How Paris-based Cathay Innovation is fueling Europe’s AI revolution with the continent’s largest sector-focused venture capital fund
Artificial intelligence is transforming how industries operate, innovate, and compete. Nowhere is this more evident than in Europe, where Paris-based Cathay Innovation has closed a €1 billion fund dedicated exclusively to AI, making it the largest of its kind in the European Union. This move signals not just robust investor confidence in French and European AI, but also a strategic push to position France as a global leader in the next wave of AI-powered industrial transformation.
In this article, we explore the details of Cathay Innovation’s landmark fund, its investment strategy, the sectors and startups it targets, and what this means for the future of AI in France, Europe, and beyond.
Cathay Innovation: A Global Vision with Parisian Roots
Founded in 2015 by Mingpo Cai and Denis Barrier, Cathay Innovation is a global venture capital firm with headquarters in Paris and offices in San Francisco, New York, Berlin, Shanghai, Beijing, and Singapore. With over $1.5 billion in assets under management, the firm has built the world’s largest VC platform focused on connecting emerging startups with established industry leaders across continents.
Cathay Innovation’s unique approach blends deep local knowledge with global reach, enabling its portfolio companies to scale across Europe, the US, Asia, and Latin America. This geographic diversity is a strategic advantage, especially in today’s fragmented world, where access to international markets and best practices is crucial for AI startups.
The €1 Billion AI Fund: Europe’s Largest Vertical AI Investment
Why This Fund Matters
Announced in May 2025, Cathay Innovation’s Fund III closed at €1 billion (approximately $1.1 billion), making it the largest AI-dedicated venture capital fund in the European Union. This fund is not only a testament to the growing maturity of the European AI ecosystem but also a clear signal that investors see enormous potential in AI-driven transformation across industries.
- Size and Scope: The fund aims to invest in around 30 startups at various stages, from early to late, with individual investments ranging from €5 million to €100 million for leading companies.
- Geographic Focus: About half of the capital will be deployed in Europe, with the remainder supporting startups in the US and Asia.
- Sector Focus: The fund targets four key sectors: digital health, fintech, consumer services, and energy/mobility.
- ESG Commitment: Classified as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR), it promotes environmental and social goals alongside financial returns.
Strategic Backing
The fund is supported by over 20 leading international corporations and institutional investors, including major French industry players such as Sanofi, TotalEnergies, Valeo, BNP Paribas Cardif, Groupe SEB, and Groupe ADP. International backers include Vale Ventures (Latin America), Copec WIND Ventures (Chile), and others.
This blend of financial and strategic investors ensures that portfolio companies not only receive capital but also gain access to industry expertise, commercial partnerships, and global networks.
Investment Thesis: Vertical AI for Industry Transformation
Cathay Innovation’s Fund III is purpose-built for the new industrial era, focusing on “vertical AI” solutions deeply tailored to the unique needs of specific sectors. The fund’s thesis is that the next wave of AI innovation will come from startups that combine technical excellence with deep industry knowledge, enabling them to solve real-world problems at scale.
Key Sectors and Example Startups
| Sector | Example Startups & Solutions |
|---|---|
| Healthcare | Nabla (AI co-pilot for physicians), AQEMIA (AI + quantum physics drug discovery), Bioptimus (biomedicine) |
| Financial Services | Range (AI-driven wealth management), Flowdesk (digital asset market-making), Ping++ (open banking) |
| Consumer | Ghost (B2B marketplace for excess inventory), Reebelo (refurbished tech marketplace), Imagino (data platform) |
| Energy/Mobility | David Energy (next-gen retail energy), Entalpic (materials discovery for low-carbon innovations) |
To date, Cathay Innovation has already deployed €235 million from Fund III across 14 investments, with half of these companies based in France or Europe. Notable French AI startups backed by the fund include Nabla, Bioptimus, and Entalpic.
France’s AI Ecosystem: A Rising Global Hub
A Surge in Investment
France has rapidly emerged as one of Europe’s top AI and tech hubs, thanks in part to proactive government policies, a strong research base, and growing investor interest. Cathay Innovation was recently named the largest French private VC investor by capital deployed into local startups in 2024.
The firm’s commitment to French AI is reflected in its decision to allocate €50-100 million specifically to back French founders in AI, a move that began in 2023 and has now become central to its strategy.
Government and Corporate Support
France’s AI ambitions are also supported by significant public and private investment. The French government has launched several initiatives to boost AI research, attract talent, and foster collaboration between academia and industry. Leading French corporations, many of whom are limited partners in Cathay’s fund, are actively seeking to integrate AI into their operations and supply chains.
Example: Nabla
Nabla, a French startup developing an AI assistant for doctors, exemplifies the kind of innovation Cathay Innovation seeks to support. By leveraging AI to streamline administrative tasks and enhance clinical decision-making, Nabla is helping to address critical challenges in healthcare efficiency and quality.
Why Investors Are Betting Big on AI in France and Europe
Market Opportunity
The global AI market is expected to reach over $1 trillion by 2030, with Europe positioned as a key growth region. According to industry estimates, AI could add €2.7 trillion to the European economy by 2030, driven by productivity gains, new products, and improved services.
Competitive Advantage
Europe’s strength lies in its diverse talent pool, world-class research institutions, and a regulatory environment that emphasizes ethics and trust in AI. France, in particular, benefits from a strong tradition in mathematics, engineering, and computer science, as well as robust public-private partnerships.
Long-Term Vision
Cathay Innovation’s long-term approach allows it to support startups through multiple funding rounds, helping them scale without the pressure of seeking new investors at every stage. This stability is especially valuable in AI, where building and deploying transformative solutions often requires significant time and resources.
The Impact: Accelerating Industry Transformation
Healthcare
AI is revolutionizing healthcare by enabling faster drug discovery, personalized medicine, and more efficient care delivery. Startups like AQEMIA and Bioptimus are using AI and quantum physics to accelerate the development of new therapies, while Nabla’s AI assistant is improving the daily workflow of doctors.
Financial Services
In fintech, AI is powering smarter wealth management, fraud detection, and seamless payment experiences. Companies like Range and Flowdesk are leveraging AI to create more efficient and accessible financial products.
Consumer Services
AI-driven platforms such as Ghost and Reebelo are optimizing supply chains, reducing waste, and promoting the circular economy by making it easier to buy and sell excess or refurbished goods.
Energy and Mobility
Startups like David Energy and Entalpic are using AI to drive the transition to cleaner, more efficient energy systems and to discover new materials for low-carbon innovations.
ESG and Sustainability: AI for Good
Cathay Innovation’s fund is classified as an Article 8 fund under the EU’s SFDR, meaning it must “promote” environmental and social characteristics. This reflects a broader trend in European venture capital, where investors are increasingly seeking to back companies that deliver both financial returns and positive societal impact.
By supporting startups that use AI to advance healthcare, energy efficiency, and financial inclusion, Cathay Innovation aims to create lasting economic and societal value.
Challenges and Opportunities Ahead
Scaling AI Startups
While Europe has no shortage of AI talent and ideas, scaling startups to global success remains a challenge. Cathay Innovation’s global network and deep pockets help bridge this gap, providing founders with the resources and connections needed to expand internationally.
Regulatory Landscape
Europe’s approach to AI regulation, focused on ethics and transparency, is both a strength and a potential hurdle. Startups must navigate complex rules while ensuring their solutions are trusted by users and compliant with local laws.
Competition
Cathay Innovation’s €1 billion fund puts it in the same league as other major European VC players like EQT Ventures and AVP, both of which have raised funds exceeding €1 billion in recent years. This increased competition is likely to drive further innovation and investment in the sector.
What’s Next for French and European AI?
Cathay Innovation’s landmark fund is expected to have a ripple effect across the European tech ecosystem. By providing significant capital and strategic support to AI startups, the firm is helping to accelerate the continent’s transition to a more digital, sustainable, and competitive economy.
As more startups receive the backing they need to scale, Europe’s position as a global AI powerhouse will only strengthen. For founders, investors, and industry leaders alike, the message is clear: the future of AI in Europe is bright, and the time to invest is now.
Conclusion
Cathay Innovation’s €1 billion fund dedicated to artificial intelligence marks a pivotal moment for France and Europe’s tech landscape. By focusing on vertical AI solutions in critical sectors and supporting startups from early to late stages, the fund is set to drive industry transformation, foster innovation, and deliver positive societal impact.
With strong backing from leading corporations, a commitment to ESG, and a global perspective rooted in Paris, Cathay Innovation is not just investing in companies, it is investing in the future of European AI.
Key Takeaways:
- Cathay Innovation has closed Europe’s largest AI-focused VC fund at €1 billion, signaling strong investor interest in French and European AI.
- The fund targets around 30 startups across digital health, fintech, consumer, and energy/mobility sectors, with half of investments in Europe.
- Strategic backing from major corporations ensures startups receive both capital and industry expertise.
- The fund’s Article 8 classification underlines its commitment to environmental and social impact.
- France is emerging as a leading AI hub in Europe, with Cathay Innovation playing a key role in supporting local talent and innovation
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