<div id="readability-page-1"><span></span><div id="ArticleBody-InlineImage-107413999"><div><div><p>From left to right, Accel general partners Harry Nelis, Sonali de Rycker, Andrei Brasoveanu, Luca Bocchio, and Philippe Botteri.</p><p>Accel</p></div></div></div><div><p>Venture capital firm Accel said Tuesday it's raised $650 million for its eighth fund targeted at investing in European and Israeli early-stage startups, in a sign the venture capital market may be showing signs of a recovery.</p><p>The firm, which made prolific early bets on the likes of social media app <span id="RegularArticle-QuoteInBody-1">Facebook<span><span id="-WatchlistDropdown"></span></span></span> and music streaming service <span id="RegularArticle-QuoteInBody-2">Spotify<span><span id="-WatchlistDropdown"></span></span></span>, said in a press release it raised the fund to &#34;support ambitious founders building global category-defining companies&#34; in Europe and Israel.</p><p>Harry Nelis, general partner at Accel, said the European tech ecosystem in particular has evolved drastically in the nearly 25 years since it opened up its London office as a separate fund in 2001.</p><p>&#34;The environment has dramatically changed since then,&#34; Nelis told CNBC. &#34;People would ask us, can Europe generate $1 billion outcomes?&#34;</p></div><p>&#34;Now, there are more than 360 venture-backed unicorns across Europe and Israel, and the whole ecosystem has evolved from one that raised about $1 billion in capital to now $66 billion in 2023.&#34;</p><h2>Talent 'flywheel'</h2><div><p>Nelis said Europe is producing a more promising talent pool now thanks to a &#34;flywheel&#34; of experienced employees from other companies that have hit unicorn status becoming founders of new companies themselves.</p><p>A report released by the firm last year citing Dealroom data showed that employees of 248 venture-funded unicorns in the region have fueled 1,451 new tech startups across Europe and Israel.</p><p>Nelis noted that there are emerging geographies in Europe that investors aren't paying as much attention to, but that are showing huge potential in technology innovation.</p><p>He called out Lithuania and Romania as examples of countries where major technology successes are emerging. In Lithuania, for example, secondhand marketplace Vinted is now a $4.5 billion &#34;unicorn&#34; company, while in Romania, UiPath has attracted a $10.9 billion valuation in the public markets.</p><p>Accel expects to invest in between 25 and 30 companies from its latest early-stage fund.</p></div><div><div id="Placeholder-ArticleBody-Video-107404094"><div id="InlineVideo-0"><div><p><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107404096-anand.jpg/query-aD00MjImdj0xNzEzNTUyOTA5JnZ0Y3JvcD15Jnc9NzUw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="750" height="422" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107404096-anand.jpg/query-aD00MjImdj0xNzEzNTUyOTA5JnZ0Y3JvcD15Jnc9NzUw"/><span></span><span></span></p></div></div></div></div><div><p>The launch of Accel's eighth European fund comes as funding for high-growth tech startups has plunged sharply in the past two years.</p><p>That's as macroeconomic uncertainty caused by Russia's full-scale invasion of Ukraine, coupled with higher interest rates from central banks, has caused something of a reset in technology valuations.</p><p>Against this backdrop, Accel's ability to raise such a large fund for European and Israeli ventures suggests the grim environment for technology may be showing signs of easing.</p><p>The firm managed to close its eighth fund for the region in just a couple of months, according to a source familiar with the matter speaking on condition of anonymity, since the details aren't public.</p><p>It comes after Plural, a venture capital firm established by the founders of Wise, Skype and Songkick, raised its own 400 million euros ($431 million) fund in January to back technology startups in Europe.</p></div><div><p>Climate-focused VC firm World Fund closed a 300 million euro fund in March.</p><p>Magnus Grimeland, CEO of seed investor Antler, told CNBC earlier this year that early-stage venture activity and private company valuations have been inching up since the start of this year — and he expects Europe to follow the trend.</p><p>&#34;It's on its way back,&#34; Grimeland said in an interview at Antler's London office in March. &#34;We see a lot more activity in the portfolio. In New York, we made eight investments in January, and seven of them already have follow-on investments. The U.S. tends to always act quicker.&#34;</p></div><h2>Europe's AI opportunity</h2><div><p>Even as startup funding has waned, though, excitement about artificial intelligence has led to a rush of capital flowing into startups focusing on AI.</p><p>For example, the likes of OpenAI, Anthropic and Cohere have raised billions of dollars.</p><p>Nelis suggested that Accel doesn't want to get distracted and focus solely on a hyped area like AI with its latest fund.</p><p>Instead, he said, the firm will focus on using its &#34;prepared mind&#34; philosophy — which encourages deep focus and a disciplined and informed approach to investing — to approach its next startup bets.</p><p>&#34;We're lucky that with DeepMind here in London and with Fair [Facebook AI Research] in Paris, there's at least two big centers that have great AI expertise,&#34; Nelis told CNBC.</p><p>&#34;Together with smaller centers across Europe, we think that Europe is extremely well-positioned to create some important AI companies, the same way we created important enterprise businesses.&#34;</p></div><div><div id="Placeholder-ArticleBody-Video-107414052"><div id="InlineVideo-0"><div><p><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107414058-1715613861401-1715613661088-clara_shih_aanhpi_2024__changemaker__1080p_.jpg/query-aD00MjImdj0xNzE1NjEzODY1JnZ0Y3JvcD15Jnc9NzUw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="750" height="422" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107414058-1715613861401-1715613661088-clara_shih_aanhpi_2024__changemaker__1080p_.jpg/query-aD00MjImdj0xNzE1NjEzODY1JnZ0Y3JvcD15Jnc9NzUw"/><span></span><span></span></p></div></div></div></div><div><p>Nelis said that the way Accel thinks about AI can be broken up into three layers: the &#34;foundation model&#34; layer, referring to algorithms underpinning advanced AI systems, the &#34;tooling layer,&#34; which helps applications that sit on top of these algorithms run, and the &#34;application layer.&#34;</p><p>He added that he thinks Europe will excel when it comes to AI application companies, as opposed to foundation models where U.S. technology giants have a big advantage.</p><p>&#34;My expectation is Europe is going to generate some really interesting AI application companies,&#34; Nelis told CNBC. &#34;The foundation layer is a layer where at least for now the U.S. incumbents currently have a real advantage — they have the advantage of compute power, large datasets, and lots of capital.&#34;</p><p>The firm has previously invested in Synthesia, a $1 billion generative AI startup backed by U.S. chipmaker Nvidia that helps companies make presentations with AI-generated avatars.</p><p>Victor Riparbelli, CEO and co-founder of Synthesia, told CNBC his company partnered with Accel last year as the firm's team knows &#34;how to strike the right balance between visionary and useful technology.&#34;</p><p>&#34;Over the last year, there have been a lot of cool demos and perhaps too much frothiness in the AI industry,&#34; Riparbelli told CNBC via email. &#34;It was really important to us to partner with a fund that is as focussed as we are on delivering real, tangible business value.&#34;</p></div></div>

Early Facebook investor Accel raises $650 million fund to back European and Israeli startups