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Big Tech Ramps Up European VC Funding

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Bloomberg Oct 3 09:10 · 15.3k Views

Big tech names including the likes of Amazon, Nvidia, Google and Meta have ramped up investment in European technology startups, according to a Founders Forum report.

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Transcript

  • 00:00 This is the first report of its type
  • 00:02 that you and the team that found this form have put out.
  • 00:04 And it's very timely given the investment that we've seen into open AI from the likes of NVIDIA, from the likes of Microsoft,
  • 00:09 many others as well.
  • 00:10 The role that mega cap tech that the mag seven that NVIDIA and a number of those players, Microsoft, Amazon, Meta
  • 00:16 are playing and having in terms of reshaping this European startup scene.
  • 00:20 What is it looking like?
  • 00:21 What kind of impact
  • 00:23 are they having?
  • 00:24 Yes, I mean, we're delighted to do this as the first report ever and really kind of garnering the insights from the founders themselves that are partnering with the big tech companies, which is, you know, it's a critical part of the ecosystem.
  • 00:34 What we've seen is, you know, phenomenal growth in the investment
  • 00:38 fivefold
  • 00:39 for that first half of the year, but it's very concentrated to a smaller group of startup players
  • 00:45 and actually over 99% of them as we need more and it isn't just around investment,
  • 00:50 they need sort of tangible and practical outputs to support them in their growth stories.
  • 00:55 The headlines really are that Google and Microsoft come out as the lead in innovation and in investments
  • 01:01 matter and in NVIDIA lead in investments perhaps less.
  • 01:04 So they need to raise more awareness in the programs that they're delivering.
  • 01:07 Amazon really seen as the startup builder, probably the best reputationally across with the founders, but very much seen as the grassroots all round player
  • 01:16 and Apple still work to do in terms of reputation and investment
  • 01:21 from the founder sentiments that we surveyed.
  • 01:22 Yeah, really interesting that Amazon stands out as being possibly at least from the view of some of these founders, the bet the best partner there, which is really fascinating.
  • 01:30 Meta has been very acquisitive
  • 01:32 as well.
  • 01:32 So it stands out top of the list in terms of the acquisitions that's made.
  • 01:35 Yes, within this space, what's driving that?
  • 01:37 What's behind that?
  • 01:37 What have they been targeting?
  • 01:39 Well, ultimately I think people forget these are now major, major companies that need to innovate in the same way that perhaps you know, 100 year old corporates do.
  • 01:47 That partnership really between the two is critical And the pace of the AI and we just talked about the pace of change and the demand being insane.
  • 01:55 There is a requirement to keep that technology innovation at pace and working with startups from the big players, investing in those companies is just a critical tool for the big tech companies as it is for startups to partner with them.
  • 02:07 You've used the word critical, I think three times, Carly, and probably appropriately so.
  • 02:11 But I wonder if critical
  • 02:13 is also an over reliance.
  • 02:14 Is the European ecosystem around start-ups overly reliant on this US funding?
  • 02:21 We need
  • 02:22 sources of capital from all forms and that can't just come from big tech providers.
  • 02:26 And it isn't just really investment.
  • 02:28 What we've heard from the founders is they actually need the programs that
  • 02:32 these big tech companies are opening.
  • 02:34 We need proof of concepts and sandbox environments where actually big
  • 02:37 tech companies play a role to bring together corporates, academics, scientists and the startups
  • 02:42 to really look at the next frontier of technologies into climate, AI and and groundbreaking
  • 02:48 environments really.
  • 02:49 So it isn't just around the investment, but of course investments important, but we need it from multiple sources.
  • 02:55 It also a reminder that Europe lacks that growth later stage funding the firepower when it comes to those big ticket investments.
  • 03:03 I think there's never been a better time to be a founder in Europe right now.
  • 03:07 And generally the, you know, what we've seen over the last few weeks and months
  • 03:11 is that really actually Europe is leading in the sense of some companies in AI, in voice, in video and software tools.
  • 03:19 So we've probably been never in front of a technology curve as much as we have now,
  • 03:23 but we have to remain competitive.
  • 03:25 And so to continue that competitors against US and China,
  • 03:28 we do need more later stage capital.
  • 03:30 We do need that from multiple sources and we do need these partnerships.
  • 03:34 And I think
  • 03:35 that sense of just investment in talent as well.
  • 03:38 So we've seen actually the European engineering ecosystem has really matured,
  • 03:42 but we need more around leadership at scale.
  • 03:44 And this is where the big technologies can really play.
  • 03:46 Big tech companies can play a role
  • 03:48 in a providing mentorship, providing partnership to help more later stage companies.
  • 03:52 They're more traditionally known for the grassroots early stage,
  • 03:55 but how can they actually partner with these companies to help them come at scale?
  • 03:58 I would imagine there may be some regulators in the UK, in Brussels, who'll be looking at your report and thinking this is a reminder that there is a monopolistic, anti competitive push coming through from megacap tech.
  • 04:09 Now, that is not what you're saying in this report, but clearly
  • 04:13 there is a concern about the size and scope of these companies hoovering up the startups and just expanding their Moat that much further and making it a much more difficult place in which to innovate.
  • 04:24 Yeah, I think it's no secret that the big tech companies are clearly quite distracted and focused on that EU digital markets
  • 04:31 and fair criticism, do you think?
  • 04:32 I think we need to make sure that we've got a competitive and fair playing field for all.
  • 04:36 It's a bold move from open AI recently around saying, you know, no competitive,
  • 04:41 you know, investments from those.
  • 04:42 I think there's very few companies that can pull that off.
  • 04:45 Is that the right thing for a competitive market?
  • 04:47 Time will tell,
  • 04:48 but I think we need open and fair playing fields for these companies to grow and scale.
  • 04:53 OK.
  • 04:53 What are the capital markets looking like?
  • 04:55 Because you talk on scale and that's another challenge for Europe, scaling these businesses,
  • 04:58 getting them to size.
  • 05:00 Exits or IP
  • 05:01 OS,
  • 05:02 how is that evolving?
  • 05:03 We need to see more across the pension reforms and now with the change of government, let's see how that transpires.
  • 05:08 We need to see more family offices and institutional families investing, I think in the ecosystem used to come from multiple sources and not only believe that it can come from big tech players or US investors,
  • 05:18 OK, So we look for those additional reforms as well.
  • 05:20 Maybe we'll get some announcements
  • 05:22 around the budget.
  • 05:23 Talking of which, are you hearing any concern
  • 05:25 from
  • 05:26 the touch point individuals that you have, whether it's investors or founders around what might come out in the budget, particularly the focus on
  • 05:33 capital gains, carried interests, high net worth individuals.
  • 05:36 Is that something that's percolating to the surface in your community?
  • 05:38 Yes, absolutely, but we don't know yet.
  • 05:40 I think really it's just a case of the fact
  • 05:42 that we need to make sure we stay competitive and have the right incentives and the right opportunities for founders to
  • 05:48 make the UK brilliant.
  • 05:50 Carried interests, carried interests, capital gains could, could, could be a cold wind across this sector here in the UK.
  • 05:55 I hope not.