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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 | 13.06.24

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This week Apple saw a 2% drop in shares, post their rollout of Apple Intelligence (AI) at the WWDC — but have investors misjudged their strategy? Meanwhile US tech firms are pushing startups to sever ties with Chinese investors, amid tighter controls from Washington. 


Across the pond, the UK economy flatlined in April delivering a blow to Sunak's efforts to boost growth, however economists predict a rebound in the second quarter. Meanwhile, Labour plans to close a tax loophole for private equity investors if they win the election. 


We cover this, plus the Nordic early-stage startups to watch, what Raspberry Pi is doing for the London Stock Exchange, and AI > Humans at stock picking — in the CogX Must Reads.


— Charlie and the Research & Intelligence Team

P.S You are now able to sign up for the super early bird offer (75% off) to the CogX AI Summit in London on October 7th here.


The investment ecosystem

🛑 UK Economy stalls in blow to Rishi Sunak: UK economic growth flatlined in April, slowing from a 0.4% expansion in March. Despite this, economists expect growth in the second quarter due to strong wage growth, lower inflation, and better weather conditions.


💼 Labour to close tax loophole for private equity investors, if they win the general election. The change will tax "carried interest" as income at 45% instead of capital gains at 28%, potentially raising up to £440m, according to Shadow Chancellor Rachel Reeves. 


🤔 How many new VC funds does Europe need? Europe is witnessing a surge in solo GPs raising VC funds, driven by the growing startup ecosystem. This trend is seen as beneficial, however, there's a call for more funds that lead deals, not just participate.


🇺🇸 US tech sector pressures Chinese VC to divest: US venture firms are urging tech start-ups to cut ties with Chinese investors amid expected tighter controls from Washington on foreign ownership, reflecting the growing scrutiny of Chinese investment in US tech.

🚀 Raspberry Pi goes public on the London Stock Exchange, pricing its IPO at £2.80 per share and valuing the company at £542 million ($690 million). Shares surged 32% to £3.70, potentially raising over $200 million. Retail investors can start trading on Friday.


Chart of the week

High-performance computing comprises the processors, networks, and storage systems necessary to solve complex computational problems. The sector is predicted to grow in order to support growing innovation in AI & ML.


How AI is transforming investing 


📊 AI can pick stocks better than you: A new study shows AI's potential in stock picking, outperforms human analysts. Using ChatGPT to analyse financial statements, the AI achieved 60% accuracy in predicting earnings, compared to humans' 57%. 

📉 Opinion: Investors may be misjudging Apple’s AI strategy, revealed at the WWDC, which caused a 2% drop in shares. Despite this, analysts foresee a boost, due to Apple’s focus on ecosystem and privacy, using its Private Cloud Compute and on-device processing.


💡 AI promoted from back office duties in asset management: Asset managers are increasingly using AI for investment decisions, tracking portfolio manager habits, and identifying opportunities. However experts remain sceptical of its long term impact. 


🌍 UK AI sector most valuable in Europe, new report reveals: The UK's AI sector is valued at £72bn, making it the top in Europe and fourth globally behind the US, China, and Israel. In Q1 2024, 16% of UK venture capital investment went to AI startups.


🤖 European neobanks bet on AI chatbots. Klarna launched an AI assistant for customer service, while Bunq and Lunar introduced AI financial assistants to provide spending insights. With growing VC interest, consumers can expect more AI-powered products soon.


📜 Conservative manifesto does not mention the word ‘startup’ once, and is light on specific support. However, investor tax breaks will stay, through the SEIS and EIS, as will R&D tax credits, and they plan to establish a £250m fund for women founders, if elected.


🌟 Nordic early-stage startups to watch, according to investors: The Nordics have a strong track record of successful startups. Despite a drop in US investment, regional investment has reached record highs. The 12 startups are listed here.




Noteworthy deals

  • AI-powered market intelligence platform AlphaSense secured $650M in funding at a $4B valuation, to help them acquire rival research startup Tegus for $930M.


  • Challenger AI startup Mistral raised €600M in a round led by General Catalyst with a €5.8bn valuation, in a bid to rival industry leader OpenAI.


  • GenZ social media BeReal acquired by Voodoo for €500m to build new features, and kickstart growth again.


  • Poland’s CampusAI raises €10m pre-seed from angel investor Maciej Zientara, to create a metaverse for learning AI skills. 


  • Satellite manufacturer Apex attracted $95M for their off-the-shelf satellite bus business, led by XYZ Venture 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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