German AI company Aleph Alpha has today raised $500m (€460m) in one of Europe’s largest AI rounds ever. €110m of the funding is in the form of equity, and Sifted understands the majority of the funding is in the form of a grant. It includes no debt.
The round, which was first reported by Handelsblatt, is led by a group of seven new investors, including Innovation Park Artificial Intelligence (Ipai) based in Heilbronn, Bosch Ventures and SAP, among others. Existing investors such as Cavalry Ventures, LEA Partners and 468 Capital also participated.
Aleph Alpha builds large language models (LLMs) similar to OpenAI’s GPT-4 but designed for enterprises rather than consumers.
The funding will bolster Aleph Alpha’s research capacity, and accelerate its development and commercialisation of generative AI for applications in healthcare, finance, law, government and security. It’s hoped the funding will help Aleph Alpha scale to compete with international competitors in the US and China.
Technological sovereignty
Founder and CEO Jonas Andrulis wanted to raise solely from German and European investors, one VC who participated in the round tells Sifted — which proved tricky. The VC says US funds were interested in joining the round, but only US-based Hewlett Packard Enterprise contributed with a small ticket.
Despite Aleph Alpha’s desire to contribute to Europe’s tech sovereignty, whether it can grow to be a significant AI player without US investment or resources remains to be seen.
Claude Ritter, partner at Cavalry Ventures, is hopeful. “In the past, there hasn’t been the capital here [in Europe]. But with the rise of DeepMind, Mistral and other AI companies, we have a lot of data points to show stuff is happening here,” he says.
“There’s a lot of interest in governments, with France doubling down on it. It feels like there is good momentum for Aleph Alpha to get off the ground. Will this be a German company forever? I can’t tell you.”
Yes, I want to contribute to the fact that there’s technological sovereignty, and I want to be the smallest company that can do that
Andrulis himself tells Sifted at a conference in Heilbronn, where Ipai is based, that scaling to become a huge company was never his intention. “I don’t want to necessarily have a company of 10k people. Yes, I want to contribute to the fact that there’s technological sovereignty, and I want to be the smallest company that can do that.”
“The goal was never size, but capability,” Andrulis adds. “So the smallest number of people that can get me there is fine.”
Correction: On November 7 this article was updated with new information about the makeup of the funding round, and an earlier headline stating this round is Europe's third-largest ever AI fundraise was also changed as a result.
