Shawn Tan, CEO, Skymind
When we decided to launch our first investment fund for AI companies last year, we had our heart set on Europe and specifically the UK.
There were many reasons for this. London’s strength as a location for raising capital and tax incentives is a mainstay of its competitive offer for business. Access to diverse talent and investment, favourable regulation, and a solid and well-established technology hub are other attractive enticements- with the added competitive advantage of boasting a global friendly time zone that overlaps with business hours in Asia, Europe and the rest of the world. With all this going for Britain, it should come as no surprise that it is now the home of more tech unicorns (startups valued at over $1 billion) than anywhere else in Europe.
The UK is also widely considered the premier European hub for artificial intelligence. London alone is one of the world’s leading cities for AI jobs creation. Ahead of New York and outside Asia, it ranks 8th overall in the world and ahead of any other nation in Europe. London is also the best European location for AI talent. With 13 universities in the capital offering AI-related degrees, the city is an epicentre for growing talent and attracting it.
A study by AI research organisation JF Gagne also confirmed that the UK has the world’s second-highest concentration of high-profile AI professionals after the US. With so much at stake, it’s little wonder that the government is keen to protect the nation’s AI crown. Later this year, the Digital Secretary will unveil a new plan to make the UK a global centre for the development, commercialisation and adoption of responsible AI, ushering in a new golden age of innovation.
This new AI strategy is expected to focus on economic growth through the widespread use of AI technologies; ethical, safe and trustworthy development of responsible AI; and resilience in the face of change through an emphasis on skills, talent and R&D. It is not a surprising development since the UK is renowned for its historical support for the industry.
After all, this is the birthplace of Alan Turning and the Enigma Code. Among his achievements were developing the theoretical underpinning of the world’s first computers and laying the groundwork for the development of artificial intelligence. Now, the Alan Turing Institute is the national institute for data science and artificial intelligence. They undertake research tackling some of the biggest challenges in science, society and the economy, and collaborate with universities, businesses and public and third sector organisations to apply this research to real-world problems.
This strong support for the sector in Britain is what makes it an attractive springboard for making further investments into Europe, which is leading the way in developing AI policies that are the first of their kind to introduce regulation to the sector. The EU’s approach is unique. Over in the U.S., tech firms are mostly left to themselves, while in China, AI innovation tends to be government-led and deployed as part of citizen surveillance. Meanwhile, Europe aims to maximise the potential of the industry while maintaining the privacy laws of the individual.
The growth of the sector is seeing exciting developments in the same areas that VCs are looking to invest in: Medtech, Agritech, transport tech, and Know Your Customer (KYC) solutions.
Europe is an attractive destination for MedTech as it is a much more liberal and attractive market than the U.S.. When launching new medical devices and technological developments, there tends to be government support through investment in research and science projects, alongside world-class academic institutions. Many of modern medicine’s most lucrative innovations began in Europe, including the PET-CT scanner and a range of spinal treatment devices.
As for Agritech, the agricultural sector is one of the vital land users in Europe, heavily influencing the landscapes of rural areas. Specifically, meadows and cultivated land together make up 39% of Europe’s land cover. Agritech startups can completely reinvent the future of food production, using predictive software, weather sensors, and drones scanning entire plots of land. The pandemic has affirmed the fragility of the global food system and emphasised the need for innovative solutions in farming and agriculture. The adoption of new technologies by EU farmers have kept European agriculture competitive in a global world.
When it comes to building and scaling these startups, finding entrepreneurial talent is not hard, but partnering with top talent is much more challenging. Top talent can now pick and choose from many different investment sources, making a positive relationship with them more important than ever. However, the relationship between entrepreneur and investor are evolving in any case: these days, venture capital is moving away from simply placing money into a company and developing towards a ‘venture building’ model.
This ‘venture building’ approach requires much more from VCs than capital alone: it involves working alongside the founders to supply them with an entire suite of service support, from financial backing to corporate client introductions and talent acquisition. With this model, it becomes even more critical that values are aligned between parties.
Looking ahead to the future challenges society will face on all fronts, it is clear that AI will play an enormous role in revolutionising entire industries. Due to the strong government support, unique regulatory frameworks, and access to talent, Europe increasingly appears to be the most attractive place for forward-thinking investors.