry backlash. Investor threshold would be increased by almost 59%, according to new upcoming changes to the Financial Promotions Act. Critics say this action could drastically lower the number of women and underrepresented groups able to invest in startups.


 

Chart of the week




The global AI market size is projected to reach £584 billion by 2030, according to Statista Market Insights. LLMs and Autonomous & Sensors technologies will be leading the market, with computer vision and AI robotics trailing behind.

 

How AI is transforming investing 

 

🤖 Are European execs wary of GenAI's full potential? European executives are less optimistic about GenAI productivity gains compared to their North American and Asia Pacific peers, a new BCGX report reveals. Investors warn cautious senior directors could risk falling behind in the global tech race.

 

🦄 VCs shift focus to specialised AI applications. After a record $29.1 billion investment in generative AI last year, VCs are now turning towards industry-specific AI applications, known as vertical AI. They offer targeted solutions tailored to the unique needs of different sectors.


Startups


🤔 Is Europe leading in quantum investments? Investments in quantum companies plummeted by 54% globally last year, compared to startups in the EMEA region — which saw a 3% increase in their funding value. While positive for the industry, this shift could highlight a changing trend in global technology priorities, with AI hype draining investors’ attention.

 

📉 EU intensifies guard on Deeptech startups against external takeovers. The European Commission is setting tougher standards to protect startups in critical tech areas like AI, biotech, quantum, and advanced semiconductors. New rules would require all EU countries to monitor and potentially block foreign takeovers of tech businesses in these sensitive areas.

 

Jobs



 

Noteworthy deals


  • Kore.ai, a startup building conversational AI for businesses has raised £118m in a funding round led by FTV Capital, Nvidia, Vistara Growth, Sweetwater PE, NextEquity, Nicola and Beedie.

  • Rebellions, a South Korean based AI chip startup has raised £97m in a series B funding led by South Korean telecom giant KT. 

  • Calluna Pharma, an Oslo-based clinical-stage immunotherapy company has raised £64m in Series A funding from investors including Forbion, Sarsia, p53 and Investinor.

  • Tau Group, an Italy-based company pioneering sustainable manufacturing for electric motors raised £9.4m in series B funding led by CDP Venture Capital and Santander Alternative Investments.

  • Ceezer, a Berlin-based AI-driven carbon credit platform, has raised £8.8m in Series A funding led by HV Capital.


 

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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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