The Race Isn’t Over for European AI Startups and the Upcoming ‘Agentic Revolution’
In the realm of artificial intelligence (AI), the competition is fierce. The top U.S. tech giants like Amazon, Microsoft, Google, Meta, and Apple have deep pockets to spend tens of billions of dollars on AI development and infrastructure. Next in line are heavy hitters like OpenAI, Anthropic, and xAI, which are spending billions on AI. Then there are a handful of challengers, like Mistral and ElevenLabs, which have the capacity to spend hundreds of millions. But how long will these challengers be able to keep up? And will they ever be able to surpass the titans?
The European Perspective
Philippe Botteri, an Accel partner who has led investments in companies like Docusign, UiPath, and more recently Snyk and Chainalysis, shares his insights on the AI race. According to him, smaller startups, including some European players, aren’t out of the running just yet.
A Great Opportunity for Europe
"You have some great companies like Mistral, like H, like Poolside, ElevenLabs, but they’re a bit behind in terms of their fundraising capabilities," Botteri said on today’s episode of Equity. "They have raised hundreds of millions. They haven’t raised the billions that OpenAI and Anthropic have raised. But I think that is going to be the next big step for Europe."
Botteri believes it’s too early to say that the race is over, and that European startups still have a chance to catch up.
The AI Market: A Growth Story
But why should we care about this AI race? The answer lies in the numbers. AI and cloud funding are predicted to hit $79.2 billion by the end of 2024, with traditional software companies facing challenges as funding growth slows outside of AI. This means that the AI market is a growth story, and European startups can still play a significant role.
Why Europe Has an Edge
Europe’s strong talent pool gives it an edge in the AI race, even as startups on the continent struggle to compete with the vast amounts of money U.S. tech giants have. But Botteri believes that this gap will narrow soon.
Increased M&A Activity and a Slow IPO Market
In addition to the AI market growth story, there are other trends worth noting. Increased M&A activity globally amid a slow IPO market means that investors are looking for alternative ways to deploy their capital. This creates an opportunity for European startups to attract more funding.
The ‘Agentic Revolution’
So what’s next? Botteri believes that 2025 will be the year of the "agentic revolution" with AI significantly impacting software development and productivity. This means that companies will need to adapt quickly to remain competitive.
Conclusion
In conclusion, the race for AI foundational models is far from over. European startups still have a chance to catch up, and the growth story in the AI market is too big to ignore. As we look towards 2025, it’s clear that the "agentic revolution" will bring significant changes to software development and productivity.
About the Authors
Rebecca Bellan is a senior reporter at TechCrunch, covering transportation for the publication. She has a background in journalism and history from Boston University and has previously covered social media for Forbes.com.
Theresa Loconsolo is an audio producer at TechCrunch, focusing on Equity, the network’s flagship podcast. Before joining TechCrunch, she was one of two producers at a four-station conglomerate where she wrote, recorded, voiced, and edited content, and engineered live performances and interviews from guests like lovelytheband.
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About the Show
Equity is a podcast hosted by Rebecca Bellan and Theresa Loconsolo. Each episode features discussions on the latest tech trends and startup news.
