Welcome to ICYMI – a weekly snapshot of European news stories that have given me pause for thought. ICYMI is a chance for you to go beyond the front-page headlines and find out what other stories may be worthy of your attention. This week:
- Cathay Innovation announces record-breaking €1bn AI investment fund
- Euro supermarket group takes on the leading US cloud companies
- Concerns that the Netherlands is not ready for the full impact of AI
So how is the European tech industry faring this Spring? It seems that the investment cash is rolling in for Paris-based VC firm Cathay Innovation, who this week announced the closure of a huge €1bn multi-stage fund dedicated to AI.
It is the firm’s third fund and marks its entrance into the small pool of VCs in continental Europe to have passed the billion-euro threshold. Swedish investor EQT Ventures raised a €2.4bn growth fund and a €1.1bn early-stage fund in 2022; in France, Atlantic Vantage Point (AVP) recently announced it has nearly closed €1bn of a €1.5bn growth fund.
Cathay’s new fund will back around 30 startups from early to late stages. About half of the fund will be deployed in Europe and the remainder in the US and Asia. Cathay is targeting startups applying AI to digital health, fintech, consumer services, mobility and energy.
It has already deployed €235m to back 14 companies, half of which are European. They include French AI assistant for doctors Nabla, biotech Bioptimus and materials discovery startup Entalpic.
Ironically in the same week, Meta’s chief AI scientist, Yann LeCun, provided a more sober perspective on the continent’s startups. In a post on X picked up by Techcrunch he argued that an “inferiority complex” among European media and investors is holding back the continent’s tech industry.
“Perhaps more importantly, there was a similar inferiority complex on the part of investors, which made them less willing to take risks when the mere possibility of an American competitor would rear its head,” said Yann LeCun.
Yet on a more positive note, LeCun believes that this mindset “has been changing over the last few years.”
Supermarket sweeps into the cloud
One name that you would not necessarily expect to crop up on a list of European tech innovators is the budget supermarket chain Lidl. Yet as Wirtschaftswoche reports the company, through its parent company Schwarz Group, it is making significant strides in the cloud computing sector.
Its IT division, Schwarz Digits, initially developed for internal purposes, has evolved into a standalone entity offering cloud and cybersecurity services. With a workforce of 7,500 and annual revenues reaching €1.9 billion in 2023, Schwarz Digits emphasizes data sovereignty by ensuring all data is processed and stored within Germany and Austria. This focus on stringent data protection has attracted notable clients, including SAP and Bayern Munich.
This week has also seen a slew of stories shout the cultural and wider global impact of AI. A new study by Dutch researcher Alex de Vries-Gao (Vrije Universiteit Amsterdam) reported in NOS Nieuwsuur estimates that artificial intelligence (AI) systems consumed between 11% and 20% of the total global electricity used by data centres in 2024. The International Energy Agency warns data centre energy usage could more than double by 2030, with AI as a major driver.
Also in the Netherlands The Sociaal-Economische Raad (SER), the Netherlands’ primary advisory body to the government, cautions that the country is ill-prepared for the transformative effects of artificial intelligence (AI) on the labour market. In a recent report picked up by FD, SER highlights insufficient investments in reskilling and upskilling initiatives, which are crucial to ensure that future jobs remain engaging and ‘humane’. SER Chairperson Kim Putters emphasises the urgency of addressing this issue, especially given the tight labour market.
On a more positive note Handelsblatt has compiled a list of the 18 most promising startups in Europe. While the list spans multiple industries, a common thread is their commitment to leveraging technology to address contemporary challenges. Among those who receive a name check are quantum startup Planqc and the automotive hopeful Deepdrive.
Brighter economic future for the UK?
Finally, after a turbulent few years, are good times ahead for the UK economy? Chancellor Rachel Reeves will doubtless have been cheered this week by the International Monetary Fund (IMF) reported by The Guardian, which has upgraded the UK’s expected growth rate this year to 1.2% from 1.1%, and reassured the nation that an “economic recovery is underway.”
However, looking ahead, the IMF also warns that trade tensions linked to US tariff plans will reduce UK economic growth next year.
It expects global trade tensions will wipe 0.3 percentage points off growth for the year but is still predicting growth will increase to 1.4% in 2026.
The IMF may also have thrown Reeves a political bone too. It argues it should refine her fiscal rules to prevent the need for emergency spending cuts. This may give the government some leeway to pull back from some of its more controversial plans such as means-testing winter fuel payments for pensioners.
