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Written by Tom Driver
Following ChatGPT rocking the world of artificial intelligence (AI) last year, the demand for AI investment is as great as ever. Historically bought out by foreign investors from the United States and Asia, AI start-ups from Europe are beginning to resist.
Following the EU’s launch of the European Tech Champions Initiative, the hope is that European innovators will finally be able to step out of the shadows of long-standing tech hubs such as Silicon Valley.
Boasting an initial €3.75 billion of capital to tackle the European scale-up gap, the initiative will help boost European AI development to a level that venture capital (VC) firms simply cannot ignore.
Here is a look at the top 10 European AI-investing VC firms to look out for in 2023:
Btov Partners
With offices in Germany, Switzerland, and Luxembourg, Btov Partners is a VC firm focused on early-stage investments into the digital and industrial technology sectors. On their website, they brand themselves as “the first backer of outstanding entrepreneurs and non-obvious opportunities in Europe.”
Last year, the firm led a €1.1 million funding round supporting Textcortex, a Berlin-based AI writing assistant. Launched in 2021, the start-up seeks to boost workspace productivity by integrating with existing GAI tools.
Having also invested in the groundbreaking translation tool, DeepL, Btov Partners have proven they have an eye for budding European AI. It would be wise to track their progress across 2023.
Sequoia Capital
Of course, the biggest VC firms won’t be turning a blind eye to the AI hype. In late 2022, Sequoia Capital displayed great faith in generative AI (GAI), releasing a market map of GAI companies and start-ups.
In a post which can be found on their website, Sequoia partners Sonya Huang and Pat Grady wrote, “Every industry that requires humans to create original work—from social media to gaming, advertising to architecture, coding to graphic design, product design to law, marketing to sales—is up for reinvention.”
In March last year, Sequoia called European seed-stage innovators to join its new, European-focused accelerator, Arc. Part of its first cohort is Synativ, a London-based start-up that uses the latest research in generative AI to produce data images to be used in several industries.
With over $85 billion of assets under management, Sequoia’s increased focus on European GAI deserves plenty of attention.
Impetus Capital
Based in Sofia, Bulgaria, Impetus Capital is an early-stage VC firm supporting seed and Series A start-ups. They seek innovative models with little-to-no competition in their markets.
Just last month, Impetus co-led a €2.5 million funding round for Transmetrics, a Sofia-based AI platform that optimises logistics planning and asset management. It uses a combination of automated data extraction and machine learning algorithms to enrich its data quality.
Partnering with the European Innovation Council Fund to support Transmetrics, Impetus Capital supports European AI from within the continent, contributing to Europe’s exponential AI-related growth.
TheVentureCity
TheVentureCity is a global, early-stage VC firm, using data insights to invest in start-ups seeking product-led growth. With an office in Madrid, this firm is certainly tapped into the European AI scene.
In 2021, TheVentureCity led a €2.5 million funding package handed to Beams, a social media app which trades followers and likes for authentic conversations via audio messaging. Beams have recently integrated AI into their product, analysing voice responses to provide personalised insights.
Given TheVentureCity’s portfolio companies have raised $1.2 billion over the last five years, the firm is absolutely one to watch in 2023.
Biometric Ventures
Based in Prague, Biometric Ventures is a VC firm focused on early-stage start-ups in the field of biometrics and AI. This company is actually a branch of the Slovakian start-up Innovatrics, a provider of biometric solutions for governments and enterprises, produced using AI models.
Innovatrics’ products are used in more than 80 countries by over one billion people, founding its own VC firm in 2020. Biometric Ventures have reported two start-ups that have developed successfully, including Ageware, an age verification software.
Although the focus is broadly on biometrics technology, AI is increasingly incorporated into biometric innovation. For example, AI simplifies facial recognition by computers through analysing facial features and matching them with a database, as is the case in Ageware.
A European AI-utilising start-up founding its own VC firm represents a desire to expand the industry. It will be very interesting to see where else Biometric Ventures invests in 2023.
Lightspeed Venture Partners
Another more established name in the VC world, Lightspeed Venture Partners (LVP) is a multi-stage VC firm which seeks to support innovative start-ups across multiple sectors.
In October last year, LVP co-led a $101 million funding round towards Stability.ai, a London-based GAI start-up considered one of Europe’s AI pioneers. Valued at $1 billion, Stability.ai focuses on research to produce open-source models, crafted to generate music and images.
In a 2022 article published on Medium, firm partner Paul Murphy announced the opening of a new London office, as well as the hiring of two new partners in Berlin and Paris.
Murphy seemed confident in Europe’s potential, stating, “After years of people doubting whether Europe-centric companies can scale quickly enough to provide venture returns, the answer has become clear: They can and are.”
With the hefty funding round handed to Stability.ai, LVP have certainly put their money where their mouth is. There is no doubt that the firm will continue to invest in European AI this year.
Newtopia
Newtopia is a hands-on VC firm, seeking to invest in pre-seed, seed, and Series A tech start-ups. Although it focuses on Latin-America, the firm has a growing presence in Europe.
Part of its portfolio is Oliver, a Barcelona-based start-up that produces a wearable smart device for football players. Data collected during matches is transformed by a proprietary AI algorithm into actionable insights, which can be traced on a mobile app and web portal.
Earlier this month, Oliver announced a new partnership with FC Barcelona, making it the club’s first-ever start-up investment. Of course, this is no small feat. With Oliver bringing this VC firm such quick success, Newtopia are sure to continue to expand their European activity.
Don’t take your eyes off them this year.
Sparking Capital
Sparking Capital is an early-stage VC firm providing pre-seed and seed investments to tech start-ups. Based in Bucharest, the company has so far primarily invested in Romanian innovators.
In 2022, Sparking led a €0.7m funding round for Hyperhuman, a Bucharest start-up that uses an AI-powered platform to help health and fitness professionals create and distribute online video content. Its users can produce videos without the need to be tech-savvy.
Since opening a new International Centre for Artificial Intelligence in December 2021, Bucharest’s AI start-up scene has continued to expand. Funding projects at their earliest stages, Sparking Capital isn’t a VC firm to be ignored in 2023.
Heartcore Capital
Headquartered in Copenhagen, Heartcore Capital claims to be investing in “companies re-enchanting the world through technology.” The firm provides early-stage support for consumer technology innovators.
In October last year, Headcore led a $7 million seed-stage funding round for Kive, an intuitive cloud-based visual library made for creatives. The Swedish inspiration management platform helps to organise their users’ sources of information and is growing rapidly.
Heartcore Capital’s unique consumer technology focus allows them to shine amidst the sea of VC firms being founded. If you’re interested in Scandinavian AI development, Heartcore Capital is one to look out for.
Borski Fund
Founded in 2019, the Borski Fund is a VC firm that supports start-ups that are either run by female entrepreneurs, or that find other ways to improve gender equality. Based in Amsterdam, the firm is looking to diversify the business landscape in the Netherlands.
Just last month, Borski led a €2.1 million funding round handed to Aiir Innovations, a Dutch start-up that uses AI to provide software solutions for aircraft engine inspection. Also based in Amsterdam, the company has two female founders and has already partnered with KLM Airlines.
Committed to reducing the gender gap, the Borski Fund combines their passion for innovation with a desire for social justice and should not be overlooked this year.
Conclusion
From budding VC firms like Biometric Ventures and Borski Fund, to the industry veteran, Sequoia Capital, all ten investors named in the list are sure to continue their European AI investment throughout 2023.
Despite the eye-catching buzz around ChatGPT, the AI industry still has huge potential to develop further, and with ever-growing levels of support, the European start-up scene is not to be ignored.
As investment continues to pile in, there are sure to be more VC firms turning their attention to European AI. Keen entrepreneurial AI developers in Europe should certainly keep an eye out, as catching a new VC firm early could be the key to receiving the funds to develop the ChatGPTs of the future.
