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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 | 04.07.24

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In today's big story, we look across the pond to the US — and discover why founders across the Atlantic, particularly British founders, are increasingly drawn to the allure of Silicon Valley. 


Also inside:

  • Europe Sets New Record for Gen AI VC Investment

  • AI leader Andrew Ng is raising a new fund

  • Robinhood acquires Pluto

  • Can startups survive the AI washout?

  • Amazon investigates Perplexity AI


— 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 Leadership Summit in London on October 7th here.


The investment ecosystem

💰 British startups seek funding across the pond: UK start-ups are increasingly turning to Silicon Valley for funding and expertise, as domestic pension funds remain risk-averse. Whilst there's a push for bold reforms to encourage more investment in local companies, some wonder if the risk is even worth it.


🤖 Europe breaks another record for VC investment in Gen AI: VC funding in Gen AI startups has exploded, reaching nearly €2 billion in the first half of the year. This record-breaking pace puts Europe on track to surpass its 2023 total and positions it as a major player in the AI industry.


🚀 AI deals are also lifting US VC funding: Investment surged to a 2-year high of $55.6 billion in Q2, driven by massive deals including $6 billion raised by Elon Musk's xAI and $1.1 billion raised by CoreWeave.


📈 Big money for startups: 89% of these corporate VCs plan to invest more in startups over the next three years, according to a new Mountside Ventures report. The trend is evident, already in 2024, they account for a quarter of all startup funding in Europe, with B2B and AI startups being their favourites.


Chart of the week

PitchBook data shows a staggering €1.9 billion invested in European Gen AI through 61 funding rounds in just the first half of 2024


How AI is transforming investing 


🔥 Edge AI startup to challenge Nvidia: The generative AI boom is driving a gold rush for AI chips, and many investors are now seeking alternatives to end Nvidia's market dominance. One such company is Axelera, a startup building chips specifically for edge devices used in security, retail, and robotics. They've quietly secured $68 million to expand globally and ramp up production of their Metis AI platform.


💎 AI leader Andrew Ng is raising a new fund: Ng's AI Fund, known for backing small teams tackling crucial challenges with AI, is aiming for $120 million in its second tranche. This is a smaller target than the initial fund, raising questions about a potential slowdown in AI funding.


🦾 Investments in Robotics surge: After a two-year dip, investment in the field is surging again in 2024. The first half of the year already saw $4.2 billion poured into robotics, putting it on track to surpass 2023's total. While not quite at the record highs of 2021, this upswing signals a recovery from the pandemic's impact. 


📱 Robinhood acquires Pluto: The company is upping its AI game with the acquisition of AI research platform Pluto Capital. This move aims to equip users with advanced AI tools, including faster trend spotting, personalised investment strategies and offer real-time portfolio optimisation.


🤔 Can AI outperform a wealth manager at picking investments? Wealth managers are using AI to save time on tasks and gain deeper client insights for better financial planning. While AI tools like ChatGPT can't replace human advisors entirely, they can help with research and basic tasks, freeing up advisors' time for client relations.


👨🏻‍💻 Is AI powering the Next Fintech startup Revolution? Fintech is embracing AI to gain a competitive edge, here's a glimpse into what's brewing according to Sifted:

  • Thwarting fraud before it happens: Fintechs are using AI and "synthetic data" to identify novel fraud techniques – essentially training AI to recognise future threats that haven't even been invented yet.

  • Seamless ID Verification: Generative AI is being explored to streamline tedious ID checks. Imagine AI anticipating your need to confirm your identity and pre-filling details for a faster experience.

📉 Can startups survive the AI washout? The initial excitement around generative AI like OpenAI's ChatGPT promised a tech revolution. But over a year later, the big tech players are back on top, leaving many startups struggling.


🕵️ Amazon investigates Perplexity: Cloud giant Amazon is investigating Perplexity AI, a startup valued at $3 billion, following accusations of web scraping. According to Wired, the issue centres around Perplexity potentially violating AWS terms of service by scraping content from websites that explicitly blocked such activity.




Noteworthy deals

  • Formation Bio, a US-based startup working to boost drug development with AI has raised $372m in series D funding led by Andreessen Horowitz.


  • CData, a US-based company helping organisations use data across apps and build AI models, picked up $350m in growth capital.


  • PortSwigger, a UK-based company developing tools to help test software security, has raised $112m in funding led by Brighton Park Capital.


  • Spercede, a London-based reinsurance startup has raised $15m in series A funding led by Alven.


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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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