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

As the OpenAI saga unfolds across the Atlantic, the European tech community awaits the latest updates as if a new series of Succession is about to be released. Indeed, the events sometimes resembled a Greek tragedy in which the gods fought atop Mount Olympus, before the eyes of us mere mortals. With only a handful of large-scale AI startups such as Germany’s Aleph Alpha and France’s Mistral to get drama (London’s Deepmind was absorbed by Google Borg a long time ago), we grabbed the popcorn and watched this unexpected episode of Silicon Valley. .

I interviewed a few avid tech watchers, many of whom were venture capitalists, but almost none wanted to go public, perhaps for fear of attracting the attention of an AI god from the valley in full combat mode.

A UK-based investor argued that the drama would have positive effects on Europe’s nascent AI sector.

“This is great news for startups like Mistral, who can likely poach good employees and catch up on Open AI. For AI companies based on Open AI, this will not lead to major changes in the short term, but it will mean a homogenization of the market, especially if they lose their direction and focus.

Another pointed out that after OpenAI’s much-lauded Demo Day, it was considered “the most extraordinary type of company” but now looks like “an absolute shit show.” They compared it to the debacle that was WeWork, “but at least there’s no real venture capital in this one, because it’s a hodgepodge of nonprofits for-profit and for-profit and no one understands how it works.”

One European VC predicted that the events will impact any negotiations over terms: “I would expect founders to become more resistant to board control over CEO replacement and other similar terms . They will clearly ask, “If this can happen to Sam Altman, why should I assume it won’t happen to me?” »

On an even more practical level, many European applied AI startups rely heavily on OpenAI, which is (whatever anyone says) head and shoulders above most alternatives. The unrest at OpenAI appears to be pushing the company further into the hands of Microsoft and that could have some pretty big implications for companies that rely on the OpenAI platform… “especially if that company is competitive with or outside the ecosystem Microsoft,” they stressed.

“From a platform perspective, it’s a disaster,” said another investor. “So many companies are already working with OpenAI, it’s like Facebook, Twitter, etc. The APIs are still changing and maybe worse.”

Some also complained about European regulations: “As we have seen with the harsh regulations coming from the EU, the government will not save us. We need more AI champions at the grassroots level. There is still time, but we don’t know how much.

Others were more optimistic about the turmoil which bought time for European startups: “Which is a good thing for European startups because it gives them time to breathe and recalibrate before the next shock wave. »

Finally, a brave soul in DN Capital co-founder and managing partner Steve Schlenker has been officially declared.

One of his concerns is that access to the world’s top LLMs will shift away from average start-ups – “like the ones in Europe” – and towards mostly local start-ups and researchers. in the United States, which have succeeded in new -be defined as a “selection” process, such as that defined by the controversial OpenAI board of directors.

Additionally, if OpenAI’s best and brightest become full-time employees at a paid US mega-corporation like MSFT, “the AI ​​movement’s ability to remain open to all at a fair price will rapidly diminish.”

Meanwhile, the upside of all this chaos is that it’s happening publicly on social media, much of it on Twitter/X. As one Warsaw-based VC told me: “It’s pretty exciting and unique that a lot of these shit shows happen publicly on Twitter. Not possible in Europe!

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