Cathay Innovation Finalizes €1 Billion Ai Fund Targeting Vertical Applications Across Key Industries

Cathay Innovation, a Paris-based venture capital firm, has finalized a €1 billion fund dedicated exclusively to artificial intelligence, marking one of the largest such vehicles in Europe as of June 2025. The closing of Fund III demonstrates a significant escalation of institutional commitment to the development and adoption of “vertical AI”—sector-specific applications of machine learning and automation across key industries, including healthcare, finance, energy, and mobility.

The fund targets more than 30 investments distributed across Europe, the United States, and Asia, with each company eligible for more than €50 million in financing across their lifecycles. Cathay Innovation’s initial portfolio under the fund includes 14 companies, such as Nabla, which develops AI-powered tools for medical professionals, and Mogic AI, a startup specializing in generative AI for short-form video content.

Cathay’s roster of limited partners for this vehicle consists of major global corporations, including Sanofi, TotalEnergies, BNP Paribas Cardif, and Valeo. Their involvement signifies a robust demand for AI that can be integrated into incumbent business operations. These limited partners, simultaneously potential clients and market access channels for the startups backed by Cathay, underscore a broader industry movement towards the real-world deployment of AI rather than the pursuit of foundational large language models.

The fund’s scale and sector focus position Cathay Innovation as a critical intermediary between early-stage deep tech startups and established enterprises seeking AI solutions. Recent trends across Europe point to accelerated public and private investment in AI infrastructure, as the region seeks to reduce reliance on U.S. and Chinese technology while cultivating homegrown innovation in machine learning, data science, and automation.

However, Cathay’s high-concentration investment approach—writing large checks to a comparatively small number of companies—amplifies both the upside and downside of each bet. The sectoral fragmentation of vertical AI markets, together with the technical complexity and long adoption horizons involved, will test the firm’s capacity for technical due diligence and timing of market entry. The dual mandate inherent to all corporate venture funds—advancing strategic priorities of corporate LPs while generating financial returns—adds further complexity, often necessitating alignment of interests that can prove challenging at scale.

Despite these risks, the trajectory of AI adoption across production, healthcare, financial services, and energy suggests that software is becoming embedded in the fundamental processes of industry. Should sectoral AI reach the level of general-purpose technology that underpins operations across the global economy, Cathay Innovation's latest fund secures a diversified position at the intersection of technology entrepreneurship and enterprise digitization.

For more detailed announcements and ongoing updates, see V3V Ventures.