Paris-based venture capital firm Cathay Innovation, the venture arm of Cathay Capital, has unveiled its third fund, a €1 billion initiative dedicated entirely to AI. This marks one of the largest AI-focused VC funds ever raised in Europe, reflecting surging investor appetite for transformative technology. This fund positions Cathay among the few continental European VCs to surpass the billion-euro threshold, joining the ranks of firms like EQT Ventures and Atlantic Vantage Point.
The fund aims to back nearly 30 startups across early to late stages, with investment sizes varying. Cathay plans to invest at least €50 million for standout portfolio companies over their lifecycle. This approach enables Cathay to support startups from seed through growth rounds, helping them scale globally and remain competitive against US and Asian rivals. Nearly half of the fund will be allocated to European startups, with the remainder distributed across the US and Asia.
Targets industry transformation
Cathay Innovation was co-founded in 2015 by Denis Barrier and Mingpo Cai. Barrier, who serves as CEO, brings a wealth of experience in venture capital and a vision to support startups that leverage AI to revolutionise industries. Cai, also the founder of Cathay Capital, has been instrumental in building a global investment platform that bridges continents and sectors. Since its founding, Cathay Innovation has invested in over 120 startups across 5 continents, with several portfolio companies achieving unicorn status and successful IPOs.
The fund focuses on application-layer AI companies rather than those developing foundational models. Cathay is interested in startups applying AI to sectors such as digital health, fintech, consumer services, mobility, and energy. This focus reflects a belief that AI’s greatest near-term impact will be realised in real-world applications that solve pressing industry problems rather than in the development of new foundational AI models. This approach aligns with Cathay’s strategy to invest in technologies that drive sustainable transformation across industries.
A mix of financial and strategic investors backs Cathay’s fund. Notable corporate LPs include pharmaceutical giant Sanofi, energy company TotalEnergies, automotive supplier Valeo, and French bank BNP Paribas Cardif. Other strategic backers include Groupe SEB and Groupe ADP (Paris Aéroport), further broadening the fund’s industry reach. These partnerships provide capital and offer portfolio companies access to industry expertise and potential collaboration opportunities. For example, Cathay has previously facilitated partnerships between its portfolio companies and LPs, such as Owkin’s collaboration with Sanofi in AI-driven drug discovery.
Portfolio highlights
Cathay Innovation has already deployed €235 million from the fund into 14 companies, half of which are European. Notable investments include:
- Bioptimus: A French biotech startup developing a foundation model for biology, often called the “Biology GPT.” The company recently secured $76 million in funding to advance its AI-driven approach to understanding complex biological systems.
- Aqemia: A Paris-based company pioneering RNA-based drug discovery. The startup has received $7.4 million to further its mission of accelerating the development of novel therapeutics using its proprietary AI and physics-based algorithms.
- Nelly: Headquartered in Berlin, Nelly is focused on automating administrative tasks and digitising healthcare processes. The company has landed €50 million to expand its platform, which aims to streamline operations for healthcare providers and improve patient experiences.
- FirstVet: A Swedish startup offering video-based veterinary consultations. With a recent €20 million funding round, the company plans to expand its services, making veterinary care more accessible and convenient for pet owners.
- Nabla: This French healthtech startup, backed by Cathay, has developed an AI-powered assistant that automatically generates clinical notes for doctors. Nabla’s technology is already used by over 20,000 healthcare professionals, helping reduce administrative burden and improve patient care.
- Entalpic: Another recent investment, Entalpic is leveraging AI for materials discovery in sectors such as energy storage and pollution control, demonstrating Cathay’s commitment to industrial innovation.
These investments reflect Cathay Innovation’s commitment to supporting startups that leverage technology to drive innovation across various sectors, including biotechnology, healthcare, and digital services. To date, Cathay Innovation’s portfolio companies have collectively raised over $16 billion in follow-on funding and created approximately 15,000 jobs worldwide.
A commitment to sustainable innovation
The fund qualifies as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation, indicating that it promotes environmental and social characteristics. Cathay must disclose how its investments help achieve these characteristics, including monitoring key ESG metrics such as carbon footprint, diversity, and employee welfare. Cathay has been refining its sustainability approach since 2019, integrating ESG considerations into its investment framework to build resilient businesses that maximise impact.
Cathay Innovation’s global presence, with offices in Paris, San Francisco, Shanghai, and Singapore, allows it to identify cross-border opportunities and support startups in international expansion. The firm’s unique model of combining financial investment with strategic corporate partnerships gives its portfolio companies a competitive edge, providing capital and industry connections.
Cathay Innovation’s €1 billion AI-focused fund marks a significant milestone in European venture capital. By concentrating on application-layer AI and fostering strategic partnerships, Cathay aims to drive meaningful transformation across industries. With a global investment strategy and a commitment to sustainability, the firm is poised to play a pivotal role in shaping the future of AI-driven innovation.
As the European VC landscape grows increasingly competitive, Cathay’s scale, track record, and collaborative approach position it as a leading force in the next wave of technology-driven change.
