Europe has a major opportunity in artificial intelligence (AI) to focus on the practical use of this technology. While the United States leads in the development of large language models, which require enormous investments, European companies can focus on tools that make AI useful in everyday life. This is the area where the greatest profits are expected in the future, as Robert Lacher, founding partner of Visionaries Club, said on Squawk Box Europe at the beginning of the year. According to him, this application layer is the key to success.
However, the pace of development is set primarily by American giants such as OpenAI and Anthropic. Their frequent model updates, such as OpenAI's ChatGPT or Anthropic's Claude, force startups built on these foundations to adapt quickly. If they fail to do so, they risk falling behind. In the first half of 2025, generative AI companies secured investments worth $49.2 billion (approximately CZK 1.13 trillion), surpassing the full-year 2024 total of $44.2 billion. The United States accounts for 97 percent of the value of these deals and 62 percent of their number, while Europe accounts for only 2 percent of the value but 23 percent of the number.
Challenges for Europe
Investors in Europe are generally less willing to take risks than those in America, and the market is fragmented, making it difficult for companies to grow quickly. Following the boom in 2021 and the subsequent economic downturn, the emphasis has once again shifted to stable growth and solid business metrics. AI is attracting attention, but less so than in the US. Bryan Kim, a partner at Andreessen Horowitz, emphasized at Italian Tech Week that speed in innovation, product development, and distribution ultimately beats everything else. According to him, the technologies that startups rely on change every month, and companies must keep pace to succeed.
Europe has its own large language model company—the French startup Mistral, which has raised €1.7 billion (approximately CZK 42.5 billion) to date. The company positions itself as an open competitor to OpenAI and recently secured an investment from Dutch chip manufacturer ASML. Nevertheless, it still has a lot of work ahead of it to catch up with the American leaders. Examples of European companies applying AI in practical ways include the Swedish platform Lovable for creating apps and websites using AI, the AI agent-focused startup Sana, the London-based company Synthesia for video generation, and ElevenLabs for synthetic audio. ElevenLabs later also developed its own language model.
Momentum as the key to success
The ability to continuously improve often depends on securing funding for expansion. Jean La Rochebrochard, managing director at Kima Ventures, noted on Squawk Box Europe that Europeans are revolutionary, romantic, and inventive, but it is difficult to compete with a country that has a greater appetite for risk, more capital, and more talent—meaning the US. Nevertheless, he believes that Europe can produce more major success stories, similar to Spotify or Revolut. According to him, founders who have built companies outside Europe and are returning are the ones worth backing. He hopes Mistral will reach a valuation of $100 billion (approximately CZK 2.3 trillion) and inspire dozens of other companies.
British AI cloud company Nscale recently raised $433 million (CZK 9.96 billion) in new funding, shortly after a billion-dollar Series B round—the largest in Europe. Like Mistral, it focuses on AI infrastructure, a highly relevant topic in the context of independence from American technology. Anton Osika, CEO of Lovable, said on Squawk Box Europe that Europe only needs to change its mindset and believe that success is possible. According to him, barriers to accessing technical talent or capital are no longer as significant as they once were. His company, for example, serves as a technical co-founder and attracts top experts from the US to Sweden. Moreover, he says it is easier to hire in Europe than in the US, where there are a thousand similar companies, giving European startups an advantage.
The rivalry between OpenAI and Anthropic affects the entire market
The rivalry between OpenAI and Anthropic is increasing pressure on European startups because these companies have enormous user bases—OpenAI reports more than 800 million weekly active users—and annual revenues in the billions of dollars. Anthropic focuses on trust in enterprise environments and specialized applications, while OpenAI dominates consumer products. Both companies are expanding into Europe; for example, Anthropic is hiring in Britain, Germany, and Switzerland and establishing a research center in Zurich. This makes it more difficult for local companies to attract talent and capital because they must compete with the speed and resources of American giants.
This competition accelerates innovation but raises the bar for European startups, which must adapt their products more quickly. Questions surrounding AI regulation and independence from the US are becoming increasingly important as European governments and companies seek partnerships with these giants. Ultimately, this dynamic could create new opportunities for Europe if it succeeds in leveraging its local strengths in AI applications and changing its approach to risk and growth.
