Good day. For some European-based venture capitalists, a regional surge in investment in artificial intelligence isn’t just about getting in on the ground floor of a generational technology. It’s also an opportunity to reduce dependencies on foreign companies in a shifting geopolitical landscape.

Venture AI investment across Europe and the U.K. reached $13.4 billion in the first quarter, according to new data from PitchBook. The record-breaking total more than doubled investments from the fourth quarter of 2025, and bested the previous high watermark set in early 2022 by more than 60%.

Nearly a quarter of all VC-backed startups in Europe are now AI companies.

“What we're seeing in terms of investment is a lot of focus around critical infrastructure; defense, AI, cybersecurity capabilities that used to be perceived maybe as more niche categories and unfundable becoming quite strategic markets,” Cat McDonald, a partner at London-based AlbionVC, said.

This shift toward critical infrastructure is part of building what McDonald called a “sovereign architecture,” or the ability of a region to maintain technological autonomy, defensibility and resilience.

The emergence of AI, the rise of cyberwarfare and an unpredictable partner in the U.S., she said, has brought some founders and VCs to believe that Europe’s tech stack has become too dependent on companies outside the continent. A growing cohort have begun shifting their mindset, aiming to keep their companies, their local talent and future European founders at home.

“Oftentimes the best founders build another company and then they build another company,” McDonald said. “Where they do that is what creates that flywheel in the ecosystem and what has created some of the success and self-belief that we're beginning to feel in Europe.”

And now on to the news...

No AI. As the AI-generated imagery and video colloquially called slop spreads across social media and video feeds, marketers are going out of their way to tell consumers they’re not to blame.

• For some, it’s part of a message about authenticity that they want to send to their customers.
   
• “We commit: No AI generated bodies or people,” promised a campaign last month from Aerie, the intimate apparel brand owned by American Eagle Outfitters. The ads depict actress Pamela Anderson prompting a chatbot to create models before revealing that they were real people the whole time.
   
• Aerie had already pledged in an Instagram post last October that it would never use artificial-intelligence tools to generate or manipulate images of people, building on its 2014 promise not to retouch people in its ads, according to Chief Marketing Officer Stacey McCormick. “Our DNA is about realness, about not changing a person, you know, not erasing stretch marks,” McCormick said.

OpenAI and Anthropic are racing toward potentially record-breaking initial public offerings by the end of the year. An inside look at the financials of both companies prior to funding rounds completed earlier this year shows their Achilles’ heel: the soaring costs needed to train new artificial-intelligence models. OpenAI expects to spend $121 billion on computing power for AI research in 2028. That means the company anticipates burning $85 billion that year even after almost doubling sales from the prior year. Such losses would dwarf those of virtually any other public company in history. Anthropic doesn’t expect to spend nearly as much, but its rosiest forecasts tell a similar story of mounting computing costs. Both companies are releasing new versions of their AI models at a faster cadence than ever before, while pouring more resources into the training runs that create them. The arms race is showing no signs of slowing.

Xoople, a Madrid-based startup building an Earth data infrastructure layer for AI, closed a $130 million Series B round from investors including Nazca Capital, Buenavista Equity Partners and Endeavor Catalyst.

Q-Factor, a Tel Aviv-based neutral atom quantum computing startup, snagged $24 million in seed funding. NFX and TPY Capital led the investment, which saw participation from Intel Capital and others.

Natter, a New York-based AI conversation intelligence platform, landed a $23 million investment. Renegade Partners led the funding, which included contributions from Costanoa Ventures, Kindred Capital and others.

Anvil Robotics, a San Francisco-based custom robot builder, picked up $5.5 million in funding from investors including Matter Venture Partners.

Nexus, an agentic AI platform, was seeded with a $4.3 million investment led by General Catalyst.

Ridge AI, a Seattle-based startup building AI-native embedded analytics for business-to-business software companies, emerged from stealth with $2.6 million in pre-seed funding led by Madrona.

Felix, a Prague-headquartered startup building infrastructure for autonomous professional services, secured $1.7 million in pre-seed funding led by XYZ Venture Capital.

• Five Amazing Tech Innovations We Should Expect in the Next 25 Years
   
• McDonald’s CEO Responds to the Viral Big Arch Backlash
   
• Kids Are Discovering the Joys—and Pains—of the Landline
   
• Amazon and U.S. Postal Service Reach Delivery Deal

• Four things we’d need to put data centers in space (MIT Technology Review)
   
• Your body is betraying your right to privacy (Wired)
   
• Big banks seeking a piece of SpaceX’s IPO must subscribe to Elon Musk’s Grok (New York Times)
   
• Samsung is discontinuing its texting app (Associated Press)

This newsletter was compiled by Zachary Cole and Brian Gormley. 

Share your tips, comments and questions: vcnews@wsj.com

The team: Matthew Strozier, Yuliya Chernova, and Brian Gormley.

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