In 2024, generative artificial intelligence has become the focus of the technology field. Products such as OpenAI's ChatGPT have attracted global attention and triggered huge investments. However, a new report released by Accel and Dealroom shows that AI startups in Europe and Israel are rising and are expected to occupy a place in the global AI competition. This report provides an in-depth analysis of key data such as investment status, city distribution, and funding sources in the AI field in Europe and Israel, providing a valuable reference for us to understand the European AI ecosystem.
Artificial intelligence, especially generative artificial intelligence, is the focus of technology news in 2024. OpenAI has attracted a lot of attention with the release of services like ChatGPT and billions of dollars in funding. But according to the latest reports from analysts at venture capital firms Accel and Dealroom, a wave of emerging companies has emerged in Europe and Israel and is expected to make a name for itself in the field of artificial intelligence.
Europe and Israel typically account for about 45% of global venture capital investment, but less than half in AI (and even less in generative AI). This can be seen as Europe and Israel lagging in the market, or it can be seen more optimistically as a series of interesting developments in the region over the coming months and years. Investors are looking for the next big thing, and potential prices may be less exaggerated than in the United States. In fact, Accel partner Harry Nelis said the report came about because his firm has been evaluating all the generative AI startups popping up in the region to decide where to invest.
Some of the most interesting data points from the report include: London is the city with the most generative AI startups, accounting for 27% of the 221 startups analyzed by Dealroom and Accel. The second place is Tel Aviv with 13%; Berlin with 12%; Amsterdam with 5%. As a hot spot for artificial intelligence research and development, Paris ranks in the middle of the city rankings, accounting for 10%.
In addition, French startups claiming to be engaged in the field of generative artificial intelligence have raised the most funds, reaching US$2.9 billion to date, surpassing Israel. Recent funding examples include Mistral AI, which raised $640 million earlier this month (having previously raised more than $500 million), Company H, which raised a $220 million seed round a few weeks ago, and Poolside, which is also reportedly doing a round Huge financing. Other AI startup activity in Paris includes Hugging Face, which raised $235 million in August, and a new research organization called Kyutai with hundreds of millions of euros to make a difference in open source AI models.
Why are some places doing better than others? France’s $2.9 billion in financing is almost as much as the other three countries combined. Generative AI startups raised $1.15 billion in the UK (including larger companies like Stability AI, Synthesia and PolyAI), $1.04 billion in Israel (including AI21 and Run:ai, which Nvidia recently acquired), and $1.04 billion in Germany $636 million (mostly the $500 million raised by Aleph Alpha last year). Beyond that, other countries in the region have raised less than $160 million each, and sometimes far less than that, with amounts raised in the low seven figures.
According to Nelis, the main reason is strong educational institutions, which not only cultivate a large number of technical talents, but also attract large technology companies to establish their own operations in the region to attract talents. "You can see the importance of real, long-term investment in education for Paris in producing a lot of founders. The same goes for London, thanks to schools like Cambridge, Oxford and UCL," he said. However, the steps between universities and founders The success isn't immediate: Many work first at big tech companies, which set up operations to improve recruiting.
In fact, while startups may be the cradle of AI development, large tech companies also play an important role in nurturing founders. About 25% of the long tail of GenAI startups have founders who have worked at Alphabet (DeepMind or Google), Apple, Amazon, Meta or Microsoft (we'll call it MAAMA). Among the top ten startups, 60% have founders from one of MAAMA.
All in all, the AI ecosystem in Europe and Israel is booming. Although there is still a gap compared with the United States, their strong education system and active entrepreneurial environment have laid a solid foundation for future development. In the future, more AI companies with global influence are expected to emerge in these regions.