Next ‘Google-scale’ start-up will be an A.I. firm from Europe, not the US, top VC says

The next "Google-scale" technology company is likely to come from Europe and will be an artificial intelligence (AI) start-up, a top venture capitalist told CNBC on Thursday.

Siraj Khaliq, an ex-Googler and current partner at London-based venture capital fund Atomico, said European companies are taking a lead in so-called "deep technology" - which includes AI.

AI assistants can provide alternatives and present tradeoffs while human asset managers ultimately decide the course of action.
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AI assistants can provide alternatives and present tradeoffs while human asset managers ultimately decide the course of action.

"Never underestimate the value of innovation … we will see some interesting companies coming out of Europe and the ambition level now exists to take those to those almost Google-scale outcomes, whereas perhaps there was more of a temptation to be acquired in the past," Khaliq told CNBC in a TV interview.

"We are starting to see founders and backers with that patience to build truly longer term outcomes."

Europe has been a hotbed of AI companies that have been eventually acquired by large U.S. technology giants. For example, Google acquired U.K. AI start-up DeepMind in 2014, which has now become an important part of its efforts with the technology, and Microsoft purchased British firm SwiftKey in 2016.

Khaliq said the fact that DeepMind is a British company and has most of its team still in London, is a "clear example that the innovation is coming from Europe".

But at the same time, Europe has struggled to produce technology start-ups with valuations in the hundreds of billions of dollars. German software firm SAP is the only one. Other so-called "unicorns" are worth below $10 billion.

Atomico is one of the largest VC firms in Europe, and recently closed a $765 million fund.

It was founded by Niklas Zennstrom, who co-founded Skype, which was eventually purchased by Microsoft. Atomico has a large number of investments in Europe including companies such as Swedish payments firm Klarna, but also puts money into start-ups across the world.

Zenstrom echoed Khaliq's comments in an interview with CNBC in November.

"We're confident in the next 10 years or so we will see companies from Europe that are on the scale of a Google or a Facebook," Zenstromm said.

Khaliq is also an entrepreneur and founded a company called The Climate Corporation, which used a branch of AI called machine learning to help farmers improve their crop yield. This was acquired by U.S. seed giant Monsanto in 2013 for around $1 billion, according to numerous media reports at the time.

He admitted that the U.S. has had a headstart in terms of venture capital firms funding companies, but that Europe is catching up.

"I think we are a little late to the party here but we are catching up rapidly and some of the companies that are coming out of Europe now, they are innovators … they are not copying anything that is happening elsewhere," Khaliq told CNBC.

"It is really starting here. So you multiply that out and you think about the patient capital that is willing to help them get to the big outcomes, it's just really a matter of time now."