A new report, Funding the AI Economy, developed under the StepUp Startups project, examines how capital is shaping the future of artificial intelligence and what Europe must do to stay competitive. The message is clear: AI has become the defining force in global venture investment—and Europe is progressing, but not yet at scale.
DEEP Ecosystems is proud to be a key partner in the StepUp StartUps project, a European Commission-funded initiative aimed at reshaping Europe’s startup ecosystem. Together with Barrabes, Leibniz IRS, Startup Europe Regions Network (SERN), and EU Startups, DEEP is spearheading a two-year journey to develop data-driven insights, conduct research, and organize events to inform policy transformation.
The primary objective of StepUp StartUps is to provide a comprehensive understanding of the functioning of national and local startup and scaleup ecosystems across the EU-27 and EFTA countries. This knowledge will inform the development of data-driven policy reports on key issues and challenges facing Europe’s startup ecosystem.
VC investments
Over the past five years, AI’s share of global venture capital has surged. The United States invested about €1.33 trillion in venture capital between 2020–2025, with 34% directed to AI, while the EU invested €252 billion, of which only 18% went to AI. Europe’s funding pipeline is active, but deal sizes remain smaller and later-stage rounds are rarer.
The investor landscape reinforces this divide. While EU-based investors lead in early-stage funding (under €10M), their presence falls sharply in large-scale rounds—accounting for just 26% of deals over €25M, where U.S. and U.K. investors dominate. This creates a structural bottleneck: Europe generates the ideas but struggles to provide the capital depth to scale them.
Corporate venture capital is another underused engine. In the EU, corporates participate in roughly 15% of AI funding, compared to 25% in non-AI sectors. Nordic countries, especially Denmark and Sweden, show the opposite trend—strong industrial investors actively funding applied AI.
Europe’s AI hotspots continue to consolidate around Paris, Stockholm, and Berlin, which together account for two-thirds of total AI VC activity. Meanwhile, Central and Eastern Europe (Poland, Romania, Bulgaria, and Slovakia) are emerging as cost-effective centers for AI research and specialized talent.
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The project is funded by the tender of the European Commission on “European Start-ups 2.0 – Taking Europe’s start-up economy to the next level through data-driven insights, research and events” with number CNECT/2022/OP/0133. Views and opinions expressed are however those of the authors only and do not necessarily reflect those of the European Union, European Commission or the Council of Europe. Neither the European Union nor the granting authority can be held responsible for them.