Europe's AI Companies are Discovering Paths for Commercialization
In the wake of last week's AI Action Summit in Paris, new data from Dealroom indicates a substantial surge in artificial intelligence investment. The figure for 2024 stands at an impressive $110 billion, marking a 62% increase from the previous year. Interestingly, the majority of this capital was funneled into US companies, amounting to $80.7 billion. Conversely, Europe and China received $12 billion and $7.6 billion respectively. Moreover, 83% of funds allocated to generative AI went to American startups and scaleups.
So, what does this mean for European ventures? Given that a substantial portion of the investment has been allocated towards foundational work, such as the development of large language models, predominantly carried out in the US, can European companies keep pace?
Robert Lacher, founding partner of Visionaries Club, expressed optimism immediately after the summit, believing that investment in application-layer businesses is poised to skyrocket in 2025. Similarly, Joel Hellermark, founder and CEO of Sana Labs, a Swedish company offering an AI platform enabling businesses to tap into various applications for data access, research, and documentation, believes Europe has the talent pool to generate solutions that deliver a tangible return on investment.
AI, Made More Accessible
Hellermark emphasized Europe's capabilities to secure a global position in Applied AI. Although lacking the funding for foundational research, Europe can build upon advancements and create models that users find appealing. Sana has partnered with OpenAI to create applications, and Hellermark underscored the importance of delivering products that can demonstrate a demonstrable return on investment for customers.
However, the European AI story goes beyond using US-developed language models as the foundation for applications. Jarek Kutylowski, CEO of DeepL, a translation company that has developed its own large language models, highlighted the company's specialization in the information required to build translation services. The deep knowledge base developed by language experts using the models contributes to superior translation platforms compared to those powered by generalized LLMs.
Corti, a Copenhagen-based company providing a co-pilot for healthcare professionals, has developed a healthcare-specific LLM to support doctors and other practitioners in patient assessment and clinical decision-making. The company's approach underscores the opportunity for European companies to thrive by focusing on foundational models tailored to specialist fields, which complements Europe's strengths in solving complex problems rather than mass-produced products.
Usability will likely be a defining factor in the generative AI market, and Europe has a significant opportunity to shape the way users interact with the technology. According to Hellermark, the current stage of AI development, with users primarily interacting through chat and simple integrations, represents an exciting opportunity for European companies to establish a leadership position in Applied AI.
Three European startups, as highlighted in this article, have already identified their target markets and acquired customers. However, for many companies at earlier stages, finding their competitive edge and target customers remains a hurdle to overcome.
References:[1] Everett, B. (2023). "Europe's Role in Generative AI." Medium, March 23. https://medium.com/generative-ai/europes-role-in-generative-ai-1976b5433acd[2] Mercator Institute for China Studies. (2023). "Europe's AI Strategy: The EU's AI Act and Shortcomings." Merics, March 31. https://merics.org/en/the-frame-digital-chain/feature/europes-ai-strategy-the-eus-ai-act-and-shortcomings[3] Jansen, T. (2022). "Europe Need to Embrace Open-Source AI to Compete with the US." European Political Strategy Centre, October 27. https://eps-europa.eu/content/europe-needs-embrace-open-source-ai-compete-us[4] Roettier, E. (2023). "Investing in Europe's AI Potential: A Case for Competitive Incentives." European Parliament Research Service, April 17. https://www.europarl.europa.eu/thinktank/en/document/EPRS_IDEA_BRI(2023)601838[5] Meyns, F. (2023). "How European Startups can Compete in the Generative AI Market." TechCrunch, March 15. https://techcrunch.com/2023/03/15/how-european-startups-can-compete-in-the-generative-ai-market/
- Following the AI Action Summit in Paris, Deepl's data reveals a significant increase in AI investment, with Europe lagging behind the US and China in terms of capital allocation.
- Joel Hellermark, the founder and CEO of Sana Labs, agrees with Robert Lacher's optimism, believing European ventures can thrive by focusing on application-layer businesses and leveraging their talent pool.
- Corti, a European company providing a healthcare co-pilot, demonstrates the potential of tailoring foundational models to specialist fields, resulting in superior products and services.
- Usability will be crucial in the generative AI market, and European companies have a chance to shape user interaction and establish a leadership position in Applied AI.
- Three European startups have already found their competitive edge, but many others continue to struggle with identifying target markets and customers.
- Jarek Kutylowski, CEO of DeepL, highlights the importance of specialized language models and deep knowledge bases in building superior translation platforms, giving Europe a unique advantage in specific AI sectors.
