Three recent headlines that show the strength of European AI

From Silo AI to Helsing, capital is coming to Europe and the AI ecosystem is thriving

Reading the news today means seeing lots of doom and gloom about the state of venture capital, with a hangover from the 2021 boom times weighing down the VC ecosystem across the globe. 

But as an AI investor, I’ve never been more optimistic about the European landscape, and I believe there have been a few recent signs that show the strength we have here. 

Let’s take a few recent headlines. 

“AMD to acquire Finnish startup Silo AI for $665 million to step up in AI race”

US chipmaker AMD made a big move in Europe by grabbing Silo AI in a large cash deal. Founded in 2017, Silo offers AI products to large corporate clients like Unilever and Philips, helping them build models and integrate AI into their companies. 

After Google’s 2014 acquisition of DeepMind, it’s one of the most significant AI M&A deals in the region. Silo was founded in 2017 and has about 300 employees.

From my perspective, this also shows the strength of vertical integration in AI: By acquiring Silo, AMD will essentially have an in-house model creation team to help their customers and improve their offering, likely in the hopes that it will give them a leg up in the ongoing chip wars against the market leader Nvidia. 

I anticipate that we will see more deals like this, as model providers and infrastructure players try to enhance their products by getting closer to the application layer.

“Defense AI startup Helsing raises €450 million Series C”

Led by US investor General Catalyst, Germany’s Helsing landed a mega Series C round, with plans to expand into the Baltics and spend €70 million over the next three years to combat the Russian national security threat. It’s just the latest big AI round out of Europe (like Mistral’s €600 million Series B).

The news marked another strong round for Helsing. Like the AMD deal, it does show a certain elephant in the room: the inflow of money from the US underpinning European AI. One could be cynical about this and say that it shows that Europe can’t exist on its own without US influence and capital. But in my opinion, the investment shows that Silicon Valley recognizes the value creation happening here.

“Why Europe’s startup ecosystem is healthier than ever”

Finally, I enjoyed this fantastic column in Manager Magazin (in German) written by Katharina Wilhelm, a partner here in Berlin at Index Ventures. 

Katharina summed up perfectly why I’m so excited about the European AI ecosystem. She highlighted an interesting datapoint from Dealroom: In 2024, growth in European AI funding rounds is expected to outpace the US for the first time this year. AI funding in the EU will grow by 113% from 2023 to this year, compared to 47% growth in the US. 

To be sure, the US is operating on a greater scale. But the growth differential does illustrate the potential for Europe’s future. Katharina points to a few reasons why Europe is thriving, including our talent pool and our advantages on the application layer. 

Doubling down on the European advantage

I couldn’t agree more. While most of the attention in AI tends to revolve around chipmakers and large language models, I believe the most attractive investing opportunities lie in the industrial applications of AI. That’s our investment hypothesis at Merantix. 

I believe that in 20 years time, there will be many household name AI companies that were built in Europe, across robotics, mechanical engineering, healthcare, life sciences, fintech and tech-bio. 

This is where Europe really flourishes, since we have such a great concentration of industry knowledge and top-tier research. At the same time, our investment landscape is maturing, our entrepreneurial class is becoming more sophisticated and knowledgeable, and the ties and connections between the European AI ecosystems — from Berlin to Paris and beyond — are lifting all boats. 

Of course, the US is still ahead, and we in Europe need to be humble about what the US has been better at for decades: breaking down silos between research and implementation, flexible institutional investors interested in venture capital, and a pipeline of successful entrepreneurs that become investors themselves after big exits -but that’s a topic for another Substack post!

- Adrian

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