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European AI startups are emerging as key players in the tech ecosystem, attracting a growing share of venture capital investment and doubling their overall value in four years.

Key Points:

• AI startups in Europe will account for 25% of VC funding in 2024, up significantly from 15% four years ago.
• The total value of European AI companies has reached $508 billion, growing at a remarkable pace.
• AI startups in Europe are demonstrating superior production capacity, employing 349,000 people in 2024, up 168% from 2020.
• The widespread adoption of generative AI tools has significantly transformed business workflows, leading to average savings of 20% in operating costs.

In a generally stagnant European environment in venture capital funding, AI startups are taking center stage, absorbing 25% of venture investment in 2024, equivalent to approximately $13.7 billion. This represents a sharp increase from 15% in 2019, signaling a rapid rise of the AI ​​sector within the European tech ecosystem. According to an analysis by Balderton Capital and Dealroom, this dynamic has favored the emergence of new tech unicorns, including Poolside and Wayve, highlighting how Europe can compete with the US market when it comes to innovative startups with modern technologies.

James Wise, general partner at Balderton Capital, attaches great importance to these developments, highlighting how AI companies in Europe have doubled in total value in just four years, reaching $508 billion. In terms of economic weight, the AI ​​sector now represents 15% of the European tech sector, up from 12% three years ago. This trend shows that funding opportunities for AI startups are available not only in the early stages, but also in later growth cycles. However, Wise notes that a significant portion of this capital still comes from US investors, attracted by the potential of the European ecosystem.

Another notable element is the rapid growth in employment in the sector. In 2024, AI companies in Europe employed a total of 349,000 people, an increase of 168% compared to 2020. This is particularly interesting considering that AI teams tend to be small. For Wise, this reflects a structural shift in the entrepreneurial economy, characterised by an increasing number of small, highly productive companies, able to compete with larger but less efficient ones.

The adoption of generative AI tools has further accelerated this transformation, with 93% of companies surveyed by Balderton saying they have changed their workflows thanks to these technologies. Benefits include a doubling of the productivity of engineering teams and an average reduction of 20% in operating costs across different business sectors. This cascade effect, where AI companies increase the productivity of other sectors, is a significant growth driver for the entire European ecosystem.

The entire sector seems set for an increasing adoption of AI-based technologies. Further evidence of the importance of these changes is the fact that some experts, such as Wise, believe that the distinction between AI companies and other technology companies has now been overcome, suggesting that AI has become an intrinsic and ubiquitous component of contemporary innovation.

AI remains at the heart of an increasingly innovation-oriented Europe.