Analysis

February 23, 2023

The AI race is heating up — but Europe is sitting on the bleachers

AI innovations are the hot topic of the moment — so why aren’t investors flocking to European deeptechs?


Sadia Nowshin

2 min read

Image: midjourney

The AI competition is fierce — but Europe isn’t leading the herd. In fact, in many ways it’s trailing behind as its rivals accelerate. Last year the continent’s AI startups raised $15bn in funding, while the US more than doubled that figure with $33bn. 

While many see AI and immediately think “uncanny generative art”, the software has uses far beyond that. Healthtech startups are looking to the technology to streamline, automate and ultimately improve medical care, cybersecurity teams lean on the intelligence to bolster digital protection, and for techbio companies it could increase the potential for novel and life-changing drug discovery. 

But backing this fundamental deeptech is easier said than done. Here are four graphs that show how far behind Europe is when it comes to AI — and if there's any hope that the continent isn’t totally out of the game. 

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AI's leading startups are almost all American

According to analysis by AI content writing tool writerbuddy.ai, which looked at funding raised by over 10k startups globally that closed a round between 2015-23, eight out of ten of the leading companies using machine learning are based in the US — with not a single one hailing from Europe. 

The US is taking an early lead in 2023

Across both 2021 and 2022, the majority of funding into AI startups was allocated to US-based companies. According to Dealroom, the US has also got a head start so far in 2023, dwarfing Europe and China’s collective $1.1bn with $13bn raised already.  

Its unicorn numbers are miles ahead

When it comes to producing AI unicorns, the US leads the way again, with 292 companies passing the $1bn valuation threshold, according to the State of AI report, a 2022 analysis of the global AI ecosystem. The UK comes in at third place with 24 — and combined with the other two European countries on the list (Germany and Switzerland), totals just 46 unicorns (although, unlike typical Sifted analysis, these figures include companies that are now public). 

But Europe's ahead of the game in exits

However, it’s not all bad news for Europe. The US saw 228 AI startups exit in 2021 — through an IPO or an acquisition — beating both Europe and China combined. But the tables turned in 2022 as Europe took the lead for exits with 163 to the US’s 141. So far in 2023, the continent looks to be inching out in front, with three more exits than the States. 

Sadia Nowshin

Sadia Nowshin is an editorial assistant at Sifted. Follow her on X and LinkedIn