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Niklas Zennström, one in all Europe's most successful tech entrepreneurs and investors, believes the continent's artificial intelligence startups can still thrive despite their large funding gap in comparison with U.S. rivals.
European startups can succeed by developing applications built on AI platforms run by US corporations comparable to OpenAI or Google, Zennström told the Financial Times.
“Think about what happened with mobile and the cloud: there are just a few cloud providers on the earth, they allow hundreds and hundreds of companies,” he said in an interview. “It's not like everyone needs to be a giant language model.” . As an application provider, you may add value.”
The comments from a number one industry voice come at a time when European policymakers and investors are increasingly concerned that the US is ahead of the region in AI.
Many fear that a transformative recent technology will once more put Europe vulnerable to being left behind by wealthy Silicon Valley corporations, with huge implications for the region's competitiveness and national security.
The European tech industry has created a whole bunch of “unicorns” — private corporations valued at greater than $1 billion — and narrowed the early-stage funding gap with the U.S., “no matter whether Europe has a variety of critical (technology) infrastructure.” that are European,” the Skype co-founder told the FT.
“European corporations can construct on (AI platforms) whether or not they come from France or the US,” he said.
European entrepreneurs' confidence within the region's technology prospects will reach a brand new low in 2024 State of European technology Report from Atomico, the enterprise capital firm founded by the Swedish entrepreneur in 2006. The latest survey found that 40 percent of founders were “less optimistic” concerning the way forward for European technology than the 12 months before.
But while 2024 has been “very difficult” for start-ups and investors to confess, with European tech investment expected to say no for the third 12 months in a row, Zennström believes pessimism concerning the region's prospects is overblown.
“It's a European problem, (just) talking concerning the problem,” he said. “There's a lot exciting data that shows we're actually catching up (to the U.S.), we're doing pretty much.”
Despite these advances within the European technology industry as a complete, the transatlantic investment gap is especially large in AI start-ups.
A report Research from enterprise capital firm Accel, released in October, found that U.S. investments in generative AI reached nearly $48 billion in 2023 and 2024 combined, greater than five times the quantity in Europe and Israel, where the funding is positioned this 12 months sector totaled roughly $9 billion.
Much of the U.S. total is driven by startups developing so-called “foundation” models, the costly and sophisticated AI systems that underpin general-purpose chatbots and media creation services like OpenAI’s GPT.
In Europe, there are a handful of startups working on incubation models, including Paris-based Mistral and Black Forest Labs in Germany.
However, US-based OpenAI, Anthropic and xAI have collectively raised tens of billions of dollars greater than their European rivals, while Big Tech corporations Microsoft, Google, Amazon and Meta are also investing heavily in their very own large language models.
Atomico, which raised $1.24 billion in recent funding in 2024, has backed European AI startups developing more specialized models around specific applications, including Corti, a Danish maker of digital healthcare assistants, and the German company DeepL, which offers machine translation tools.
“It’s not nearly five LLM corporations,” said Zennström. “Plus there’s a lot value being created.”
However, he acknowledged that “it will not be yet decided” whether Europe can construct competitive general-purpose LLMs in the long run.
“What you would like for AI is you would like a variety of money, a variety of data and distribution. Therefore, it’s natural that Big Tech corporations have a competitive advantage,” said Zennström. “The reality is that the wealthy are getting richer.”
