Funding the AI Economy: Strengthening Europe’s Investment Capacity

A new report  from StepUp StartUps Consortium explores Europe’s fast expanding AI investment landscape and makes recommendations to strengthen its capital base, corporate engagement and ecosystem connectivity.

Artificial Intelligence (AI) technologies’ substantial capital needs are redefining the global investment landscape. Over the past decade, AI has evolved from a niche technology into a central focus for global investors, accounting for nearly 50% of total global venture capital (VC) funding in the first half of 2025. The EU has made strong progress, with AI’s share of total European venture capital rising to 27%, reflecting a growing recognition of AI’s strategic value and Europe’s strong pool of AI talent.

A new EU report, Funding the AI Economy, shows that Europe’s AI investment ecosystem still faces major challenges despite progress in recent years. While total venture activity is expanding, the scale, structure, and distribution of AI funding remain fragmented and modest compared to key global competitors. Between 2020 and 2025, the US dedicated 34% of its €1.33 trillion in VC funding to AI, while Europe allocated 18% of €252 billion, underscoring the need to strengthen both its investment base and the share of AI investment within it.

Key Recommendations
To boost competitiveness and secure its role in the global AI economy, the report highlights three sets of strategic actions for Europe:

Scale up investment capacity: Strengthen Europe’s ability to fund large-scale AI ventures by developing an AI-oriented sub-vehicle in the recently announced Scaleup Europe Fund and mobilising institutional investors to support late-stage growth companies delivering European AI models and applications.
Connect and strengthen ecosystems: Link Europe’s leading AI hubs with emerging regions through ‘AI corridors’, streamline conditions for AI startup growth and launch initiatives that attract global AI ventures and talent to the EU.
Mobilise corporate capital: Encourage greater participation from established European companies through incentives, co-investment schemes, and platforms that connect corporates and startups.

For more information: Funding the AI Economy: Strengthening Europe’s Investment Capacity | Shaping Europe’s digital future