If you follow the global AI race, you’d be forgiven for thinking that there are only two nations battling for leadership. But China and the United States are far from the only tech markets with mature cohorts of startups and incumbents, strong venture capital activity, and capital markets capable of translating startup ideas into companies. public.
The AI race is part of a larger deep-tech competition that includes things like chipmaking, another flashpoint often discussed as a US-China issue. The reality is that many countries are betting on deep technology – what The Exchange sees as investing in complex technology that may not have immediate commercial application, or focusing on preparing other products more suitable for the market. .
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We are curious if Europe can form a third independent center or group of hubs for investment in deep technologies, intellectual property and business creation, separate from China and the United States.
We tackle the question in two parts: Today, we analyze Angular Ventures’ report on venture capital investments in companies and cutting-edge technologies in Europe and Israel. Then, early next week, we’ll collect feedback on the issue from leading European investors and founders to better understand the perspective on the ground.
To begin with, a few caveats. The Angular Ventures report includes data from Israel, an active deep tech market. And what the venture capital firm has set up includes some company investments (SaaS, fintech, e-commerce, etc.). So we’re going to have to do some analysis, but no dataset is perfect, and what Angular has published is very helpful.
The first data point we need to consider is concentration. Angular divides venture capital activity into two useful categories for general comparisons. If we look at the European venture capital market from a business and deep tech versus consumer perspective, the data indicates that the continent has dramatically shifted its investment focus from a balanced to a preponderance of non-consumptive work.
From 2014 to 2017, for example, the two broad categories were roughly equivalent, each holding around 50% of venture capital activity in Europe. But from 2018 to now, that peg has shifted to a roughly two-thirds/one-third split, with European investments in deep tech and corporates absorbing the majority of deal flow.
This recent and clear divergence in corporate orientation towards Europe helps to explain why our question is more than inactive. Europe has moved from a market that is fairly evenly split between consumer and non-consumer investment to one that is heavily skewed in favor of back-end technology over consumer-facing products.