Xavier Niel, one of Europe’s leading technology investors, believes the region can succeed in creating leading AI companies even without the billions in capital raised by American competitors, as long as the founders do not may be tempted to withdraw money too soon.
“I think we can create great things with a few hundred million euros,” he said. french billionaire who made his fortune in telecommunications with the operator Iliad and now invests extensively in startups. This includes backup The Paris-based artificial intelligence group Mistral which has skyrocketed to a valuation of 6 billion euros per year since its foundation.
“Europe can create competitive AI models today,” he said in an interview with the Financial Times. “But in the next two or three years, [success] It depends on the number of initiatives and the ability of those who are the real geniuses (those who build the best companies) not to be absorbed or sold too quickly.
Such optimism about European technology is notable given that the continent lost to American and Chinese giants during previous waves of disruption from the Internet to social media, leading the region to distinguish itself more in regulation than innovation.
Niel’s opinion carries weight as a prolific technology investor with deep contacts in Silicon Valley who also sits on the boards of private equity group KKR and TikTok owner ByteDance.
Europe has few players to compete against companies like OpenAI and Google that are building the so-called large language models that underpin AI applications. Some candidates like the German Aleph Alpha have thrown in the towel.
Despite his optimism, Niel warned that if AI innovation failed to take hold, the region would be “demoted” in the global economy. It would rely on American and Chinese tools built without its “values,” such as privacy and transparency. “If Europe doesn’t get it right, it will become a very small continent abandoned for a few generations,” he said.
France is home to one of the remaining contenders in AI models: Mistral, founded last year by a trio of scientists from Google and Meta. With more than $1 billion in funding, Mistral has developed a large language model that it claims is simpler and more capital efficient than better-funded competitors.
Although Niel insisted that his message of not selling out too early was aimed broadly at European founders, it rings particularly true for Mistral. “Founders need to realize that if a larger company offers to buy them at X value, then they are probably worth 2 or 3 times as much.”
Niel has supported the AI ecosystem in France with an investment of around 500 million euros so far and said he could eventually deploy billions.
A nonprofit research lab called Kyutai aims to create open-source artificial intelligence models, a project that former Google CEO Eric Schmidt joined. Niel’s cloud infrastructure company Scaleway runs one of the largest supercomputers in the European private sector.
Niel makes seed investments of €15 million a year through his Kima Ventures fund and also backed the New Wave fund, where he recently intervened to end a power struggle between the founders.
There is still time to find winners in AI in Europe, Niel said, given the quality of its mathematics and engineering institutes and how the tech giants have yet to establish dominance. Furthermore, the magnitude of the opportunity in AI means that “it won’t be one company that wins, but dozens or even hundreds,” he said.
“Of course, the world moves faster now, the resources are greater. But there will always be two smart kids somewhere in the world, working in a garage, with a technological vision or a new idea.”
Niel was once one of those children, as the iconoclastic 57-year-old businessman recently recounted in a memoir-like interview book titled Une Sacrée Envie de Foutre le Bordel (“An intense urge to cause trouble”).
He dabbled in hacking as a teenager and briefly became an asset for the French national spy agency as it built its first cyber unit. They had him hack the phone of then-French President François Mitterrand so the agency could get a bigger budget, according to the book.
Niel’s first lucrative business was running adults-only sex chat services at Minitel, a rudimentary French network that preceded the Internet.
But the real breakthrough came in telecommunications when he founded Iliad in 1990 as a low-cost competitor when France opened the market to competition. It was made public in 2004.
Just a few months after the IPO, Niel was arrested on suspicion of asset embezzlement and pimping, related to investments in sex shops he made with a partner from his days at Minitel.
He spent a month in jail and was later convicted of a lesser charge. Niel wrote that the judge gave him advice he will never forget: you can brush the line between good and evil, but never cross it.
Thanks to the success of Iliad, Niel invested in technology, real estate and media such as the newspaper Le Monde. took the Iliad privateand expanded its telecommunications holdings to about 20 countries, most recently to Ukraine. In Paris, Niel built the world’s largest startup incubator called Station F and opened a free coding school.
As his projects multiplied, Niel took on the role of European technology ambassador. When Pavel Durovthe billionaire creator of the Telegram messaging application, was arrested and questioned in France for alleged complicity in criminal activities, his first phone call was to Niel.
“When I went to prison, everyone disappeared from me. So when a friend has a problem in France, I’m not the kind of person who doesn’t answer the phone.”
In September, Niel joined the board of ByteDance, the Chinese parent of TikTok, which has come under scrutiny in the United States and Europe over data privacy, misinformation and security.
US President Joe Biden signed a law to ban the platform on national security grounds if its Chinese parent does not get rid of it by 2025. President-elect Donald Trump has said he could reverse the decision, an eventuality that Niel supports personally.
“I think it would be positive if TikTok continued to exist, with its qualified workforce, in the United States. Positive for competition, for citizens, for the improvement of products,” he stated.
“What worries me is that if TikTok comes under pressure, all other social networks, including American ones, will too,” he said.
Niel said he had been a “small investor for a long time” and thought being the only European on the board would help ByteDance’s plans to expand in the region.
“We are able to welcome them to Europe and help them invest. . . and understand who we are as we are, [our] way of operating,” he stated. For them, “it creates value and for us, it creates future-oriented investments in Europe.”