Niklas Zennström, considered one of Europe’s most profitable tech entrepreneurs and traders, believes the continent’s start-ups can nonetheless reach synthetic intelligence regardless of their large funding hole with US rivals.
European start-ups can thrive by creating functions which are constructed on prime of AI platforms run by US-based corporations akin to OpenAI or Google, Zennström advised the Monetary Instances.
“Suppose what occurred with cellular and the cloud: there are a number of cloud suppliers on the earth, they permit 1000’s and 1000’s of companies,” he stated in an interview. “It’s not like everybody must be a big language mannequin . . . You may create worth as an software supplier.”
The feedback from a number one trade voice come as European policymakers and traders develop anxious that the US is pulling forward of the area in AI.
Many fear that Europe as soon as once more dangers being left behind by deep-pocketed teams in Silicon Valley in a transformational new know-how, with large implications for the area’s competitiveness and nationwide safety.
The European tech trade has created a whole lot of “unicorns” — non-public corporations valued at greater than $1bn — and narrowed the hole in early-stage funding with the US “no matter whether or not Europe has a variety of vital [tech] infrastructure that’s European”, the Skype co-founder advised the FT.
“European corporations can construct on prime of [AI platforms] whether or not they’re from France or from the US,” he stated.
Confidence amongst Europe’s entrepreneurs within the area’s tech prospects hit a brand new low in 2024, in line with the State of European Tech report by Atomico, the enterprise agency based by the Swedish entrepreneur in 2006. Its newest survey discovered that 40 per cent of founders felt “much less optimistic” about the way forward for European tech than the 12 months earlier than.
But whereas conceding 2024 has been “very arduous” for start-ups and traders, with capital invested in European tech anticipated to fall for a 3rd successive 12 months, Zennström believes pessimism concerning the area’s prospects is exaggerated.
“It’s a European downside to [just] speak about the issue,” he stated. “There may be a lot thrilling knowledge that reveals we are literally catching up [with the US], we’re doing fairly properly.”
Regardless of that progress within the European tech trade at massive, the transatlantic funding hole in AI start-ups particularly is stark.
A report by enterprise agency Accel, revealed in October, discovered that US funding into generative AI reached nearly $48bn in 2023 and 2024 mixed, greater than 5 instances as a lot as in Europe and Israel, the place funding within the sector totalled about $9bn.
A lot of the US complete is pushed by start-ups creating so-called “basis” fashions, the pricey and sophisticated AI techniques underpinning general-purpose chatbots and media creation companies, akin to OpenAI’s GPT.
Europe has a handful of start-ups engaged on basis fashions, together with Paris-based Mistral and Germany’s Black Forest Labs.
Nevertheless, US-based OpenAI, Anthropic and xAI, have collectively raised tens of billions of {dollars} greater than their European rivals, whereas Large Tech teams Microsoft, Google, Amazon and Meta are additionally investing closely in their very own massive language fashions.
Atomico, which raised $1.24bn in new funds in 2024, has backed European AI start-ups which are constructing extra specialised fashions round specific functions, together with Corti, a Danish maker of digital assistants for healthcare, and Germany’s DeepL, which presents machine translation instruments.
“It’s not simply all about 5 LLM corporations,” Zennström stated. “There’s additionally a lot else that’s being created by way of worth.”
However he admitted the “jury continues to be out” on whether or not Europe can construct aggressive general-purpose LLMs in the long run.
“What you want for AI is, you want some huge cash, you want a variety of knowledge and also you want distribution. So it’s a pure factor that the Large Tech corporations have a aggressive benefit,” Zennström stated. “The truth is the wealthy get richer.”
