December 6, 2023
European investors are grabbing popcorn for OpenAI’s new ‘series’, but are scared of the consequences TechCrunch

With the OpenAI saga playing out across the pond, the European tech community has been waiting for the latest updates as if a new series of “successions” were about to arrive. In fact, events sometimes resemble a Greek tragedy, with the gods fighting atop Mount Olympus while we mere mortals watch. To get any play with just a few large-scale AI startups, like Germany’s Aleph Alpha and France’s Mistral (London’s DeepMind was long ago absorbed into Google’s Borg), we’re grabbing popcorn and turning to this silicon Valley watching the unexpected episode.

I checked with a few keen tech observers, many of them venture capitalists, but almost no one went on the record, perhaps for fear of attracting the attention of some Valley AI god in full war-mode.

One UK-based investor said the drama would have a positive impact on Europe’s emerging AI sector.

“This is great news for startups like Mistral, which can probably bring some good employees on board and integrate with OpenAI. This won’t make much difference in the short term for AI companies built on OpenAI, but it will mean the market will become homogenized, especially if they lose direction and focus.

Another pointed out that after OpenAI’s highly praised demo day, it was seen as “the most extraordinary kind of business”, but now looks like “a complete crap show”. He compared it to the WeWork debacle, “but at least it doesn’t have any proper VCs, because it’s a mix of non-profits and for-profits and no one understands how it works.”

One European VC predicted that the events will have an impact on all term-sheet negotiations: “I would expect founders to become more resistant to board control over CEO replacement and other similar terms. They would obviously ask ‘If it could happen to Sam Altman, why should I assume it won’t happen to me?’

On an even more practical level, a lot of European applied AI startups rely heavily on OpenAI, which (no matter what one says) is a cut above most alternatives. It appears that the turmoil at OpenAI is pushing business into Microsoft’s hands and could have huge implications for companies that rely on OpenAI’s platform… “especially if that company is in or with the Microsoft ecosystem.” There is competition out there,” he said.

Another investor said, “From a platform POV, it’s a disaster.” “So many companies are already working with OpenAI, it’s like Facebook, Twitter, etc. The API changes frequently and possibly for the worse.”

There were also complaints about European regulation: “As we have seen with the heavy-handed regulation coming from the EU level, the government will not save us. We need to have more AI champions at the local level. There is still time, but it is not clear how much.”

Others were more upbeat about the turmoil buying useful time for European startups: “Which is a good thing for the European generation of AI startups because it gives them time to breathe and recalibrate before the next shockwave.” Is.”

Ultimately, a brave man came on record as Steve Schlenker, co-founder and managing partner of DN Capital.

One of his concerns is that access to the world’s most successful LLMs will shift away from the average startup – “like in Europe” – and towards startups and researchers, mostly local to the US, who have yet to pass on something new. There are well-defined “screening” processes, such as those defined by the controversial board at OpenAI.

Furthermore, if OpenAI’s best and brightest people become full-time employees of a paid American mega-company like MSFT, “the ability of the AI ​​movement to remain open to all at a reasonable price will decline precipitously.”

Meanwhile, the upside to all this chaos is that it’s playing out publicly on social media, primarily on Twitter/X. A Warsaw-based VC told me: “It’s very exciting and unique that so much of this bullshit show is happening publicly on Twitter. This is not possible in Europe!”


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