Welcome to a new episode of the EUVC podcast, where our good friends Dan Bowyer and Mads Jensen from SuperSeed, discuss with Lomax Ward, General Partner at Outsized Ventures, to cover recent news and movements in the European tech landscape 💬
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Here are the core take-aways:
Will all Nobel Prizes eventually have an AI subset?
Why it matters: The Nobel committee’s recognition of these AI pioneers underscores AI’s increasingly pivotal role across scientific fields. Hassabis and Jumper developed AlphaFold, an AI model capable of predicting the structure of almost every known protein—a breakthrough that has massive implications for medicine, vaccines, and various humanitarian applications.
Launched in 2020, AlphaFold has transformed fields like drug discovery by accelerating the previously labor-intensive protein-folding research. This prize validates the significance of AlphaFold’s contributions and highlights the Nobel committee's gradual acknowledgment of AI's impact on traditionally distinct sciences.
Lomax and Mads emphasized the need to “handle AI with care,” similar to other transformative technologies like nuclear power. They support pushing AI innovation forward but stress the importance of balanced regulation to avoid stifling potential advancements.
Mads pointed out that while AI drives a new “industrial revolution,” excessive regulatory controls—especially within Europe—could hamper progress and international competitiveness. This sentiment was echoed with references to the regulatory freedom available in other regions, like the limited AI access in Hong Kong, which contrasts starkly with Europe’s heavier regulatory approach.
Will AI or the DOJ Crack Google’s Search Monopoly?
Why it matters: With Google controlling 90% of global search traffic, this move intends to enable more competition. Yet, the rise of AI-driven search platforms like GPT, Perplexity, and Claude suggests that technological shifts might be naturally weakening Google’s hold.
The DOJ’s antitrust action could signal a pivotal moment for tech monopolies, with implications for how Big Tech operates both in the U.S. and abroad. However, with AI alternatives rapidly evolving, some argue that Google’s dominance might erode naturally as users turn to AI-based options. Andreas and others now start their searches with AI, while competitors are also gaining ground by offering more conversational, context-aware responses.
Mads pointed out that Google’s vast data reservoir, especially from sources like YouTube, uniquely positions it to challenge OpenAI. But if regulators split up Google, the AI landscape could quickly tilt in favor of OpenAI, as Google would lose its edge in competing with such powerful data.
Lomax further noted that VCs often support companies with monopolistic potential, but there’s a balance to maintain. The question remains: Should regulators let the market forces play out rather than intervene?
Rising UK Borrowing Costs: What’s the Impact on Startups and Venture Capital?
What it is: UK borrowing costs are rising, stoking market concerns as the government faces with mounting debt.
Why it matters: While not yet at the unsustainable levels seen under former Prime Minister Liz Truss, this trend has investors watching closely. Higher borrowing costs directly impact the economic environment for startups and venture capital. As government borrowing increases, competition for available capital often drives up interest rates.
For UK startups, this could mean tighter access to financing as investors become more cautious with riskier assets. Higher interest rates make debt more expensive, potentially reducing the number of venture deals and leading VCs to scrutinize investments more critically. The ripple effects could also tighten budgets for startups already facing a challenging fundraising climate, especially those in the early stages.
Pension funds push for more UK borrowing.
Why it matters: This move, backed by figures like Rachel Reeves, would allow pension funds to direct billions into critical infrastructure, potentially attracting significant international capital.
Changing the co-investment rules could unlock a flood of capital for infrastructure, boost the UK economy, and drive societal benefits. Beyond roads and bridges, this capital injection could have knock-on effects on the startup ecosystem, both directly and indirectly. Large infrastructure projects often spur innovation, create new markets, and provide opportunities for tech startups focused on everything from clean energy to smart cities. Additionally, the influx of international capital could enhance the broader investment climate, potentially making more funding available for startups across various sectors.
As Lomax and Mads discussed, this capital injection would likely ripple into the startup ecosystem, indirectly benefiting tech-driven sectors such as clean energy and urban innovation. However, Mads emphasized that merely increasing funding won’t suffice without meaningful reforms to streamline high-cost planning processes.
Will the UK’s new regulatory innovation office drive economic growth?
Why it matters: Speeding up regulatory approvals could give the UK a competitive edge in high-growth industries, enabling innovations to reach the market faster. This streamlined approach offers a clear path to market for startups and VCs, reducing the regulatory bottlenecks that can deter investment in risky or experimental technologies. The focus on sectors like biotech and autonomous vehicles signals the UK’s commitment to nurturing cutting-edge industries that require regulatory clarity to thrive. Faster approvals could lead to quicker scaling, attracting local and international investors eager to support high-potential tech.
During the discussion, Mads emphasized the importance of approvals and addressing “regulatory overhang” from outdated, cumbersome rules. He pointed out that if the office simply adds layers without meaningful simplification, it risks becoming another underfunded body rather than a true accelerator for innovation.
However, Mads and Lomax expressed skepticism about whether this new office will be adequately resourced and empowered to make a lasting impact. They argued that, for real economic growth, the office would need political and financial support beyond just the next few months or electoral cycles, emphasizing a sustained commitment over a quick fix.
Will LPs get back into VC in 2025?
What it is: Venture Capital Journal has launched this year's poll testing LP appetite for investing in venture.
Why it matters: The poll reveals potential headwinds for VC fundraising. In last year’s survey, nearly half of LPs expected only moderate performance from their VC portfolios in 2024, while 42% avoided first-time managers—a twofold increase. Additionally, 24% of LPs reported overallocation to VC, and interest in adding new VCs reached a historic low of 30%. This shift could significantly impact first-time funds and emerging GPs, who may face a tougher environment for securing capital in 2025.
These challenges and lower enthusiasm for late-stage and growth strategies signal a potential cooling in VC demand globally. However, the results are skewed toward institutional investors like insurance companies, funds of funds, and pension funds, so they might not fully capture appetite in other LP segments, such as family offices, which may still see VC as a key diversification tool.
Mads noted this pullback could make fundraising for first-time funds and emerging managers even tougher in 2025, as LPs seem more inclined toward established names perceived as safer.
Lomax highlighted that many institutional investors remain cautious, partly because of the surge in non-traditional, "tourist" LPs in 2021. With these less experienced investors retreating, the burden falls back onto more traditional LPs, who tend to be selective and wary of adding new, untested managers.
Does startup ownership and location matter?
What it is: Some big European Series Bs were announced—Dexory, Poolside, and Newcleo—but are they European?
Why it matters: These relocations highlight the complexity of defining “European” startups in a globalized venture landscape. As companies increasingly straddle international borders to optimize for talent, capital, or regulatory benefits, rigid geographical definitions may seem less relevant. For VCs and the startup ecosystem, what matters most may not be ownership or HQ location but rather where the company is making meaningful economic contributions, driving innovation, and creating jobs. Europe’s strategic relevance remains strong if it continues to attract, retain, and grow such companies, regardless of nuanced affiliations.
However, the sensitivity to ownership and location persists, especially as Europe faces talent and capital challenges relative to the US. Some fear these cross-border moves may reflect a talent or capital drain rather than a purely strategic expansion. For VCs, these moves prompt critical questions about where returns and impact are truly centered, especially for funds with a Europe-first mandate.
Lomax emphasized that what truly matters is where these companies are innovating, hiring, and driving meaningful economic contributions rather than where their headquarters is listed. He also noted that these relocations reveal strengths and gaps in Europe’s venture landscape. For instance, Newcleo’s decision to move to France reflects a strategic response to Europe’s nuclear funding opportunities.
Yet, as Mads pointed out, this is a symptom of the UK’s inconsistent commitment to nuclear energy, showing how governmental policies can shape or hinder, startup loyalty and long-term economic impact.
Join us for Expand North Star in Dubai - the world’s largest startup and investor connector event.
Discover the tech and investment opportunities fuelling growth across UAE, MENA, and APMEA regions at Expand North Star, inspired by GITEX GLOBAL, on 13-16 October 2024 at Dubai Harbour.
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