From left to right, Accel general partners Harry Nelis, Sonali de Rycker, Andrei Brasoveanu, Luca Bocchio, and Philippe Botteri.
Accel
Venture capital firm Accel said Tuesday it’s raised $650 million for its eighth fund targeted at investing in European and Israeli early-stage startups, in a sign the venture capital market may be showing signs of a recovery.
The firm, which made prolific early bets on the likes of social media app Facebook and music streaming service Spotify, said in a press release it raised the fund to “support ambitious founders building global category-defining companies” in Europe and Israel.
Harry Nelis, general partner at Accel, said the European tech ecosystem in particular has evolved drastically in the nearly 25 years since it opened up its London office as a separate fund in 2001.
“The environment has dramatically changed since then,” Nelis told CNBC. “People would ask us, can Europe generate $1 billion outcomes?”
“Now, there are more than 360 venture-backed unicorns across Europe and Israel, and the whole ecosystem has evolved from one that raised about $1 billion in capital to now $66 billion in 2023.”
Talent ‘flywheel’
Nelis said Europe is producing a more promising talent pool now thanks to a “flywheel” of experienced employees from other companies that have hit unicorn status becoming founders of new companies themselves.
A report released by the firm last year citing Dealroom data showed that employees of 248 venture-funded unicorns in the region have fueled 1,451 new tech startups across Europe and Israel.
Nelis noted that there are emerging geographies in Europe that investors aren’t paying as much attention to, but that are showing huge potential in technology innovation.
He called out Lithuania and Romania as examples of countries where major technology successes are emerging. In Lithuania, for example, secondhand marketplace Vinted is now a $4.5 billion “unicorn” company, while in Romania, UiPath has attracted a $10.9 billion valuation in the public markets.
Accel expects to invest in between 25 and 30 companies from its latest early-stage fund.
The launch of Accel’s eighth European fund comes as funding for high-growth tech startups has plunged sharply in the past two years.
That’s as macroeconomic uncertainty caused by Russia’s full-scale invasion of Ukraine, coupled with higher interest rates from central banks, has caused something of a reset in technology valuations.
Against this backdrop, Accel’s ability to raise such a large fund for European and Israeli ventures suggests the grim environment for technology may be showing signs of easing.
The firm managed to close its eighth fund for the region in just a couple of months, according to a source familiar with the matter speaking on condition of anonymity, since the details aren’t public.
Magnus Grimeland, CEO of seed investor Antler, told CNBC earlier this year that early-stage venture activity and private company valuations have been inching up since the start of this year — and he expects Europe to follow the trend.
“It’s on its way back,” Grimeland said in an interview at Antler’s London office in March. “We see a lot more activity in the portfolio. In New York, we made eight investments in January, and seven of them already have follow-on investments. The U.S. tends to always act quicker.”
Europe’s AI opportunity
Even as startup funding has waned, though, excitement about artificial intelligence has led to a rush of capital flowing into startups focusing on AI.
For example, the likes of OpenAI, Anthropic and Cohere have raised billions of dollars.
Nelis suggested that Accel doesn’t want to get distracted and focus solely on a hyped area like AI with its latest fund.
Instead, he said, the firm will focus on using its “prepared mind” philosophy — which encourages deep focus and a disciplined and informed approach to investing — to approach its next startup bets.
“We’re lucky that with DeepMind here in London and with Fair [Facebook AI Research] in Paris, there’s at least two big centers that have great AI expertise,” Nelis told CNBC.
“Together with smaller centers across Europe, we think that Europe is extremely well-positioned to create some important AI companies, the same way we created important enterprise businesses.”
Nelis said that the way Accel thinks about AI can be broken up into three layers: the “foundation model” layer, referring to algorithms underpinning advanced AI systems, the “tooling layer,” which helps applications that sit on top of these algorithms run, and the “application layer.”
He added that he thinks Europe will excel when it comes to AI application companies, as opposed to foundation models where U.S. technology giants have a big advantage.
“My expectation is Europe is going to generate some really interesting AI application companies,” Nelis told CNBC. “The foundation layer is a layer where at least for now the U.S. incumbents currently have a real advantage — they have the advantage of compute power, large datasets, and lots of capital.”
The firm has previously invested in Synthesia, a $1 billion generative AI startup backed by U.S. chipmaker Nvidia that helps companies make presentations with AI-generated avatars.
Victor Riparbelli, CEO and co-founder of Synthesia, told CNBC his company partnered with Accel last year as the firm’s team knows “how to strike the right balance between visionary and useful technology.”
“Over the last year, there have been a lot of cool demos and perhaps too much frothiness in the AI industry,” Riparbelli told CNBC via email. “It was really important to us to partner with a fund that is as focussed as we are on delivering real, tangible business value.”
An employee walks past a quilt displaying Etsy Inc. signage at the company’s headquarters in the Brooklyn.
Victor J. Blue/Bloomberg via Getty Images
Etsy is trying to make it easier for shoppers to purchase products from local merchants and avoid the extra cost of imports as President Donald Trump’s sweeping tariffs raise concerns about soaring prices.
In a post to Etsy’s website on Thursday, CEO Josh Silverman said the company is “surfacing new ways for buyers to discover businesses in their countries” via shopping pages and by featuring local sellers on its website and app.
“While we continue to nurture and enable cross-border trade on Etsy, we understand that people are increasingly interested in shopping domestically,” Silverman said.
Etsy operates an online marketplace that connects buyers and sellers with mostly artisanal and handcrafted goods. The site, which had 5.6 million active sellers as of the end of December, competes with e-commerce juggernaut Amazon, as well as newer entrants that have ties to China like Temu, Shein and TikTok Shop.
By highlighting local sellers, Etsy could relieve some shoppers from having to pay higher prices induced by President Trump’s widespread tariffs on trade partners. Trump has imposed tariffs on most foreign countries, with China facing a rate of 145%, and other nations facing 10% rates after he instituted a 90-day pause to allow for negotiations. Trump also signed an executive order that will end the de minimis provision, a loophole for low-value shipments often used by online businesses, on May 2.
Temu and Shein have already announced they plan to raise prices late next week in response to the tariffs. Sellers on Amazon’s third-party marketplace, many of whom source their products from China, have said they’re considering raising prices.
Silverman said Etsy has provided guidance for its sellers to help them “run their businesses with as little disruption as possible” in the wake of tariffs and changes to the de minimis exemption.
Before Trump’s “Liberation Day” tariffs took effect, Silverman said on the company’s fourth-quarter earnings call in late February that he expects Etsy to benefit from the tariffs and de minimis restrictions because it “has much less dependence on products coming in from China.”
“We’re doing whatever work we can do to anticipate and prepare for come what may,” Silverman said at the time. “In general, though, I think Etsy will be more resilient than many of our competitors in these situations.”
Still, American shoppers may face higher prices on Etsy as U.S. businesses that source their products or components from China pass some of those costs on to consumers.
Etsy shares are down 17% this year, slightly more than the Nasdaq.
Google CEO Sundar Pichai testifies before the House Judiciary Committee at the Rayburn House Office Building on December 11, 2018 in Washington, DC.
Alex Wong | Getty Images
Google’s antitrust woes are continuing to mount, just as the company tries to brace for a future dominated by artificial intelligence.
On Thursday, a federal judge ruled that Google held illegal monopolies in online advertising markets due to its position between ad buyers and sellers.
The ruling, which followed a September trial in Alexandria, Virginia, represents a second major antitrust blow for Google in under a year. In August, a judge determined the company has held a monopoly in its core market of internet search, the most-significant antitrust ruling in the tech industry since the case against Microsoftmore than 20 years ago.
Google is in a particularly precarious spot as it tries to simultaneously defend its primary business in court while fending off an onslaught of new competition due to the emergence of generative AI, most notably OpenAI’s ChatGPT, which offers users alternative ways to search for information. Revenue growth has cooled in recent years, and Google also now faces the added potential of a slowdown in ad spending due to economic concerns from President Donald Trump’s sweeping new tariffs.
Parent company Alphabet reports first-quarter results next week. Alphabet’s stock price dipped more than 1% on Thursday and is now down 20% this year.
In Thursday’s ruling, U.S. District Judge Leonie Brinkema said Google’s anticompetitive practices “substantially harmed” publishers and users on the web. The trial featured 39 live witnesses, depositions from an additional 20 witnesses and hundreds of exhibits.
Judge Brinkema ruled that Google unlawfully controls two of the three parts of the advertising technology market: the publisher ad server market and ad exchange market. Brinkema dismissed the third part of the case, determining that tools used for general display advertising can’t clearly be defined as Google’s own market. In particular, the judge cited the purchases of DoubleClick and Admeld and said the government failed to show those “acquisitions were anticompetitive.”
“We won half of this case and we will appeal the other half,” Lee-Anne Mulholland, Google’s vice president or regulatory affairs, said in an emailed statement. “We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
Attorney General Pam Bondi said in a press release from the DOJ that the ruling represents a “landmark victory in the ongoing fight to stop Google from monopolizing the digital public square.”
Potential ad disruption
If regulators force the company to divest parts of the ad-tech business, as the Justice Department has requested, it could open up opportunities for smaller players and other competitors to fill the void and snap up valuable market share. Amazon has been growing its ad business in recent years.
Meanwhile, Google is still defending itself against claims that its search has acted as a monopoly by creating strong barriers to entry and a feedback loop that sustained its dominance. Google said in August, immediately after the search case ruling, that it would appeal, meaning the matter can play out in court for years even after the remedies are determined.
The remedies trial, which will lay out the consequences, begins next week. The Justice Department is aiming for a break up of Google’s Chrome browser and eliminating exclusive agreements, like its deal with Apple for search on iPhones. The judge is expected to make the ruling by August.
Google CEO Sundar Pichai (L) and Apple CEO Tim Cook (R) listen as U.S. President Joe Biden speaks during a roundtable with American and Indian business leaders in the East Room of the White House on June 23, 2023 in Washington, DC.
Anna Moneymaker | Getty Images
After the ad market ruling on Thursday, Gartner’s Andrew Frank said Google’s “conflicts of interest” are apparent by how the market runs.
“The structure has been decades in the making,” Frank said, adding that “untangling that would be a significant challenge, particularly since lawyers don’t tend to be system architects.”
However, the uncertainty that comes with a potentially years-long appeals process means many publishers and advertisers will be waiting to see how things shake out before making any big decisions given how much they rely on Google’s technology.
“Google will have incentives to encourage more competition possibly by loosening certain restrictions on certain media it controls, YouTube being one of them,” Frank said. “Those kind of incentives may create opportunities for other publishers or ad tech players.”
A date for the remedies trial hasn’t been set.
Damian Rollison, senior director of market insights for marketing platform Soci, said the revenue hit from the ad market case could be more dramatic than the impact from the search case.
“The company stands to lose a lot more in material terms if its ad business, long its main source of revenue, is broken up,” Rollison said in an email. “Whereas divisions like Chrome are more strategically important.”
Jason Citron, CEO of Discord in Washington, DC, on January 31, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
The New Jersey attorney general sued Discord on Thursday, alleging that the company misled consumers about child safety features on the gaming-centric social messaging app.
The lawsuit, filed in the New Jersey Superior Court by Attorney General Matthew Platkin and the state’s division of consumer affairs, alleges that Discord violated the state’s consumer fraud laws.
Discord did so, the complaint said, by allegedly “misleading children and parents from New Jersey” about safety features, “obscuring” the risks children face on the platform and failing to enforce its minimum age requirement.
“Discord’s strategy of employing difficult to navigate and ambiguous safety settings to lull parents and children into a false sense of safety, when Discord knew well that children on the Application were being targeted and exploited, are unconscionable and/or abusive commercial acts or practices,” lawyers wrote in the legal filing.
They alleged that Discord’s acts and practices were “offensive to public policy.”
A Discord spokesperson said in a statement that the company disputes the allegations and that it is “proud of our continuous efforts and investments in features and tools that help make Discord safer.”
“Given our engagement with the Attorney General’s office, we are surprised by the announcement that New Jersey has filed an action against Discord today,” the spokesperson said.
One of the lawsuit’s allegations centers around Discord’s age-verification process, which the plaintiffs believe is flawed, writing that children under thirteen can easily lie about their age to bypass the app’s minimum age requirement.
The lawsuit also alleges that Discord misled parents to believe that its so-called Safe Direct Messaging feature “was designed to automatically scan and delete all private messages containing explicit media content.” The lawyers claim that Discord misrepresented the efficacy of that safety tool.
“By default, direct messages between ‘friends’ were not scanned at all,” the complaint stated. “But even when Safe Direct Messaging filters were enabled, children were still exposed to child sexual abuse material, videos depicting violence or terror, and other harmful content.”
The New Jersey attorney general is seeking unspecified civil penalties against Discord, according to the complaint.
The filing marks the latest lawsuit brought by various state attorneys general around the country against social media companies.
In 2023, a bipartisan coalition of over 40 state attorneys general sued Meta over allegations that the company knowingly implemented addictive features across apps like Facebook and Instagram that harm the mental well being of children and young adults.
The New Mexico attorney general sued Snap in Sep. 2024 over allegations that Snapchat’s design features have made it easy for predators to easily target children through sextortion schemes.
The following month, a bipartisan group of over a dozen state attorneys general filed lawsuits against TikTok over allegations that the app misleads consumers that its safe for children. In one particular lawsuit filed by the District of Columbia’s attorney general, lawyers allege that the ByteDance-owned app maintains a virtual currency that “substantially harms children” and a livestreaming feature that “exploits them financially.”
In January 2024, executives from Meta, TikTok, Snap, Discord and X were grilled by lawmakers during a senate hearing over allegations that the companies failed to protect children on their respective social media platforms.