In 2024, artificial intelligence is consistently front-page news. From Nvidia hitting a trillion-dollar market cap to the growing energy usage of information centres, it’s essentially the most discussed technology of our time. And it’s a technology that the US dominates, with three of the Most worthy AI start-ups, Anthropic, OpenAI and xAI, based there.
But here’s the confounding thing — the worldwide race to construct artificial general intelligence was initiated by a London-based start-up, DeepMind, founded in 2010 — well before Anthropic or OpenAI existed.
How did Europe lose its lead? And how can it stop that from happening again?
It’s an issue that sits inside a broader trend of the US becoming more globally dominant in technology, despite the EU having a bigger population. There are only seven examples of trillion-dollar tech corporations on the planet — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. All are American. None are European. Going a level down, Europe has 4 $100bn-plus tech corporations compared with the US’s 33, and from Mario Draghi to Emmanuel Macron there’s increasing recognition from European leaders that something has stalled.
I share this view and, after 17 years spent founding and investing in start-ups, I consider that the expansion of the technology industry in Europe is core to making a more prosperous and resilient society. You only need to take a look at the UK’s economic stagnation since 2008 to see why.
When you’re drifting sideways in fog it might be hard to get your bearings, but when the entire economic effect of 14 years of sluggish growth — a 28 per cent drop in GDP vs trend — had occurred in a single single drop overnight it will be a historical economic shock on the size of a pandemic or war within the lifetime of the common Briton. It would splash every front page for months, not only fade into the background.
Meanwhile, over the identical period within the US, GDP didn’t stagnate, substantially due to technology corporations’ contribution to economic growth. Over a 13-year period, the combined market cap of Apple, Google, Amazon, Microsoft, Tesla, Nvidia and Meta has increased by 1,620 per cent. Put simply, the economic advantages, not to say national security and geopolitical advantages, of those corporations are extraordinary — they’re a wealth engine to pay for other things a rustic might wish to do.
But there are reasons for Europeans to be hopeful. Technologies that might transform our world for the higher are being in-built the continent — be it in robotics, nuclear fusion or quantum computers — and today it stands a significantly better likelihood of commercialising its scientific excellence.
To avoid repeating past mistakes, and be sure that the following era of innovation may be built to deliver the continent’s first trillion-dollar company, one thing is crucial: Europe must have a good time and support experienced founders who’re constructing and investing within the highest-risk, highest-reward ideas.
The value of repeat founders
The DeepMind story began when co-founders Demis Hassabis and Shane Legg met on the Gatsby Computational Neuroscience Unit at University College London — a novel academic institution where neuroscientists and machine learning researchers come together to collaborate.
Hassabis is many things — a Nobel-winning scientist, a visionary AI researcher — but I consider at the least as importantly he was something else: an experienced founder. Twelve years prior to DeepMind, he founded Elixir Studios, a London-based games studio that shut down after seven years.
You can feel the heartache in Hassabis’s quote from a press release as the corporate wound down: “It seems that today’s games industry now not has room for small independent developers wanting to work on progressive and original ideas . . . this was the only real purpose of establishing Elixir and something we could never compromise on.”
Technology start-ups are a comparatively recent area of the economy and there remains to be limited understanding of what exactly drives success. A standard explanation for why Europe lags the US is excessive regulation, and it’s actually true that founders in Europe face more bureaucratic drag compared with their US peers.
As only one example, in Germany the notary process adds huge overhead for founders raising funding, specifically from angel investors, and for my part is clearly negative for the start-up ecosystem. Another obvious problem across Europe is the high equity stakes taken by some universities within the commercialisation of mental property, which might make it almost unattainable for out of doors investors to are available in.
But I consider it’s the role of founders that has the largest impact. When I feel in regards to the hardest-charging founders I do know in Germany, similar to Hélène Huby of The Exploration Company or Francesco Sciortino of Proxima Fusion, they blast through this bureaucracy and it is admittedly not the core thing holding them back. In particular, repeat entrepreneurs similar to Hassabis are a form of critical keystone species that massively affect the general health of a continent’s technology ecosystem.
The first and most evident reason for that is that like several career, being a tech start-up founder is a form of craft — and the longer you do it, the more you refine the craft. So when it got here time for Hassabis to lift his first round of funding for DeepMind in 2010, he knew higher than to waste time on conservative European investors and headed straight to Silicon Valley where he was capable of raise investment from experienced founders similar to Peter Thiel and Elon Musk.
This is the second reason that experienced founders are so essential — for his or her second or third company they may often tackle harder challenges. Musk is the quintessential example of this — his first company in 1995, Zip2, was an online city guide, his second in 1999 was a web-based bank, and his third in 2002 was an area exploration company.
What explains this ramp in ambition? I believe the deepest reason is that having founded a start-up, you realize how hard it might be — so should you’re going to try again, you’re much more committed to tackling a mission that’s inspiring enough to justify the lows that you realize will inevitably come. There’s also a form of natural selection at play — the harder the mission, the greater the skill level required and the less likely a first-time founder will make it.
Audacious capital
As investors, experienced founders are also often a source of essentially the most audacious capital, funding start-ups with the next level of risk or an extended gestation period before they begin to work and make cash. The game introduced the concept of the “tech tree” — the concept progress in technology may be visualised as a tree by which recent branches of technology sprout from the predominant trunk after which allow for a network of subsequent branches to grow. For example, semiconductors were needed to enable personal computers.
Experienced founders are sometimes more than likely to fund recent branches of the tech tree. In Silicon Valley, greater than 60 per cent of the partners at top enterprise capital funds were previously founders and chief executives; in Europe, against this, the figure stands at a dismal 8 per cent.
Things are starting to maneuver in the correct direction. My own fund, Plural, is run 100 per cent by experienced founders and chief executives. We are here for the following Hassabis, to try to satisfy their ambition.
This brings us back to the story of DeepMind, which in 2014 was acquired by Google for just £400mn only 4 years after launching. Hassabis now runs the whole lot of Google’s AI efforts from London and has delivered breakthrough after breakthrough, from AlphaGo to AlphaFold. I first wrote about the price to the UK of DeepMind being acquired back in 2018 in an essay “AI Nationalism”, but in 2024 this seems much more stark.
What happened? I might argue that there was simply not enough audacious capital available for Hassabis to pursue his mission and as a substitute an experienced founder — on this case Larry Page with all of the resources of Google — was capable of provide the billions in long-term high-risk funding that he needed.
The same is true in self-driving cars or quantum computing, where Google has invested billions in technology that might take a decade before it makes money. Consider how various things might be today if someone in Europe had the audacity to be a real partner to Hassabis and funded him to remain independent.
Meanwhile in Silicon Valley, a gaggle of experienced founders, most notably Sam Altman and Musk, were considering hard about how essential AI might be and the right way to compete with DeepMind as they founded OpenAI. In 2015 Altman emailed Musk saying: “Been considering loads about whether it’s possible to stop humanity from developing AI. I feel the reply is sort of definitely not. If it’s going to occur anyway, it looks as if it will be good for somebody aside from Google to do it first”.
Musk then became the biggest donor to the brand new non-profit OpenAIThe goal was very explicitly to meet up with DeepMind. In emails released as a part of a court case, Musk wrote to the co-founders in 2016: “DeepMind is causing me extreme mental stress.” And in 2018: “My probability assessment of OpenAI being relevant to DeepMind/Google with out a dramatic change in execution and resources is 0 per cent. Not 1 per cent . . . I wish it were otherwise . . . Unfortunately, humanity’s future is within the hands of (name redacted by lawyers).”
Fast-forward today and OpenAI is now valued at greater than $150bn, Anthropic, founded in 2021 by OpenAI alumni, is reportedly valued at $40bn and xAI, founded by Musk in 2023, is already valued at $50bn. A set of well-resourced founders — Page, Musk and Altman — tilted history and now Silicon Valley, not London, is the worldwide centre of gravity for AI.
Next-generation technology
But, while Europe may need fallen behind in that story, AI remains to be young and far is yet to be written. And beyond AI, there are potentially world-changing technologies being in-built Europe that urgently need daring capital to grow.
One example is nuclear fusion. Fusion might be the last word solution for zero-carbon, low-cost, baseload energy. For Europe it might be a source of energy security in addition to a chance to construct an enormous recent industry. A start-up that builds fusion reactors in the way in which that SpaceX builds rockets might be the following trillion-dollar company.
This must be an area where Europe is positioned to steer — it has invested more public funding in fusion research than the US and has a bigger base of fusion scientists. European governments have led the way in which with the Joint European Torus, the tokamak with the record for fusion power within the UK, and the Wendelstein 7-X in Germany, the world’s most advanced stellarator. Europe must be poised to win.
However, if you have a look at private start-ups in fusion, 4 within the US have raised greater than $500mn, compared with just one in China and 0 in Europe. And again it comes back to audacious founder-led capital, with the best-funded US fusion start-ups raising their early rounds of funding from Altman, Vinod Khosla or Bill Gates. Experienced founders are those capable of optimistically embrace these sorts of high-risk projects that outline the following branch of the tech tree.
We’re seeing glimpses of how this could work in Europe. In 2021, Spotify founder Daniel Ek invested €100mn in AI defence start-up Helsing when there was no alternative investor standing within the wings — he was the one person willing to take this level of risk. Helsing is an example of a really progressive European company that has now secured a series of major government military contracts. That early investment substantially de-risked the business, allowing Helsing to lift greater than $830mn from enterprise capitalists over the next three years. It was a catalytic event of a sort that doesn’t occur enough in Europe.
Don’t sell
Another reason I call experienced founders a keystone species is that, together with founding and investing in additional ambitious start-ups, in addition they support the following generation of founders in additional nuanced ways.
Experienced founders can lend their scar tissue to a brand new founder and help them avoid the mistakes they made. Consider how Sean Parker, co-founder of Napster, took the experience of being fired from his previous start-up and used it to assist Mark Zuckerberg retain full-board control of Meta, something that became critical in July 2006 when Yahoo made Facebook a proposal to accumulate it for $1bn. With complete control of the board, Zuckerberg could select to reject the offer, despite advice from board members to take the deal. Fast-forward to today and Meta is one among those trillion-dollar US corporations.
Ek was a second-time founder when he began Spotify and, despite a reported billion-dollar offer to sell to Google in 2009, remained independent; the corporate now has a market cap of $95bn. The obvious point is that to eventually be value $1tn, you have to not sell earlier for a number smaller than that.
This story illustrates the importance of a mission-focused founder, but not selling will also be on account of sheer incompetence from an acquirer. In 1998, Google’s founders tried to sell their company to Yahoo for $1mn, Yahoo refused they usually kept constructing. Later, in 2002, Yahoo realised the worth of Google, offered $3bn, Google said they’d sell for $5bn, Yahoo balked again and 22 years later Alphabet is value greater than $2tn and owns DeepMind.
Dutch payments company Adyen didn’t sell and is now value $46bn, Wise is now value $11.4bn and Arm Holdings is the UK’s Most worthy technology company, value $143bn, but only because an attempted acquisition by Nvidia in 2020 was blocked. Can you even imagine the extent of dominance Nvidia would have today if it owned Arm too?
Great corporations take time. ASML, the Dutch chip equipment maker, is now value over $275bn, but has been consistently tackling its mission since 1984. Nvidia is a $3.4tn company today, but in 2010, when it was 17 years old, it was valued at lower than $10bn. If Europe wants a real tech giant, it is going to require steely determination from founders and investors to not sell and keep constructing.
Europe, rise up tall
While Europe is yet to supply its first trillion-dollar tech company, that’s not the primary aim of the sport. To give itself one of the best likelihood of making one among those truly iconic corporations, it must create as many $100bn corporations similar to Spotify as possible.
Things must occur urgently as time is running out to remain within the race. Europe must now construct these remarkable vehicles of scientific progress and economic growth — not only to grow the tech industry, but to power its nations to be more prosperous as a complete. If it does, we could soon be living in a world powered by European-built nuclear fusion power plants or solving a few of science’s most complex problems with quantum computers which were developed in London or Munich.
This isn’t nearly growing the tech industry for those who work in it: it’s about making a more prosperous and resilient society with more wealth to pay for Europe’s public services.
The next branches of the tech tree have the potential to actually profit humanity and there is no such thing as a reason they’ll’t be grown in Europe. Regulation isn’t the core problem — the secret is to cherish the role of experienced founders, have a good time after they fund the riskiest and most vital tech, stop selling essentially the most precious corporations to US acquirers and switch an already powerful innovation engine right into a harder-edged ambition to maintain scaling in Europe.
It’s time for Europe to rise up tall.
