Hoxton Ventures Founder Hussein Kanji Bullish on European Tech

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00:00So the momentum was there in 2025 for European tech and the flows for VCs into some of these

00:07startups. Everything from AI to deep tech to what's happening in the healthcare space.

00:12Just give us an overview of what happened as we get towards the end of this year and

00:16how that sets us up for 2026. More and more momentum in the European market for technology

00:21and for AI in particular. People forget that one of the leading AI labs in the world was DeepMind,

00:26which is now part of Google, born and raised right here in London in terms of right down the road at

00:31King's Cross. That alumni base and all the things that are affiliated with everything DeepMind have

00:37kind of created a whole wave of companies out here in the European continent, both in the UK as well

00:42as continental Europe. And that's just compounding. We're now starting to see examples of companies

00:48out here in the European market that are competing head to head with the American companies and in

00:52some cases of the market leader. So I'll give you a few examples. So in voice AI, which is

00:56basically turning, you know, me and you talking into text and turning that into a really natural

01:00sounding voice. The pioneering company right now is Eleven Labs, homegrown here in London and in

01:05Poland. For video generation, you know, a little character on the screen, you tell it what to say,

01:10kind of it pretends to be me or you. Kind of we would call it a deep fake, you know, 10 years ago,

01:14but these days you'd call it an ad company. Leading company in the world, Synthesia,

01:18born and raised right here in the UK, came out of UCL. You know, we're starting to see many more

01:25examples of this. Lovable is a similar type of thing, coding development. You have an idea for

01:29a website or for an app. You want to, you know, have the AI basically write that. You know, you

01:34go to a website, you do it. There are a couple of US companies. There's a, you know, there's a

01:37company homegrown here in Sweden. So we're starting to see more of these examples. My suspicion is over

01:41the next five years, we're going to see more and more breakthroughs kind of coming out of the

01:45European sphere. More and more of these companies turning out to be like category leaders and world

01:49leaders. When do we get to a point where European startup or where Europe is minting, regularly

01:53minting a hundred billion dollar plus tech companies, which the US is doing on kind of an

01:59annual basis? It's a really good question. And the biggest thing that holds us back here is money.

02:03So we definitely have the technology capability. We definitely have the research labs. We definitely

02:07have the AI kind of frontier models. Everything's in our backyard. Weirdly enough, funding in the

02:12venture community is down in Europe. The flows are not as good as they are in the US. So in the US,

02:18I think everyone's woken up to the fact that this is the dawn of a new era. This AI adoption,

02:22you know, cloud computing took about five years for the S&P 500 to kind of adopt, you know, AI is

02:27happening much, much, much faster than cloud computing was, you know, but here in Europe, for some

02:32reason, the taps are not really... We're talking about European, domestic pools of European capital.

02:37Global pools of capital kind of coming into the European market. You know, the only glimmer that we have

02:42right now is on the deep tech side, where there's more money going into more science-oriented companies

02:46in Europe. But everything else is kind of down from 2024, when realistically, you should be up,

02:53right? Because the fundamentals are actually really good. And they're actually accelerated in 25 versus

02:57in 24. So it should be the other way around. But I find capital flows in Europe are just really hard.

03:03So that's the biggest constraint at this point. It's not regulation. It's not lack of a single

03:07access to a single market. It's capital and needing to flood the space with liquidity.

03:13And these are companies that are competing on the global scale and winning on the global scale and

03:17winning against their US counterparts. But if they're funded at half the level, a third the level,

03:2120% the level of the guys in the US, who do you think is going to win the global race? It's,

03:26you know, and that's the biggest problem right now that we have in the industry.

03:29Does Europe need a winning foundation model? Or is it OK that Europe plays in the application layer?

03:33That's a good question. I think the foundation model, you know, I think that race is for the

03:38big boys. You know, there's a ridiculous amount of R&D spend going in. You'd have to, I mean,

03:43there are people who are trying to build kind of sovereign plays for national security, for just,

03:48you know, national identity into some respect. But I think that's a bit of a losing game because

03:52that's a lot of money. I think the question is, what can you use with these foundation models?

03:56There's 400 billion of R&D being spent by all of the big tech companies on AI. And most of it's going

04:02into the public domain via open source or via open models or via APIs. So how can you leverage

04:07these things and actually build the next generation of stacks? I don't think you want to be competing

04:11against the big boys as an earlier stage company.

04:13Just the kind of investment, the kind of spend that we're seeing in the US, the hyperscale is

04:16committing to 400 billion in CapEx this year, the kind of connections and deals between NVIDIA

04:20and OpenAI and Oracle, and it continues Broadcom, AMD. Does that concern you? Does that seem rational?

04:26Or is there some red flags there for you?

04:28I mean, it's reminiscent of the dot-com industry, of the circular economy that was in dot-com.

04:34Cisco is the biggest comparison when you look at what NVIDIA is. But then you look at some of the,

04:38you look at the return on investor capital on the hyperscalers. It's higher today than it was

04:43six months ago before they were spending on the next generation GPUs. So that tells me that the

04:48adoption on the compute side from the customers is actually quite there. I think this is a much

04:54faster acceleration. But the truth is, no one really knows the answer to these. These are

04:58black and white questions. We won't really know until the dust settles, because like we're in this

05:02fog, right, where everything is being built up. But it's reminiscent of dot-com on the one hand,

05:07but on the other hand, it's like much faster adoption, much higher ROI.

05:11What are you most excited about when it comes to European tech? And what are you avoiding?

05:15Yeah, we're super bullish on the next generation science companies that fuse AI with science.

05:20So we had a company called Cusp AI that raised $500 million valuation. It's building next generation

05:28frontier models for material science. So it's basically the AI inventing materials. Super

05:33exciting, homegrown again, like in a race of basically two or three, I think is going to

05:37win the race, you know, built over here. We just funded another company that can make rare

05:41earth minerals from scratch in a lab, like synthetic rare earth minerals. Almost think of lab grown

05:46diamonds, but lab grown synthetic earth minerals. Homegrown came out of Oxford. We wrote the

05:51first check. You know, these kinds of companies in many ways can be a pioneering and then use

05:56all these technologies to actually build really, really big companies. And they're standing alone

06:00uncontested.

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