Pathfounders Newsletter: Aleph Alpha acquired; Our rooftop reception; Here comes SovAI; Nick Clegg is wrong; and Londonmaxxing is cute, but silly

Mike Butcher writes:

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There was plenty of news to digest this week, but perhaps the biggest news came out today. 

Canadian AI start-up Cohere has agreed to take over Germany’s Aleph Alpha in a deal valuing the combined group at about $20bn.

The deal comes as Western governments and companies are hunting down alternatives to US Big Tech providers because of the US administration's lurch towards its own sovereignty, and its strong-arming of other governments on everything from Iran to (today) the Falkland Islands. It’s hard to keep up with it all.

The transaction creates a transatlantic company focused on “sovereign” AI systems that allow customers to retain control over their data and infrastructure.

Cohere’s chief executive Aidan Gomez was quoted in the FT saying: “Our countries need to come together and collaborate and establish mutual dependencies in order to boost our resilience.”

The deal is no doubt of some relief to the early investors in Aleph Alpha: Earlybird Venture Capital, Lakestar, UVC Partners. But given they were probably expecting more like a $100bn+ exit from Aleph Alpha before it ‘bottled it’ and became a services company rather than a full-blown AI powerhouse, I guess they had to salvage the situation somehow. 

That said, the deal is excitingly on trend. Three weeks ago, France’s Mistral raised even more money, as did UK’s WAYVE last week, coming just ahead of the SovAI launch in London. Cambridge’s Callosum raised $10.25m to scale a single AI model on identical chips, cutting OpenAI and NVIDIA out of the equation. Also this week, the UK’s Recursive Superintelligence secured $500 million in a funding round led by GV and Nvidia. The deal values the London-based startup at $4 billion pre-money. 

So it’s clear that Sovereign AI, or let’s call it SovAI, is here to stay. (And that’s why it will be the theme of a Pathfounders upcoming event, so subscribe to all our channels to get that heads up, including WhatsApp). 

And that’s why Nick Clegg is wrong. This washed-up politician, whose appalling strategic moves enabled the disastrous Brexit, crashed out of politics, became a sock puppet for Zuckerberg, and is now an itinerant investor and biscuit-eater on various boards. 

Today, he railed against the entire SovAI trend, telling City AM that the UK’s AI sovereignty debate is “slightly dishonest” due to our “marginal relevance” as a global tech player. 

The huge irony here is that he now sits on the board of infrastructure darling Nscale, a UK company which literally pushes sovereign cloud services and partners with NVIDIA to do it, and is an investor in Yann LeCun’s AMI startup based out of Paris. Nscale has even pledged to build what it calls the largest UK sovereign AI data centre in Loughton, Essex.

Nscale emerged from stealth in May 2024 via a spinoff from crypto mining firm Arkon Energy, and has quickly become an important part of the U.K.’s bid to become a global AI player.

Clegg said, “No one in their right mind would ever train an LLM foundation model in the UK. In fact no one does”. Well, perhaps he hasn’t been reading the news. Because UWE’s supercomputer will literally be doing that as part of the UK’s Sovereign AI launch last week.

Clegg thinks the UK can’t build AI because it has sided with rights holders over AI developers on copyright.

But there’s actually another thing going on entirely. While the UK’s new SovAI fund says all its investments will follow the letter of the law, there’s clearly a ‘don’t ask, don’t tell’ policy going on, as Ed Newton-Rex - a campaigner for copyright holders - recently hinted at. 

“Energy is too expensive”, Clegg told City AM. Yes, well it’s too expensive partly because Clegg himself played such a bad hand while in government that it never put in the renewables and nuclear that it needs today. 

That the UK is “now operating as a country without a single steam engine we can call our own” and “dependent on US tech – by accident or by design” is a rather useful statement for someone whose Nscale investment works incredibly closely with US company Nvidia.

SovAi isn’t going away as both a policy and investor trend any time soon. And mouthy ex-politicians who are conflicted in their investments should probably keep their mouths shut. 

It’s been a busy week at Pathfounders towers. We are prepping the launch of the Pathfounders Network (which will launch soon in BETA), attended Fintech Week in the guise of recording interviews at the London Stock Exchange (video out next week), attended the launch of Enterprise Britain and chaired a panel at a South Summit event, went to a “tech Takeover” at KOKO London and totally missed an event about “Londonmaxxing”. You can’t be everywhere. 

On that note: “Londonmaxxing” is fun and cool and all, but, in our opinion, the wrong conversation for tech.

Have you ever been to an event or watched a panel where the conversation is a cul-de-sac? A dead end? This is the issue with Londonmaxxing and its broader cousin, Britmaxxing.

After all, in the UK, 53 per cent of high-growth businesses are based outside London.  That they receive only 39 per cent of the funding might be music to the ears of London-maxxers. But it’s hardly collegiate to celebrate this fact. That Munich and Berlin, in federalised Germany, both have strong tech ecosystems, is surely something better to aspire to.

And not only is the phrase itself giving a self-referential ‘ick’ its also the wrong conversation to be having in the tech startup ecosystem. 

No one in San Francisco goes around “SF-maxxing”. Sure, people love that there is a great tech cluster in the Bay Area. But instead, they go there to get sh*t done. To talk about and to build tech. The focus is not on the city, but on how to find the right warm introductions to the right people. 

If other cities love to talk about why they are “better than SF”, then you already know that you have stumbled into the wrong conversation, and need to do a fast U-turn.

Some 15 years+ ago, I lived through the explosion of startups in Shoreditch, and ‘Silicon Roundabout’. Don’t get me wrong, it was fun. And as the saying goes about the 60s, if you can remember them, you probably weren’t there. 

But locations and cities go in and out of fashion. In the end, it’s building that counts.

• Pathfounders is partnering with the new Renaissance Summit (tickets here), a ‘Chatham House’ gathering of ~90 family offices, VCs, founders, and policymakers, focused on pan-European capital collaboration and Europe’s role in a shifting global landscape. The Renaissance Summit is offering 10 members of the Pathfounders community the opportunity to get a ticket at early bird pricing. Simply apply to join the event by using the voucher PATHFOUNDERS26.

• We’re running The Pathfounders Stage at World Summit AI. Startups can apply for the pitch competition right now! Get tickets here.
• We’re supporting Podim Conference, May 11–13, 2026 in Maribor, Slovenia. Apply now to their pitch competition.
• We’re also partnering with GITEXT AI Europe, 30 June to 1 July 2026 at Messe Berlin

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Guest Column: As UK VCs increasingly look to pension funds to close the scale-up funding gap, James Codling warns that until venture’s track record improves, it may not yet deserve the cheque.

Guest Column: Ivan Nikkhoo argues that without more creative approaches to funding in that crucial inflexion point from Seed to Series A, the UK risks losing a generation of startups to deeper-pocketed overseas investors.

Here’s our events guide for the rest of April and part of May:

MAY
05-05-2026 — 06-05-2026 — OMR Hamburg
06-05-2026 — 07-05-2026 — Tech Show Frankfurt
07-05-2026 — 08-05-2026 — EU Startup Summit
07-05-2026 — VC World Summit Frankfurt
11-05-2026 — 13-05-2026 — PODIM Maribor
REGISTER NOW: Get 10% off with code “pathfounders”
11-05-2026 — 14-05-2026 — WebSummit Vancouver
11-05-2026 — 12-05-2026 — HTGF Day Berlin
11-05-2026 — 12-05-2026 — Dubai Fintech Summit
11-05-2026 — 13-05-2026 — The MedTech Forum
11-05-2026 — 13-05-2026 — AI Everything Abu Dhabi

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