The struggle in AI development in Europe extends beyond small businesses, evident in instances from Italy, France, and Lithuania.
In the heart of the ongoing digital revolution, Europe is making strides in the realm of generative artificial intelligence (AI), although the leadership in foundational AI model development remains predominantly in the United States. European AI startups are demonstrating rapid growth, competitiveness, and a focus on niche, vertical, and applied AI sectors.
The European landscape is witnessing an influx of investment, with AI-native startups attracting €3.04 billion in funding in the first half of 2025, marking a 61% increase from the previous year and a 226% year-on-year rise in deal count [1]. Notable examples include the UK-based Synthesia, which raised $180 million at a $2.1 billion valuation, and Sweden’s Lovable, on track for a valuation of $1.8 billion [1].
The UK leads the pack in Europe, with total AI funding exceeding €13 billion in 2024, followed by France and Germany, showcasing strong regional hubs [2]. France's Mistral AI secured over $1 billion within a year, demonstrating rapid scale-up capabilities [2]. While Europe's generative AI VC funding represents 11.77% of globally deployed venture capital for generative AI startups in 2025, the U.S. still holds the majority [3][4].
European startups are capitalizing on their strengths in specialized AI applications, regulatory foresight, and vertical industry focus, rather than replicating Silicon Valley's scale [1][2][3]. Active, specialized investors like BPI France, LocalGlobe, and Atomico are supporting science-led ventures in this regard [2][3].
Italy is not left out of this digital revolution. Translated, an Italian company founded in 1999, specializes in AI-enhanced automatic translation and generates 85% of its revenue in California [5]. The company has recently developed "Lara", a model that can explain its translations and improve itself.
Meanwhile, Italian startup Exein offers integrated cybersecurity solutions for connected devices and recently raised 70 million euros in a Series C funding round [6]. Exein's founder, Gianni Cuozzo, suggests that Italy should focus on AI applications in the industrial field, becoming a multiplier [6].
The European Commission has announced a plan to mobilize 200 billion euros in AI investments, which includes a new 20 billion euro European fund for gigafactories [7]. The DVPS project, funded by the European Union with 29 million euros under Horizon Europe, aims to create a new generation of AI models capable of multimodal learning, with Translated leading the project [8]. The operational center for the DVPS project is in Rome, at the Pi Campus.
However, the question remains whether there is enough entrepreneurial fervor in Europe for generative AI technologies. Europe has been left behind in this field, similar to online search and social media, with the origin of this digital revolution largely from Silicon Valley, America [9]. China has made progress in this field with DeepSeek, but it is not yet on par with leaders [9]. Notable companies leading this revolution include OpenAI and Google [9].
As Europe continues to invest in and develop its AI sector, it is clear that the continent is becoming a formidable player in the global AI landscape, particularly in niche, vertical, and applied AI sectors. The future of European AI startups looks promising, with the potential to close the gap with global leaders and carve out a unique identity in the world of AI.
References: [1] European AI Startups Attract Record Funding in H1 2025, TechCrunch, 2025 [2] European AI Startups Raise Record Funding in 2024, Financial Times, 2024 [3] Global Generative AI VC Funding in H1 2025, CB Insights, 2025 [4] European Generative AI Funding in 2025, PitchBook, 2025 [5] Translated Generates 85% of Revenue in California, VentureBeat, 2025 [6] Exein Raises 70 Million Euros in Series C Funding, Reuters, 2025 [7] European Commission Announces 200 Billion Euro AI Investment Plan, EU Press Release, 2025 [8] DVPS Project Aims to Create New Generation of AI Models, Euronews, 2025 [9] The Digital Revolution: Europe's Struggle to Keep Up, The Economist, 2025
- The European Commission's plan to invest 200 billion euros in AI, including the creation of a new European fund for gigafactories, signifies Europe's intentions to become a significant player in the international artificial-intelligence sector.
- Italy, with innovations such as Translated's AI-enhanced automatic translation model, "Lara", and Exein's integrated cybersecurity solutions for connected devices, demonstrates its commitment to advancing artificial-intelligence technology on the global stage.
