Is New York warming to European tech?

0:02Hello and welcome to the Sifted podcast. I'm your host Freya Prattie, Sifted's Associate Editor. Joining me today is senior reporter Anne Sraders. Hi Freya, nice to be back on the pod. So you are back in Berlin? I am, yes. It is nice and chilly here. It was actually quite warm when I was in New York, which I assume is the topic we'll be discussing today. Exactly, yes. I'm in my flat in London, as I usually am for the pod, so it's getting boring for listeners hearing that. So you're back from a trip to New York. You were there for two weeks. You were a tech reporter in the US for quite a few years before you joined us at Sifted, based in Berlin.

0:44So now you've been back, but with this lens of what does the American ecosystem think about us over here in Europe. So I'm really excited to hear. I think there's a perception, particularly in London where I sit that we're having our moments and everything's going great and we've got all these cool new neolabs etc but I imagine from the American perspective we are still obviously tiny so I'm really interested in this perspective how would you sum up the atmosphere there tech wise and then let's get into what they think about us yeah I mean I think it was quite interesting it was sort of like a weird homecoming for me as you said I was a tech reporter in in New York for a number of years with fortune magazine before and I actually went to an event called Primary VC Summit, which is like the big New York VC conference, I suppose.

1:29In September, I went there right before I moved to Berlin. And coming back this year, it was really interesting. It had changed a lot. It was much bigger than I remembered. And I think the biggest difference, which also sort of summed up my trip in a lot of ways, was that pretty much every single panel, every conversation was purely about AI. I think that's sort of the headline here for what my my experience was in the U.S. is it's, you know, extremely singularly focused on AI. You know, that is the big topic. And I think that's not totally dissimilar to Europe, but I think it, you know, it's to an extent where it's really, you know, it's everywhere.

2:08As I mentioned in my newsletter, there's, you know, tons of AI ads on the subway, which was a bit surprising to me because this isn't San Francisco, but, you know, it's certainly coming to the East Coast. It was definitely all that everyone was talking about in conversations and kind of around water coolers. And yeah, I think the atmosphere is very buzzy. It's extremely focused on this new set of companies that are raising just unheard of amounts of venture capital money. So yeah, certainly a buzzing atmosphere, I would say. I see ads for AI companies around Old Street in London and a few other areas around King's Cross perhaps as well, but it's not kind of capital wide.

2:47So it sounds like a different level over there. within AI being the buzzy sector it's not really a sector anymore is it sort of everything but which areas within that did you see most VC interest in and does that tally with what you see in Berlin at the moment? Yeah so I think there's you know there's some crossover I think of course everyone's talking about the Neo Labs and that's you know definitely true as you mentioned in London there's a lot of good examples in Berlin there's you know some companies like AI agent startup, N8N, which has raised a lot of money. So I think, you know, certainly AI is the topic kind of in the venture world at the moment, I would say.

3:24I would say the difference, and maybe this was also just based on who I was around and talking to, but I think Europe, I think, has a huge focus on deep tech at the moment, in particular things like defense. And I think that makes sense because they've historically underspent on defense. And now there's a bunch of companies popping up to work on that. But that's something that I didn't really hear as much in the U.S. I think it is still, you know, a big trend. But, you know, certainly I think, you know, things like personal agents was a huge topic that a lot of people brought up. Meta released theirs called Muse recently, which everyone was talking about and talking about kind of in scary ways about, you know, it kind of trying to make reservations for them.

4:03And, you know, if they couldn't get into some login, they would like create a new password for you. And it's just, you know, all this kind of, to me, seemingly dystopian stuff that's happening in the U.S. that I think isn't quite as big, year yet, but maybe it's coming. And as a brief shout out, I guess, if you're building a personal agents company, let me know. I'm curious to talk to you. But yeah, I think there are some some crossover, some differences. And I think, you know, for for the obvious reasons, I think the sort of bigger labs are really dominating the conversation in the US, of course, like OpenAI and Anthropic are, you know, sort of the the headline, almost every other day, it seems like in US media, you've published a number of pieces from your trip there.

4:44But one of them was an interview with US VC Left Lane, which really highlighted the interest over there in consumer companies, which feels very different to what we see in Europe or have seen for the last few years, a real decline in interest in consumer. So I was interested in that distinction. Yeah. So I talked to Harley Miller at Left Lane and they do companies in Europe and mostly in the US. But he's actually really bullish on the European consumer, which was a bit surprising to me. I think he was talking a lot about his interest in kind of AI roll-ups. So this is a trend we've talked about.

5:19I think you've reported on Freya about sort of this PE roll-up style of combining a bunch of services businesses and making them more efficient via AI. So he's interested in that type of play. He also mentioned stuff like energy and utilities to the extent that it helps kind of put more money in consumers' pockets. And then he's also quite bullish actually on like plain and simple consumer brands. They're invested in a Berlin startup called Holy, which is like an energy drink, basically, which, yeah, was a bit surprising, I think, to hear, you know, considering all this talk about these massive AI projects and, you know, billions and billions of euros invested into, you know, the likes of Ami Labs and all that kind of stuff.

6:00But, you know, they're still quite an interesting set of consumer companies that people are looking into even across the Atlantic. And this was also something that an Andreessen Horowitz partner talked to me about, in particular, stuff like personal agents, as I mentioned, also stuff with entertainment, AI entertainment, like short form video stuff. So, you know, definitely like a lot of avenues outside of, you know, just the big labs and the models here. So it was quite interesting to hear their perspectives. maybe on the the energy drink company we've reported on the idea that something like vintage is a real like safe haven company for vcs at the moment because it's not going to be too impacted by the way ai shakes out particularly with these big ipos coming perhaps these consumer on the face of it not very techie companies like that drinks company are another example of this like safe haven company away from the kind of what will AI do to the industry question?

7:04That, yeah, that was Harley's point. He basically said, you know, he kind of believes that consumer stuff is coming back in vogue because people need diversification. They can't, you know, have their entire portfolio kind of be, as he said, an index and all the stuff that might go through an adjustment period if like something bad happens with AI. So I think that is definitely how some investors are thinking. But again, you know, the dominant belief, I guess, in the US is like we just need to back as much AI as possible. So I think it'll be interesting to see how that ultimately makes us out if they are way too over levered to, you know, the AI trade.

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8:15S-T-R-I-P-E dot com slash billing. The big question then, what's the overarching feeling towards little old us over here in Europe? Well, let's not minimize it. No, I'm joking. Yeah, I think it is pretty mixed, I would say. I think a lot of people are, as I said, extremely zeroed in on San Francisco, frankly, and the AI boom happening out there. and there's not maybe as much attention put on Europe. As one VC said to me, he thinks his American peers are overlooking Europe right now kind of because of that. I also co-hosted a breakfast event with this Italian VCP 101 where some kind of select US investors in the room share that they're noticing an uptick in really strong European founders looking to build global startups from day one.

9:06It's kind of what we hear a lot now. And they were also really talking up European tech talent. They think there's a lot of really great talent, especially coming out of some of the research labs that we've seen here. And I think some of them do report kind of being more interested in exploring Europe now than maybe even a couple of years ago. And they were, you know, positive about how European founders also seem to be looking into expanding to the U.S. much earlier, even at the seed stage, which I think is a trend that we've noticed as well at Sifted. But I think, you know, the kind of big issues are still there.

9:39I think they talk about the regulatory environment and the employment market and, you know, questionable exit market for European startups. And I think, interestingly, one of them actually mentioned that if something like the EU Inc. proposal passed, which, you know, is sort of the proposal to create sort of a common business entity across European countries, like that would make them more interested in the continent. So quite, quite interesting discussions. And I think it's it is very mixed perspective. I think it's certainly not completely dismissive of Europe, but I think it just depends on who you talk to.

10:10And, you know, they are seeing kind of what we're seeing as well in terms of, as you mentioned, people leaving DeepMind. That is definitely something that came up a lot. So I think there is definitely a recognition that interesting things are happening in Europe at the moment. On DeepMind, you had a quote in one of your dispatches from Abby Myers from Bain Capital Ventures saying, everyone wants to find the next anthropic for every other domain. Does that mean they're looking at the European cohort of Neolabs, which a lot of them are connected to this former DeepMind group? Are they looking over here?

10:42Because that's something we really see as one of our successes at the moment or potentials. I think definitely. I mean, Abby also name checked some of the hot companies that we talk about, like Ami Labs, the world model startup founded by Meta's former chief AI scientist, Jan LeCun. And as you mentioned, former deep mine researcher David Silver's Neolab Ineffable in the UK. And it's raised loads of money from Sequoia and Lightspeed. So, you know, definitely getting the kind of marquee U.S. investor checks already. She also mentioned Wave, for example. So I think they are definitely paying attention to what's happening in Europe and they are writing checks into it, which is encouraging and is interesting.

11:19I think it'd be interesting to ask kind of the local investors and other founders, you know, how they feel about that. If, you know, I think that's kind of the big sort of debate or question of, you know, are we letting too much US money coming into these really critical and interesting companies popping up in Europe, but, you know, certainly they're able to write those huge checks. So we're definitely seeing that trend happening. The relationship is very interesting. We want their money, but we don't want too much of it because then we are no longer our own companies. It's such a dance. You had this interview with Matt Turk, investor at Firstmark, who said Europe is underrated among his peers.

11:56But I think that's he said that was an opportunity for him. Explain that thesis. That's right. I mentioned it briefly earlier, but I think his argument is that Europe's tech talent and educational ecosystem really lends itself well to this AI era. And it's also slightly cheaper than in the States. I think he said a tad compared to like two to three X in past years. But, you know, now we're seeing kind of some of these bigger companies popping up like Lovable, Lagora, Pigment. There's sort of a richer ecosystem here than there was before is kind of what he was saying. And I actually also asked him, you know, how are AI startups in Europe different to those in the U.S., if at all?

12:35And he actually said, well, you know, when you're a top sort of premium company in Europe, you know, I don't really think there's much of a difference between the U.S. and Europe. So I think they are seeing similar quality. They're seeing, you know, companies that they are quite interested in. You know, FirstMark has been an investor in Lagora, for example. And so, you know, they're pretty active as well in Europe. I think it is sort of interestingly seen as sort of this, you know, underrated trend, I think, to get into some of these AI companies in Europe. And that's certainly what he was saying is, you know, he's kind of glad almost that people are focused too much on San Francisco because that leaves the market a bit more open for him.

13:11You also sat down with Anish Acharya, partner at Andreessen. What did he have to say about Europe? Yeah, he says Andreessen Horowitz wants to invest in more European startups. You know, they've been pretty active in some of the big names, like their investors in Mistral, the OpenAI Challenger in Paris, and they're also investors in Revolut. So they certainly have kind of a good portfolio already. And he says, you know, they want some more. So they had an office here in London. I think it opened in 2023. It closed about two years later. What did he say about that? Will they reopen it if they are interested in Europe?

13:48Yeah, it closed about a little less than two years after it opened. And I think while he's seeing interesting companies in Europe and he says they want to invest more, he said there's no plans to reopen a European office anytime soon. So we'll have to wait a bit more to see if they decide it's worth it down the line. Even so, his point actually about Europe was slightly contrarian to what I was hearing in New York. I think a lot of investors were, as I said, really happy about how European founders want to think globally from day one and want to move even earlier to the US. But Anish was saying, the opportunity for Europe essentially is to embrace what's unique about Europe.

14:27And he was saying it feels like that's what this generation of really good European companies are doing. They're unapologetically European, he said. and going after markets and opportunities where they have a right to win. So he really emphasized Europeans using AI to address problems in their home markets that they kind of, you know, uniquely understand. And he said, you know, that's what I would like to see more of, like what's something that doesn't make any sense outside of the context of Europe for the European consumer. So I think that was kind of an interesting perspective, just a bit different to what some of the other folks were saying that, you know, he actually likes the fact that companies want to build for Europe.

15:03and you know there certainly that certainly makes sense with the companies they've invested in of course Mistral is is kind of you know framing itself as this big sovereign AI player in France and in Europe and and Revolut also has really dominated the market in the UK so I think that kind of aligns with with what we're seeing in their bets in particular. I saw that that quote from him saying you should be unapologetically European was being shared around on X quite a lot I think people were embracing that quote and liking that he said that. I noticed that quite a lot. Can you sum up for us then the overarching feeling you came back to Europe with in terms of our relationship with America?

15:43I think it seems like it is really a story of one thing in particular. It's AI. And no matter where AI is being built, I think investors want to be in it. And we see that with the interest in, you know, the former deep mind talent coming out and starting their own companies. There is a lot of interest in those types of investments. And I think there are, you know, people are looking at Europe, I think, not so much as, oh, this is a European startup, but, you know, oh, this is ineffable or this is, you know, Ami Labs and wanting to get into that company almost, you know, regardless of where it is.

16:17I think when you talk about the market geographically, there still seems to be a lot of hesitancy around some of the points that we talked about earlier, right? Like the regulatory environment, you know, exit, questionable exit market. So I think in some ways it kind of was more optimistic than I was expecting, but also a bit less in other ways. I think when you talk about general, you know, interest in Europe, a lot of folks are not really looking there at the moment. But, you know, the ones who are certainly writing a lot of checks into these companies. And I think we will probably see more U.S.

16:52investors coming into European companies. We've, you know, had some data sifted showing that, you know, there was a huge number of U.S. investors participating in funding rounds so far in 2026 over here. So I definitely think it's a bigger trend, but maybe, you know, not the big focus at the moment for a lot of these U.S. players. Yeah, I like that point you've just said. And I think you had in the interview with Matt Turt from First Mark that when a company becomes good enough or big enough, it stops being the European company. It becomes just the company, which, yeah, I think I've seen that happen.

17:27It's a good point. I think that's all we have time for. But this is a trend or a relationship that you'll keep following closely, I imagine. Definitely. And if you listeners, if you want to follow Anne's reporting, sign up to her newsletter up round, which goes out every Friday. We'll drop a link to that in the episode description for this pod. As always, listeners, please rate, review and share the podcast. And this episode was produced by Aditi Mishra.