Startups overall are still facing strong headwinds when it comes to raising venture capital funding. Q2 was only a modest improvement on the low points of the previous two quarters, according to Crunchbase.
But there is one category that still seems to be opening doors — and checkbooks: AI.
In the U.S., artificial intelligence accounted for nearly 30 deals of over $100 million so far in 2024, making it the global leader at the moment. Europe, however, is not too far behind: Our research shows that as of August, Europe has seen 14 investments valued at $100 million or more for AI companies, with one company snagging two investments.
AI is driving the European long-tail startup ecosystem in a big way. Cumulatively, PitchBook data shows that there have been more than 1,700 funding rounds for AI startups in the region so far in 2024.
The biggest AI startups, those building foundational models, continue to exert the most gravitational pull when it comes to funding, in part because AI remains a costly area for development. Sources tell us that Mistral AI, which already has netted investments of more than $1 billion this year, is apparently fundraising again.
Mistral is headquartered in Paris, a city that has really established itself as the center of AI development in Europe, specifically in the category of generative AI. When you consider how some promising emerging markets like India are seeing only a fraction of the AI funding that more developed markets are getting, it will be interesting to see if Paris can sustain that leadership and capitalize on it — or alternatively how the balance of power (and money) might shift.
Whether it’s self-driving tech, LLM startups or players that also have hardware components, there are four main reasons why AI is commanding big investments:
Here’s a rundown of the biggest rounds in European AI this year, which reads like a who’s who of the biggest categories in AI right now:
Going head-to-head with the likes of Tesla, GM, Intel and Alphabet takes very big money, and that is what Wayve has been raising. In May, the Cambridge, England-based startup closed on a cool $1.05 billion to double down on its autonomous driver technology, making it the largest single round for an AI company to date in the region. Similar to Intel’s Mobileye, Wayve sells its AI technology to a variety of carmakers and OEMs, rather than making the vehicles itself, which theoretically will give it a wider business funnel, as well as more operational focus for the startup.
But unlike a number of other self-driving companies, Wayve has “steered away” from having a primary reliance on costly lidar technology. The company is already rolling out services; one customer is U.K. grocery chain Asda. “Seven years ago, we started the company to go build an embodied AI,” Wayve co-founder and CEO Alex Kendall told TechCrunch. “We have been heads down building technology. What happened last year was everything really started to work.” Its investors include SoftBank, Nvidia, Microsoft and Meta’s head of AI, Yann LeCun.
Mistral has shaped up to be one of the major players building large language models — the foundational block for generative AI applications — not just in Europe but globally. One of its unique selling points has been its embrace of open source, which theoretically makes its tech more customizable and thus enterprise- and developer-friendly.
So far, Mistral’s funding story has been a very “blustery” one: It launched with a $113 million seed round announcement barely a year ago. This year it’s collectively raised more than $1 billion, first in a tranche of $431 million and then a second round of $650 million (final close values), from an illustrious set of VC and tech and financial backers such as DST, Andreessen Horowitz, Lightspeed Venture Partners, Microsoft, Salesforce, BNP Paribas, CMA CGM and General Catalyst. Combining those rounds, it’s raised the most of any startup in AI so far this year in Europe. And if our sources are correct, it’s now working on raising even more.
Defense was one of the very earliest applications for AI back in the day, and now geopolitical events have put defense tech AI startups right back into the spotlight.
Helsing was founded in Germany, and its European roots have been pivotal to its development. It’s seen as a “home grown” solution, its existence representing more resilience in the European defense economy, helping countries in the region be less reliant on third parties outside of it. It’s announced a number of deals with specific nations, including Estonia and Germany, and it has a number more that it does not disclose.
Up to now, Helsing has focused primarily on software, one of its key missions being to build AI services that can link up and work with legacy infrastructure to improve defense systems, boost weapons capabilities, and provide better battle analytics for decision-making. Ukraine, and specifically the threat from Russia, has been a major fillip in its growth.
“Ukraine has used technology for its defense against the full-scale Russian invasion, and I think us being able to help there and deploy our technology and execute the mission we had set out three and a half years ago, to use AI to protect our democracies, has been a big driver for us,” Gundbert Scherf, Helsing’s co-chief executive officer, said in an interview with TechCrunch. With the $487 million it raised in July, it’s likely also to move into hardware, too. Its investors include General Catalyst, Prima Materia, Elad Gil, Accel, Saab, Lightspeed, Plural and Greenoaks.
Poolside’s focus first and foremost is on developers, specifically on building AI tools to help them speed up software development. While there are certainly a lot of startups also courting coders, investors are betting the founders here will have a special knack for product-market fit. CEO Jason Warner was the CTO of GitHub and led engineering for Heroku and Canonical. The other co-founder, CTO Eiso Kant, previously founded Athenian, which built a series of tools for developers to help them optimize how they build and work.
Like a number of other AI startups in Europe, Poolside is based out of Paris, and early backers included BCV; early-stage specialists like London’s Air Street, Abstraction and Scribble Ventures; New Wave and Frst from France; as well as Bpifrance, Felicis, Point Nine and Redpoint. This latest round of $400 million (that may be yet to close, or at least be disclosed) is reportedly being co-led by BCV and DST.
There are a number of companies — startups as well as major platform players like Google and Microsoft — that offer text translation and writing tools, but Germany-based DeepL thinks that its AI-based approach is simply better. It’s also taking a slightly different tack by focusing not on consumers but on the B2B/enterprise opportunity in the market.
It currently has around 100,000 business customers, and it announced a $320 million round in May of this year on a bet that it can scale that number. Its investors include ICONIQ Growth, Teachers’ Venture Growth, IVP, Atomico and WiL.
H is for “heady,” which is what the AI market is these days. It is also the name of one of the companies proving out that statement. This startup, which used to be known as Holistic AI before it took a cryptic direction and shortened its name to H, raised this $220 million as a seed round in May.
It has yet to launch any products, but when it does, it sounds like its focus will be one of the other very popular applications for AI at the moment: AI agents. Specifically, it’s focused on “frontier action models to boost the productivity of workers,” according to its site. “Outrageous AI capabilities for task automation & decision-making.” No word yet on which verticals, which models, when it might launch, or what it might handle, nor what roles it’s looking to fill. Heady, indeed.
Based out of London, Flo Health describes itself as the first “purely digital” (no hardware/wearable component) women’s health tracking app to have passed a $1 billion valuation when it raised $200 million earlier this year from General Atlantic. Its focus is currently around fertility and period tracking, but it has ambitions to extend that to older and younger users and to more categories of health. The company claims to have been utilized by a cumulative 380 million users to date, with 70 million monthly active users.
Another Parisian startup! Pigment is squarely in the area of enterprise software — specifically enterprise resource planning for finance teams. Like Flo Health, it’s not an AI startup per se, but it does lean on it for its functionality. As such, it’s part of the widening pool of AI applications that prove out the prediction that AI will eventually be part and parcel of all our digital services. Its $145 million round earlier this year, which came less than a year after its previous raise, gave Pigment a valuation of over $780 million.
