Europe’s tech awakening: can it compete with the US?

The European Commission EVP Henna Virkkunen is leading an urgent drive to develop the EU’s tech sector, RAID Director Ben Avison reports from Masters of Digital

Europe boasts over 50,000 startups and scaleups, yet it still lacks a trillion-dollar company – a stark contrast to the US’s “magnificent seven”. At the Masters of Digital conference, Henna Virkkunen, Executive Vice-President for Technological Sovereignty, Security and Democracy at the European Commission, addressed the continent’s potential and challenges.

“Our greatest strength is in our startups and in our scale-ups,” said EVP Virkkunen, speaking alongside a panel of leading European startups. “Technology, security and democracy have a very strong connection. That’s why there is such hard competition globally on who is leading on those technologies.”

European tech firms are advancing in AI, quantum chips, advanced materials, and dual-use technologies. “Together they offer potential far beyond the sum of their parts,” Virkkunen noted. However, many startups face barriers: a fragmented market, late-stage funding challenges, and regulatory hurdles.

The Commission is taking action. “We are taking concrete steps to remove potential distractions and barriers. We are now simplifying the EU rules. We have already taken many steps with several omnibuses. We are also deepening the single market,” she said.

In the coming weeks, the Commission is set to publish the 28th Regime – a single market for innovative companies. “Our goal is to make Europe the easiest place in the world to grow a tech company from startup to unicorn,” Virkkunen said.

The AI Continent Action Plan sets out to expand Europe’s compute capacity. “Today the EU stands as the global leader in providing compute power as a public good. This is thanks to our AI factories. We will have 19 up and running very soon and they are free for European startups to use.” This year will also see the launch of Europe’s first AI gigafactories.

“It’s not about closing borders or keeping winners. It’s about creating conditions for innovation to thrive, for startups to scale and for unicorns to emerge and stay in Europe,” she added.

One of the biggest challenges in Europe is the need to raise investment. “We have capital in Europe. We have around 33 trillion Euros in household savings, much of which is not mobilised for innovation now. We are now focused on delivering a true investment and savings union to incentivise our households and families to invest some of their savings, which will help our startups and scaleups in Europe,” EVP Virkkunen said.

Nadja Calviño, President of the European Investment Bank Group, noted: “The number of startups in the EU is comparable to that in the US. The talent is there; we need to nurture it and scale it up. We know what we need to do; let’s just do it!”

Valerian Giesz, cofounder and COO of Quandela, stressed Europe’s role: “Europe has a key role in driving private investors to invest in startups like us.” After receiving the Future Unicorn Award, he added: “This recognition obliges us to ‘make it’. It’s time to wake up the quantum giant!”

Yet, foreign investment remains critical. “We wouldn’t be here without capital coming from other continents,” said Ilkka Varjos, CTO of Canatu.

The opportunity – and challenge – for investors is to embrace the unknown. “The technology comes from a deep curiosity about how nature works,” said Peter Lodahl, CQO of Sparrow Quantum. “Investing in technology that doesn’t even exist – that’s what’s exciting!”