Europe increases investment in AI - But Trump's policies could threaten expansion
Investment in European artificial intelligence (AI) startups is on the rise, after the European Commission unveiled plans last week to strengthen its capabilities in the sector. But the current global trade turmoil could threaten this progress.
European investment in innovative technology saw venture capital funding surge 55% in the first quarter of this year, compared to the same period last year, according to new data from Dealroom.
The data showed that artificial intelligence companies have already raised almost 3 billion euros, up from 1.9 billion in the first quarter of 2024. Also, European tech stocks, excluding AI, have fallen by 10%.
However, the data does not include the effects of tariffs imposed by US President Donald Trump, who hit China with a 125% tariff on imports.
He also hit Europe with a 20% tariff on exports to the US, before temporarily lowering it to 10%. The US president said electronic devices such as smartphones and computers would be exempt from the duties for now, but the measure would come soon.
The launch of basic AI models has become a geopolitical race, with nations arguing that it is a matter of national security. The United States and China are far ahead of Europe in building basic models.
However, the latest report noted that investments in European AI firms went mainly to companies covering healthcare, cybersecurity and robotics.
The data also showed that interest in Europe's artificial intelligence agents has grown, with €45 million invested in new startups working on these tools, including Stockholm-based Lovable and London-based Paid AI.
Action Plan
The Technology Action Plan covers infrastructure, data access, the cloud, and aims to transform Europe's traditional industries.
Despite the UK not being part of the EU's plans for technology development, the country has attracted the largest investment in Europe, with British startups raising around €3.6 billion this year, with €1.4 billion going to artificial intelligence companies.
Germany also saw a 74 percent increase in investments for the first quarter of this year, compared to last year, reaching 355 million euros.
However, France, whose government has encouraged investment in the sector and boasts companies such as Mistral AI, suffered a decline of around 18 percent in the first quarter of this year, compared to 2024.
The French government has been promoting the development of the technology in the country and this year hosted the Action Summit on Artificial Intelligence in Paris. On the eve of the event, President Emmanuel Macron announced investments worth 109 billion euros in the sector over the coming years.
"European ambition is only getting stronger. The Paris Summit set the high standard for what needs to be done in Europe. European startups and companies are rising up to challenge the market," said one of the report's authors.
"From healthcare to cybersecurity and automation, European companies are building solutions that are urgently needed, and the pace of funding shows that investors are excited about the continent's technological potential," he stressed.
Poll
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