Is European AI more than a trend?

The EU AI funding takeover, Synthesia AI is creating deepfakes, and more...

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SearchVentures
July 31, 2024

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AI startups are taking over Europe

Despite a broader market downturn, European AI funding in 2024 is on track to surpass last year by nearly 50% and match 2022 levels, growing more than 10x in the past decade.

What is causing AI’s rapid growth in Europe?

This Week’s Trends

  • AI is taking over Europe

  • Synthesia AI creating hyperrealistic deepfakes

  • Most active early-stage investors and more


    Read Time 4 minutes

The Startup Trend
European AI Investment Growth

European AI funding has grown tenfold over the past decade and now accounts for 18% of total VC funding in Europe. This sustained interest in AI is reflected in the projected $11.5 billion funding for 2024, surpassing 2023 by nearly 50% and equalling 2022 levels.

> Generative AI now has the highest median funding round size across all rounds, outpacing conventional AI and non-AI sectors.

> Europe’s per-capita concentration of AI experts among software engineers is 30% higher than the US and almost three times as high as China's.

💡 France is emerging as a central AI hub with a 63% increase in AI VC funding to $1.2 billion in 2024 and over 1,000 VC-backed AI startups. This is due to favourable startup policies and the France 2030 plan allocating €2.5 billion to AI startups.

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Startup feature
The startup using AI to replace reality

Synthesia AI is quickly becoming a standout among generative AI startups. The London-based startup, founded by a group of four AI researchers and entrepreneurs from UCL, Stanford, TUM, and Cambridge, specializes in creating AI-driven videos.

What sets Synthesia's technology apart is that it is more than just hype—it's used by over 50,000 organizations, including nearly half of the Fortune 500, to produce videos featuring virtual avatars.

From Idea to Unicorn

In June 2023, Synthesia raised $90 million in a Series C funding round, led by Accel and NVentures, the venture capital arm of NVIDIA. This brought the company's valuation to $1 billion, making it one of the few European startups to achieve unicorn status amid a global funding slowdown.

“While we weren't actively looking for new investment, Accel and NVIDIA share our vision for transforming traditional video production into a digital workflow”

Turning AI into more than a trend

Synthesia founders: Steffen Tjerrild, Prof. Lourdes Agapito, Prof. Matthias Niessner, and Victor Riparbelli

Synthesia AI began as an academic project, leveraging the advanced research of its founders from UCL, Stanford, and TUM. The initial focus was on developing AI-driven dubbing technology, using academic work in computer vision and artificial intelligence, the team decided to take it one step further by incorporating it with human-like avatars.

“We realized that the best target customer for GenAI video wasn’t people already making videos, but businesses that didn’t have large studios or the right tools to create them effectively”

This insight guided Synthesia to focus on a B2B sales model, reducing the need for traditional marketing strategies and instead prioritizing the development and application of high-quality technology. This approach has attracted a diverse range of clients, from Tiffany & Co. to the United Nations.

“I love when there's some French cement-mixing company that you’ve never heard of before, but has 15k employees who don't care about AI at all, they’re just trying to do their job better and Synthesia is the right tool.”

Staying Competitive in AI

Synthesia faces a lot of competition from emerging startups in the generative AI space, including Colossyan, HeyGen, and Speechify, all of which are developing similar video production tools for enterprises.

“There’s a lot of companies coming after us now, but that’s a sign that this product and technology has real value. They are also much further behind on their product than we are.”

The next phase of Synthesia’s research is all about staying one step ahead and they are currently developing an AI model capable of generating avatars that can perform physical gestures and interact with objects.

The team estimates that they are currently about 40% along the journey from initial research demonstrations to enabling everyday users, like a teenager in their bedroom, to create Hollywood-quality films.

Headline News
This Week In Startups ✍️

Founders

> Fractile, a London-based startup, exits stealth with €13.8 million seed to develop a radically different approach to the design of chips for AI inference.

> osapiens, a Mannheim-based sustainability reporting startup, raises €110.7 million Series B to help companies navigate ESG regulation.

> Flo Health, a women’s health app raised more than $200 million in a Series C investment from General Atlantic, becoming the first femtech unicorn.

Investors & VCs

> Kennet, a London-based growth equity investor closes its largest fund at €266 million to invest in capital-efficient B2B SaaS companies across Europe.

> XAnge, a Franco-German VC firm has quietly stopped fundraising for its inaugural crypto VC fund due to a lack of interest from LPs.

> Here are France’s most active pre-seed and seed investors in the past 12 months.

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Cheers,

Odin Lund & Hari Mohandas

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