Europe received only 5% of the $22B VC funding for generative AI.

Europe received only 5% of the $22B VC funding for generative AI.

European Startups Lacking in Generative AI Investment

Generative AI Investment

European startups are being left in the dust when it comes to generative artificial intelligence (AI) investment. According to data from Dealroom, out of the €22 billion that venture capitalists (VCs) have invested in generative AI since 2019, European startups received just $1 billion. This pales in comparison to the $20 billion that American companies secured, making up a staggering 89% of the global total. Asian companies fared slightly better, raising $790 million, while the rest of the world only managed $454 million. It is important to note that this data only accounts for VC investments up until July 10th, 2023.

This discrepancy can partially be explained by the rise of OpenAI, a San Francisco-based company that has taken the generative AI world by storm. OpenAI has become a favorite among VCs, with nearly $12 billion invested in the company. In fact, Dealroom’s data shows that OpenAI is the leading model maker in the generative AI segment, with over 60% of VC funding for the industry being directed towards them. Other major players in this field include Anthropic, Adept AI, Inflection AI, and Aleph Alpha. The next most funded segments in generative AI are applications and infrastructure.

The epicenter of the generative AI revolution is undoubtedly the Bay Area, where OpenAI is based. VCs have poured over $18 billion into startups in this region alone. Following closely was New York with $676 million in funding, and Tel Aviv with $433 million. Nevertheless, outside of these top three cities, the landscape becomes much more promising for Europe.

London takes fourth place in the rankings, with generative AI startups in the UK capital securing roughly $36 million in investment. Stability AI, a company specializing in the Stable Diffusion text-to-image model, led the way with a whopping $101 million investment. Three more European cities rounded out the top 10: Berlin with $141 million, Amsterdam with $238 million, and Stockholm with $100 million.

This data paints an interesting picture of the generative AI investment landscape. While American companies dominate with their innovative approaches and heavy VC funding, Europe still manages to make a significant impact. This shows that despite the gap in investment, there is immense potential for European startups to thrive in the generative AI sector. With the right support and funding, these companies can further contribute to the global AI revolution.