In general, startups continue to face significant obstacles when trying to secure venture capital funding. Crunchbase reports that Q2 was merely a slight improvement above the lowest points in the preceding two quarters.
However, AI is one field that continues to open doors and checkbooks.
The United States currently leads the world in artificial intelligence, having accounted for roughly 30 agreements totaling more than $100 million in 2024. But Europe is not far behind either: According to our analysis, as of August, 14 investments worth at least $100 million have been made in AI startups in Europe; one company had received two of these investments.
AI is significantly influencing the long-tail startup ecosystem in Europe. According to PitchBook data, the number of funding rounds for AI startups in the region has exceeded 1,700 overall as of 2024.
The largest AI businesses, those developing core models, continue to have the greatest gravitational pull when it comes to investment, in part because AI is still a pricey field of development. According to sources, Mistral AI, which has already received over $1 billion in financing this year, is soliciting funds again.
Mistral is headquartered in Paris, which has established itself as Europe's core of AI development, particularly in the field of generative AI. When you consider how some promising emerging markets, such as India, receive only a fraction of the AI funding that more developed markets do, it will be interesting to see if Paris can maintain and capitalize on its leadership — or how the balance of power (and money) may shift.
Mistral is headquartered in Paris, which has established itself as Europe's core of AI development, particularly in the field of generative AI. When you consider how some promising emerging markets, such as India, receive only a fraction of the AI funding that more developed markets do, it will be interesting to see if Paris can maintain and capitalize on its leadership — or how the balance of power (and money) may shift.
Whether it’s self-driving tech, LLM startups or players that also have hardware components, there are four main reasons why AI is commanding big investments:
The processing power required to train and execute queries via AI models is massive.
AI startups are scrambling to find talent.
In some circumstances, AI businesses may require funds to pay royalties on all of the content IP they use to train and run their models.
Investors dealing with massive sums for growth investments (and pressure from LPs to deploy) must find locations to put their money; by seeing what Big Tech hyperscalers are doing, investors see outsized AI businesses as large and possibly profitable bets to make.
Here's a breakdown of the major rounds in European AI this year, which reads like a who's who of the most important categories in AI right now: