New venture capital fund for Europe’s AI startups

AI has transformed the world of digital marketing and other industries and is the ultimate technology of the future. And yet, AI startups are underfunded in Europe. The Hamburg-based venture capital fund AI.FUND aims to close this gap.

Venture capital fund: a banknote with a unicorn printed on it
Image: RealPeopleStudio/Adobe Stock

AI startups in Europe: What is the status quo?

How is the European innovation scene faring, and what challenges are founders and AI startups facing? The appliedAI Institute for Europe recently got to the bottom of these questions in its groundbreaking study “Generative AI in the European Startup Landscape 2024”, which revealed extremely interesting figures: of the some 6,300 AI startups in Europe, 669 are active in the field of generative AI. An impressive 20 percent are based in Germany.

So, what challenges are these startups being confronted with? The results of the study show that alongside regulation and compute power, financing is a major challenge for AI startups. In the U.S., multibillion sums are being invested in generative AI startups, with the equivalent of 14.3 billion euros having been allocated to OpenAI and Anthropic alone, to name just two examples. In contrast, European AI startups have so far cumulatively received only 2.37 billion euros of funding – an enormous gap that is giving them a significant competitive disadvantage on an international level. That’s where the new venture capital fund AI.FUND comes in.

Statistics on the challenges faced by AI startups
appliedAI Institute for Europe

Is Germany losing momentum as an innovation hub?

With less money being spent on innovations and fewer startups being founded, how is Germany currently faring in terms of innovative capability? Studies, such as the next-generation report published in 2022 by the German Startups Association (Startup-Verband) in collaboration with the “startupdetector” industry information service, offer interesting insights into Germany’s innovative power. Click here for the story.

AI.FUND is supporting AI applications made in Europe

The Hamburg-based venture capital fund AI.FUND aims to identify and support the best AI ideas in their early stages, with a focus on cases where AI is being applied as part of promising business models. With an impressive target volume of 35 to 50 million euros, AI.FUND was formally established in 2021 and has a ten-year term – so it is here to stay for the foreseeable future, with the goal of helping shape AI in Europe.

The brains behind AI.FUND

AI.FUND is spearheaded by renowned AI investors, entrepreneurs, and tech experts, including Ingo Hoffmann, Fabian Westerheide, Hauke Hansen, Petra Vorsteher, John Lange, and Ragnar Kruse. They all have a wealth of experience in AI and investments and are highly skilled at identifying and harnessing future-oriented business potential.

“We seek to empower economic growth and prosperity through the development and adoption of AI solutions based on European values. We dedicate all our experience and competence as successful entrepreneurs, investors, and technology experts to create European AI leaders and to connect them with the established economy.” That is AI.FUND’s mission.

The venture capital fund’s first investments

Having made their first investment in an AI startup in 2002, AI.FUND’s founders can draw on many years of tech experience and plenty of know-how and are convinced that the adoption of AI is on the threshold of exponential growth, particularly in Europe. Owing to their global network and extensive expertise, they are well equipped to support startups from Germany, Europe, and Israel wanting to change the world with innovative AI solutions.

“We focus on the application of AI across all sectors. Our preferred stages are seed and Series A rounds. We expect first customer traction and the ambition to scale internationally.”

One example of AI.FUND’s first investments is Sinpex, a Munich-based startup working on solutions to analyze customer data more effectively. It uses a “Know Your Customer” (KYC) process to verify the identity of customers and check their legal capacity.

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Venture capital funds are driving European innovation

Investments in promising European AI startups by venture capital funds like AI.FUND are strengthening Europe’s AI scene, boosting its competitiveness, and opening up new opportunities for growth and progress – something that is becoming increasingly important against the backdrop of the AI Act recently adopted by the European Parliament, which is still a hot talking point among industry experts and founders, many of whom believe it could hinder innovation in Europe. The aforementioned study by the appliedAI Institute for Europe highlights this concern, with regulation being rated as the second-biggest challenge for European startups, at 24 percent. It is argued that the AI Act’s requirements for companies to ensure transparency, disclose training data, and set up risk and quality management systems will cost time and money and slow down the development of AI applications in Europe. Initiatives like AI.FUND are therefore a crucial incentive for investors and generally signal that innovation is possible in Europe.

If you want to explore this topic in more detail, our DMEXCO stories are packed full of news, insights, and practical tips on artificial intelligence and startups. Our newsletter will also keep you up to date. Or better still: come to DMEXCO in Cologne on September 18 and 19. This year, the motto of Europe’s leading digital marketing and tech event is “Prompting the Future” – so you can look forward to plenty of inspiration from the field of artificial intelligence and the opportunity to network with lots of interesting business players.