Gen AI (2024)

Generative AI’s crazy, breakout year has stirred debate about what the tech means for our future. From the hopeful “it will help us all become productive geniuses” perspectives, to the alarmist “these sentient machines will replace us” sentiments — there is no shortage of hot takes.

Today’s tools can help to produce text, audio, video, music, code, images and design in response to prompts — capabilities that can help automate tasks and cut down on grunt work. A banner 2023 for European GenAI saw startups raise $1.5bn — a sharp increase on the $554m disbursed by VCs in 2022 (six $100m+ megarounds propelled this 2023 growth). 2024 is just over two months old and European startups have already pulled in $267m, almost half the sum raised by the sector in 2022.

One of the big early winners of the year is French GenAI startup PhotoRoom, which raised a $43m Series B last month that brings the company's valuation to around $500m. The four-year-old startup, which can remove and replace photo backgrounds in a blink, has found one of the few compelling business use cases for the technology to have emerged so far.

For all the fun things you can do with GenAI — like creating viral fake images, including the Pope in a giant puffer jacket — report after report prophesies how the tech will upend millions of jobs. If such a future is around the corner, career progress will likely depend on an ability to master these tools. Already, there is a generation split in the workforce, with Gen Z being the most common GenAI users — 63% of this cohort use the technology at least once a week, according to an Accenture survey. Goldman Sachs estimates a quarter of work tasks in the US and Europe could be automated by GenAI. At the upper end of its potential, more than 40% of tasks in administration and the legal profession could be automated. This compares with less than one-tenth of tasks in physically intensive professions such as construction and maintenance.

Some companies are touting the imminent arrival of powerful AI creations capable of performing complex tasks from start to finish. London-based startup 11X has developed four so-called digital workers who perform chunky tasks without constant prompts. Anton Osika, founder of Stockholm-based Lovable, tells Sifted that AI programmes like his will be able to build “80% of all SaaS” software by the end of 2025 and, before long, “you will see software unicorns where there is pretty much no human in the loop — it’s quite likely it will be just one person”.

Still, it would be wise to take certain claims with a pinch of salt. When a sector attracts so much hype so soon, what we often see next is a bunch of startups blowing up on the launchpad. Lofty GenAI valuations also summon unpleasant memories of 2021 when VCs were eagerly deploying capital at unreasonable prices. There will also be some pretty big bumps along the way for GenAI. Already, the tech’s drawing concerns around data security, intellectual property rights and its habit of making stuff up. The extra hurdle for European startups is that they are going up against moneybag American tech giants like Google and Microsoft: finding valuable use cases in narrow, specific domains — like PhotoRoom has managed to do — will be their best ticket to success.