Sopra Steria Ventures: How to get AI into Europe’s core IT systems

When it comes to AI, Socheat Chhay sums up the global situation starkly:

“The US has got the money, Asia has got the technology, and in the middle, we’ve got regulations,” he says, referring to Europe. Europe is often mocked for taking a cautious and legalistic stance on the artificial intelligence revolution sweeping the world.

But for Chhay, who heads up the venture partnership and investment team at French tech firm Sopra Steria, regulation is Europe’s strategic advantage.

“It’s a good thing because that’s a strategic barrier. Sovereignty, private data regulations, ethics, sustainability are a strategic competitive advantage that Europe can export, especially at an AI time where the moat is proprietary data.”

AI systems that are accountable, transparent and secure are already a crucial criteria when it comes to enterprise and government buyers. Countries such as India or the Gulf region “wouldn’t want to be dispossessed or locked out of their own public and private data by US or China technology providers,” says Chhay. Europe can credibly promise “your critical and proprietary data would be as safe as within public sectors, the banking systems or the health industry”.

The flashiest or quickest AI won’t necessarily win the corporate or government game. The safest and most trusted will.

Sopra Steria is in a good position to know. The French IT services company doesn’t necessarily have large consumer name recognition. But, it quietly runs the back end of almost every serious European institution, with a client base of more than 2,000 large enterprises and public institutions that stretches from banks to defence ministries, airline manufacturers, space agencies and transport authorities.

It works extensively with French, UK, German and Scandinavian ministries. It helped develop many of the systems that run European border control or protect people and infrastructure such as the 2024 Olympic Games. It helps run London’s transport network. Some 280 financial institutions run its payment system. Roughly 20% of payments made in the region and the same percentage of UK mortgages are estimated to touch a Sopra Steria system. 

“We’re at the invisible backbone making sure things happen,” says Chhay.

At the same time Chhay and his team of investors and value creators are making sure that Sopra Steria stays at the forefront of compute technology from AI to quantum. Three years ago the company created a dedicated corporate venturing unit with a brief to invest and find business synergies in augmented software, AI and deep tech. It looks for technologies that plug into Sopra Steria’s main businesses including financial services, aerospace, defence and security, and public sectors. 

A key feature of Sopra Steria Ventures from the start was that it wouldn’t be a side bet, a small fund bolted on to the side of an existing business. The unit was designed to be tightly wired into Sopra Steria’s business activities in software, integration and consulting.

The mission is always to partner with startups in a way that creates new services for Sopra Steria’s clients. For example, the IT integrator provided security for the Olympic Games in Paris in 2024.

It partnered with XXII, a French startup developing computer vision technology, to increase live security outcomes. Later it invested in the startup to ensure better access to the technology, which the Sopra Steria team felt had very broad applications in defence, security, retail, logistics, maintenance and manufacturing.

The business case worked for both sides. Many existing Sopra Steria customers were hesitant to use technology from a new startup on its own but were given confidence by the fact that it was part of a Sopra Steria partnership. This opened up pilot opportunities in other sectors. On the Sopra Steria side, added capabilities allowed the company to make more money from contracts. As a whole, Sopra Steria portfolio companies have benefited from an increase of new revenues ranging between 5% and 20%.

Chhay says the team doesn’t necessarily always invest in the startups it partners with. Sometimes, however, investment becomes a good way to secure a closer relationship, especially in areas in which the startup’s technology proves strategic.

CVC by the book

Sopra Steria Ventures is not a unit that has been built by trial and error. Before setting up the team Chhay spent extensive time speaking to both internal stakeholders at the company and peers in the corporate venture community to understand the do’s and don’ts of corporate venture. He developed a clear playbook that covered governance, investment process and, critically, a best-in-class platform function from day one.

In terms of investment, the team operates with VC-like speed — “from touch point to the bank transfer, it’s around four months,” and is a light-touch CVC in terms of governance, says Chhay.

At the same time, the business opportunity for Sopra Steria has to be clear early on. Business leaders at the parent company are brought in from the start and asked to create  “a business plan between three to five years on the total contract values and synergies that they could do together”, says Chhay.  He has a strict hurdle on returns: “If we invest, we need to create at least five to seven [times] in terms of synergies for us and the startup.”

Internal business stakeholders are encouraged to see startup partnerships as something that could generate revenues in between one and two years.

Once the partnership begins, startups enter a three-month programme that looks more like structured co-building than post-deal integration. Sopra Steria assembles an operational team including tech, sales and marketing and spends time testing the joint value proposition on clients with an expectation of going to market together in nine months.  

The 12-person team is heavily weighted to platform and operations, with only three investors, two in corporate functions and the rest focus on liaising with different business units, from financial services, cybersecurity to defence and aerospace.

The team is also deliberately made up of ex-entrepreneurs, people used to rolling their sleeves up and building and who can speak the language of founders and investors.

Strategic first, with a financial constraint

Strategic fit with startups is the most important factor, but financial returns are necessary. The goal is simple: “to return the money plus over inflation”.

That leaves room in the portfolio for a barbell strategy mix of deals, some which are more risky and financially focused and others which might not be VC-backable but bring in technologies that are strategically important for Sopra Steria.

Bets on frontier technologies such as quantum computing may not result in a joint product offering in the short term but are seen as critical to making sure Sopra Steria has a stake in key emerging technologies and support its clients’ transformation.

Chhay frames certain high-valuation frontier tech stakes – such as in quantum computing – as a way “to tilt your portfolio in case anything happens”.

AI, SaaS and Europe’s “regulation advantage”

Sopra Steria’s portfolio is increasingly skewed towards AI, data and software. The unit is looking at AI for financial services, for example, especially technologies that allow orchestration of some core banking functions.  

It is also pursuing autonomous software management systems for defence and security, as well as predictive engineering or maintenance and mission planning for industrial clients and agencies in the aeronautic and transportation industries.

Sopra Steria’s vantage point inside a large IT, software and consulting services group has also made it acutely aware of AI’s disruptive impact on software. Chhay estimates that “around 40% of SaaS application could be impacted by AI agents”. In some areas, including fintech, HR tech, supply chain, devops and customer service, Chhay says somewhere between 20% and 80% of top layer tasks can be automated.

He sees the risk of AI as higher for newer SaaS or AI providers than for long-standing incumbents.

“Any SaaS that are not legacy, or they’re not into deep into workflows and managing proprietary data are at risk,” he says.  By contrast, large incumbents “might be the winner of this evolution, because they are already there. They are deep into customised workflows and data of their clients. What they will need is to get AI into their workflows, to generate faster outcomes, increase accuracy and lower down the cost of operations.”

In that world, Sopra Steria Ventures bets that a well-governed, platform-heavy CVC – plugged into mission-critical systems for banks, governments and industrial giants – can be one of the key channels through which Europe turns its regulatory instincts into commercial advantage.

See all the recent deals by Sopra Steria in the CVC Funding Round Database