The last three weeks were wild.

Global recession fears. Energy shocks. Billion-dollar AI rounds. Defence startups raising fast money. Big Tech layoffs. New chips wars. Europe suddenly looking ambitious.

If you only read headlines, it feels random.

It’s not.

There are very clear shifts happening. Let’s walk through the biggest ones.

See below to continue…

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Continue…

One of the biggest stories discussed recently was the disruption of energy supply routes and the risk of a new global recession.

Around one fifth of the world’s oil supply moves through the Strait of Hormuz. When flows are threatened, energy prices react immediately. Gas storage levels in Europe are already significantly lower than two years ago, and wholesale gas prices have started rising again. 

Why does this matter for startups?

Because inflation goes up. Central banks hold interest rates higher. Investors become more cautious. Venture allocations slow down. This is exactly the chain reaction that hurt the startup ecosystem in 2023 and 2024. 

Actionable takeaway for founders:

Another major theme is the rapid rise of defence innovation.

Ukraine has effectively become a real-time innovation lab for modern warfare. Instead of billion-dollar missile systems, the focus is shifting towards cheaper drones, interceptor systems and software-driven defence tools that can be produced and iterated quickly. 

Investors are noticing.

European defence startups are raising serious capital. Governments are also stepping in with funding programs and procurement incentives. Entire new venture categories are forming around security, resilience and autonomous systems.

Actionable takeaway:

Governments across Europe are shifting strategy.

New policies are being introduced to boost nuclear energy development, reduce reliance on gas imports and increase domestic technology production. There are also moves to introduce “buy European” procurement rules to support local innovation. 

This is not just politics. This is market creation.

Large pools of capital will be directed into energy infrastructure, industrial tech, climate resilience and strategic supply chains.

Actionable takeaway:

While macro risk is rising, AI funding continues to break records.

A new European AI company recently raised around one billion dollars at seed stage. The focus is not just language models, but systems that understand the physical world through spatial data and real-world interaction. 

This signals a shift.

The next AI race may not be about better chatbots. It may be about world models, autonomous reasoning and real-world intelligence.

This opens huge opportunities for founders working on robotics, simulation, logistics optimisation, digital twins and industrial automation.

Actionable takeaway:

One of the most debated startup stories right now is the rapid rise of AI coding tools.

Some companies built massive valuations by creating developer interfaces on top of large AI models. They grew fast because they delivered better user experience. But now foundational model providers are launching competing products themselves.

We have seen this pattern many times.

If you build on top of someone else’s platform, you gain speed. But you also risk being replaced.

Actionable takeaway:

Large technology companies are increasingly designing their own AI chips to reduce dependence on suppliers. The market is splitting between chips used for training AI models and chips optimised for running them in production. 

At the same time, companies like Atlassian and Oracle are preparing major restructuring programs linked to AI adoption and efficiency improvements. 

This shows how fast the economics of software are changing.

Actionable takeaway:

Despite the uncertainty, there is also positive momentum.

International AI labs are expanding in London. Major European founders are spinning out new ventures. Discussions about harmonising European capital markets are gaining traction, which could make fundraising easier across borders. 

This matters for ecosystem builders.

Talent concentration leads to company creation. Company creation leads to new investor interest. Investor interest leads to more exits.

Momentum compounds.

Actionable takeaway:

Final Thoughts. Chaos Creates Windows.

Right now the startup world feels unstable.

Macro risk is rising. Capital is becoming selective. Technology cycles are accelerating. Entire sectors are being reshaped by geopolitics.

But this is exactly the type of environment where generational companies are built.

Founders who move fast while others wait for certainty often win.

Practical founder checklist for the next 6 months:

The next breakout startups are not being built in comfortable markets. They are being built in moments like this.

✅ If this feels familiar, send it to a founder or investor who is building through this market. These cycles are tough to read alone. It gets easier when we share signals and learn from each other.

(👉 Vote now — we’ll share the results in next week’s issue. All votes are anonymous.)

(Last week’s poll results)