AI and machine learning in Europe has already seen nearly €3 billion (around $3.2 billion) in transactions this year, keeping momentum after 2024’s record-breaking year.
PE investments in the sector reached €11.5 billion last year, more than doubling the total of €4.8 billion in 2023, according to PitchBook data.
Although Thoma Bravo‘s approximately $5.4 billion buyout of UK cybersecurity company Darktrace boosted the figure, total deal value excluding that deal still reached an all-time high of €6.4 billion. The growth is also supported by deal count, which was also record-breaking at 128 transactions.
The momentum continued into this year, which has seen over €2.8 billion invested in the sector across 26 deals, making Q1 the third-highest quarter with around 20 days still to go.
AI and ML can traditionally be viewed as a developing sector that fits into VCs’ appetite; it is also gaining traction in PE and took up 2% of total deal value in Europe last year.
As the industry matures, there are more investment opportunities for PE investors. The median deal size in AI and ML rose from €3 million in 2018 to €60.4 million year-to-date, a size that caters to more PE firms.
While VCs generally invest in startups, PE managers tend to invest in more mature companies with proven applications and established revenues, according to a research report by UBS. This offers the firms unique AI monetization opportunities and diversification options.
The biggest PE deal in AI and ML so far this year was the $1.43 billion buyout of Metaphysic, a UK-based developer of software designed to enhance human expression in the metaverse, by DNEG via its financial sponsors Novator Partners and United Alsaqer Group in February.
Other significant deals include Five Elms Capital‘s 67.66 million Swiss franc (around $76.7 million) growth investment into Swiss cloud-based hotel management software developer RoomPriceGenie last month.
Featured image by Andriy Onufriyenko/Getty Images
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