As venture capital funding slows globally due to inflation and economic uncertainty, European entrepreneurs and investors are pivoting their focus to industries with long-term potential like artificial intelligence. With over $100 billion invested in 2021, Europe saw funding plummet an estimated 55% this year to just $45 billion.
At the annual Slush startup conference in Helsinki, attendees discussed how founders must now prioritize sustainable growth over rapid expansion in this changed environment. Speakers like Eerika Savolainen, CEO of Slush, advised preparing for “the long haul” rather than chasing explosive gains. Venture investors are increasingly investing in deep tech sectors with significant impacts like AI, quantum computing, semiconductors and green technologies.
AI in particular captured investors’ attention, representing a quarter of mega-rounds over $100 million in Europe. French startup Mistral AI raised a record $113 million seed round focused on AI. Peter Sarlin of AI lab Silo says European companies can succeed in generative AI through concentrating talent on ambitious projects rather than trying to directly compete on funding with US giants.
While funding has cooled, experts say Europe’s strong engineering talent and proven track record innovating in fields like sustainability and healthcare will help the region shift its focus to industries primed for long-term growth and social impact like AI. With supportive mentorship from larger tech firms also, more European engineering talent may soon spin out their own startups applying cutting-edge technologies to humanity’s grand challenges.