When it comes to building GenAI startups, Paris has pulled ahead – and it's not especially close

Just a few days before Chancellor Rachel Reeves made her Autumn Budget announcement, Sifted released a piece of research tracking startup investment across Europe which was in its own way every bit as significant for the British tech ecosystem.?

Zooming in on ‘young’ European startups founded in 2023 and 2024, Sifted reporters Federico Scolari and Jonathan Sinclair analysed data on 686 funding rounds. Some of their conclusions should come as no surprise: more than half of that funding went to startups working on AI, for example. Two data points, however, jumped out at us, both of them ominous for the UK.

First, although the overall number of deals for British startups is well ahead of every other European country, more funding overall is now flowing to France… and not by a narrow margin. Sifted’s analysis shows that French startups from this cohort received over €1.6 billion of investment, four times more than the circa €400 million for British ones.?

Second, among the top 10 funding rounds for European startups this year, six were French, two were Swiss, and one each was Swedish and Danish. None of the top 10 rounds went to a British startup.?

It’s not especially difficult to understand how this happened: all of Europe’s best-funded and fastest-growing AI startups are now in France. This is partly an accident of timing, with a wave of French tech talent returning home, having picked up experience in Silicon Valley and London. It’s also not every day that a company that’s only 18 months old pulls in €600 million in funding in a year, as Mistral AI has done. With fewer supersized AI rounds in the mix, the picture could look very different.?

It should still come as a shock to British tech and policy leaders to find themselves falling behind their neighbours across the Channel when it comes to building GenAI companies, a sector that many in the UK assumed would be an area of strength.

London still holds the crown for Europe’s largest and best-funded tech ecosystem, but this achievement may turn out to be less durable than many assume. If the next generation of AI unicorns are built elsewhere, the picture could look very different in just a few years’ time.

For more, check out the complete article over at Sifted.