European investors grab the popcorn for OpenAI’s new ‘series’, but fear the fallout

With the OpenAI saga playing out across the pond, the European tech community is waiting for the latest updates as a new series of “Succession” is about to drop. In fact, the events sometimes resemble some Greek tragedy about the Gods fighting it out, atop Mount Olympus, while we mere mortals watch. With only a few big AI startups like Germany’s Aleph Alpha and France’s Mistral to take any drama from (London’s DeepMind was absorbed by Google Borg long ago), we grab the popcorn and watch this unexpected Silicon stage. Valley.

I checked with some keen technology observers, most of them venture capitalists, but almost no one would go on the record, perhaps for fear of attracting the attention of some Valley AI God in total war mode.

A UK-based investor stated that the drama will have a positive impact on the new AI sector in Europe.

“This is good news for startups like Mistral, which can pick up some good employees and get to OpenAI. For AI companies built on OpenAI it doesn’t make big changes in the short term. that term, but means to homogenize the market, especially if they lose direction and focus.

Another pointed out after OpenAI’s much-lauded Demo Day, it was seen as “the most amazing kind of business,” but now it looks like “an absolute shit show.” They likened it to the WeWork debacle, “but at least there were no suitable VCs in it, because it was a mix of nonprofit and for-profit and no one understood how that would work.”

A European VC predicted that the events will have an impact on all the term-sheet negotiations: “I hope that the founders will be more resistant to the control of the board in the replacement of the CEO and other similar terms. It is clear that they ask ‘if it can happen to Sam Altman, why should I think it can’t happen to me?’”

On a more practical level, many applied AI startups in Europe rely heavily on OpenAI, which is (whatever anyone says) head and shoulders above most alternatives. The OpenAI mess seems to be pushing the business further out of Microsoft’s hands and could have far-reaching implications for companies that rely on the OpenAI platform…

“From a platform POV, it’s a disaster,” said another investor. “Many companies are already working on OpenAI, like Facebook, Twitter, etc.

There are also grumblings about European regulation: “As we have seen with the heavy regulation coming from the EU level, the government cannot save us. We need to have more AI champions locally. There is still time, but It’s not clear how many.”

Others are happier about the frenzy of buying useful time for European startups: “It’s a good thing for European gen AI startups because it gives them time to breathe and calibrate. -again before the next shockwave.”

Finally, a brave soul in the form of DN Capital Co-founder and managing partner Steve Schlenker continues the record.

One of his concerns is that access to the world’s most successful LLMs will shift away from typical start-ups – “like those in Europe” – and towards startups and researchers, mostly local to the US, who passed on some new ones. -defined “screening” process, as defined by the controversial OpenAI board.

Furthermore, if the best and brightest from OpenAI continue to be full-time employees of a paid US mega-company like MSFT, “the ability of AI activity to remain open to all in one fair prices will quickly decline.”

Meanwhile, the height of all the chaos is that it plays out publicly on social media, mostly on Twitter / X. As a Warsaw-based VC said: “It’s exciting and amazing that a lot of this shit show is happening in public on Twitter. Can’t do it in Europe!”

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