The top U.S. tech giants like Amazon, Microsoft, Google, Meta, and Apple have deep enough pockets to spend tens of billions of dollars on AI development and infrastructure. Next in rank are heavy hitters like OpenAI, Anthropic, and xAI, which are spending billions on AI. Then there are a handful of challengers, like Mistral and ElevenLabs, that have the capacity to spend hundreds of millions. But how long will those challengers be able to keep up? And will they ever be able to surpass the titans?

Phillippe Botteri – the Accel partner who led the firm’s investments in companies like DocuSign, UiPath and more recently Snyk and Chainalysis – says the race for AI foundational models is only beginning. Smaller startups, including some European players, aren’t out of the running just yet.

“You have some great companies like Mistral, like Age, like Poolside, ElevenLabs, but they’re a bit behind in terms of their fundraising capabilities,” Botteri said on today’s episode of Equity. “They have raised hundreds of millions. They haven’t raised the billions that OpenAI and Anthropic have raised. But I think that is going to be the next big step for Europe.” 

“I think it’s a bit too early to say that the race is over,” he continued.

Botteri shared his insights about the AI race, the European funding landscape, and more on Equity. Here’s a sneak peek into what else we talked about: 

• How AI is eating the software market, with AI and cloud funding predicted to hit $79.2 billion by the end of 2024.
• The challenges faced by traditional software companies as funding growth slows outside of AI.
• Why Europe’s strong talent pool gives it an edge in the AI race, even as startups on the continent struggle to compete with the ungodly amounts of money U.S. tech giants have.
• Increased M&A activity globally amid a slow IPO market.
• Why 2025 will be the year of the “agentic revolution” with AI significantly impacting software development and productivity.

Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. 

Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast.