If we knew that 17-23% of the investment of European venture capital is focused on Artificial Intelligence (AI) and Deep tech, we would surely look at it with different eyes. These are companies that use pioneering technologies to solve complex problems: we are talking about artificial intelligence, for example, but also robotics, autonomous vehicles, computer vision, voice recognition, augmented reality or virtual reality. Deep tech, therefore, covers so many areas of action that it is omnipresent in all sectors, including finance, transport, e-Commerce, gaming or HealthTech.
The map began to be drawn in 2012 with 4 million euros invested. As of today, according to the report Deep tech, Artificial Intelligence and Venture Capital in Europe, investment has soared to 4.6 billion euros, an amount invested in the first three quarters of 2017. The data, analysis and investment platform for technology companies and venture capital, Dealroom.co, has about 3,000 companies cataloged under this umbrella.
WHICH COMPANIES ARE RECEIVING THE HIGHEST INVESTMENT ROUNDS?
The first, Roivant Sciences, a Swiss biopharmaceutical company founded in 2014, received an investment of 1.1 billion dollars from SoftBank and Founders Fund in August 2017. Last September, Roivant presented Datavant to improve clinical trials with artificial intelligence and will focus on accelerating the discovery, development and commercialization of new drugs through machine learning.
The second company with the highest investment received, Improbable, is a British gaming company that focuses on large-scale simulations in the cloud, enabling unprecedented virtual worlds in scalability and complexity. It raised 502 million dollars in May 2017. Creator of the SpatialOS development platform, it has offices in London, Washington DC and San Francisco.
By country, the United Kingdom clearly stands out, in the period 2012-2017, with 839 financing rounds and a total of 3.4 billion euros invested.Thirdly, the fintech British Oaknorth Bank captured, in two operations at the end of 2017, a total of 318 million dollars from The Clermont Group, Toscafund, Coltrane and GIC. In statements to the media, the company states that it is the financing round fintech highest in the United Kingdom. The platform behind it, ACORN Machine, focuses on improving the global SME lending market through machine learning and artificial intelligence.
WHICH ARE THE MOST ACTIVE INVESTORS?
Companies that are developing products and services linked to these areas of knowledge are permanently observed not only by venture capital entities but in general by all sectors of the economy.
The 5 most active investors in the deep tech scene in Europe are BPIFrance, Kima Ventures, High-Tech Gründerfonds, Local Globe and Horizons Ventures.
The first four are European, and Horizons Ventures, based in Hong Kong, stands out, specializing in investing in startups with disruptive technologies. Its portfolio includes Improbable, N26, Windward, Teralytics, Jobspotting, and Summly. It previously held Deepmind, which was acquired by Google in 2014.
As for corporations, three of the most active companies, Siemens, Bosch, and KFW, are headquartered in Germany. Also noteworthy are Crédite Agricole (Montrouge, France) and Cambridge Innovation Capital (Cambridge, UK).
WHICH EUROPEAN FUNDS ACCOMPANY THE LARGE ROUNDS?
Which European investors are present in the largest rounds of Europe-based deep tech projects? Oaknorth Bank, UiPath and N26, are the three companies that have raised the most investment volume involving European investors on their board.
Large investment rounds with European investors
UiPath is an RPA (Robotic Process Automation) software company that allows businesses to configure robots for specific processes. Created in 2005, it began its international expansion in 2015 when it raised its first seed round. Currently, it has offices in London, New York, Paris, Bucharest, Bangalore, Singapore, Tokyo, Munich, Amsterdam, Dubai, and Washington.
N26 is a German bank based in Berlin with a European banking license that offers its services in 17 Eurozone countries. The main objective is to invest in product development, doubling its focus on the use of artificial intelligence to improve personal banking.
MAIN ACQUIRERS OF DEEP TECH STARTUPS
The most relevant sales of European startups, based on the transaction amount, have been carried out by Chinese and American companies.
Mobileye, based in the Netherlands, is a global leader in the development of computer vision technology in the automotive sector and was bought by Intel Corporation last August for 15.3 billion dollars.
Skyscanner, based in Edinburgh, is a global search engine that compares flights, hotels, and car rentals and was acquired by Ctrip, China's largest travel portal, for 1.4 billion pounds (about 1.9 billion dollars) at the end of 2016.
Shazam, based in London, applies artificial intelligence techniques to identify music and was bought by Apple, in a deal valued at 400 million dollars, last December.
If we go back to 2014, Deepmind (UK) and Clear2pay (Belgium), both valued at around 550 million dollars, were bought by Google and FISGlobal, respectively.
European funds are also in search and capture of these companies. Last February, the Swiss fund Roche Venture Fund bought Flatiron Health, a New York-based startup that analyzes oncology data in real time to help cancer patients. The purchase closed for 1.9 billion dollars.
According to Dealroom.co's analysis, investment per inhabitant in the United States is still eight times higher than that carried out in Europe (excluding buyouts, secondary transactions, debt, loans, and ICO's). Figures range from 30 dollars per capita in Europe (20 dollars if we talk about Spain) compared to 250 dollars in the United States or exceeding 350 in Israel. A clear opportunity in Europe for growth.
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