Originally published here.

Europe may not be poised to overtake the US and China in the field of AI development as a bloc, but investors would be foolish to overlook AI startups and scaleups from European countries.

In 1997, IBM’s Deep Blue beat grandmaster Garry Kasparov at chess. Just over two decades later, in 2018, Google’s AlphaGo Zero taught itself to play Go in three days, defeating the world champion in 37 moves with a flourish that spectators described as “unhuman”.

By 2023, these impressive AI parlour tricks had been put to serious use, solving the particularly knotty problem of predicting, not only the structure of complex proteins, but the infinitely more complex three-dimensional folds on which their bioactivity depends. The team behind Google’s AlphaFold 2, the program used to do this, picked up the 2024 Nobel Prize in chemistry for the achievement.

Today, AI tools can reportedly detect breast cancer six years earlier than traditional screening, with a nearly 10% reduction in false negatives. They act as a second set of eyes for radiologists, making multiple sclerosis diagnoses 44% more accurate and faster. AI is revolutionizing the drug development process, too. Salt Lake City-based Recursion has been able to develop new drugs in weeks at a cost of thousands of dollars in an industry accustomed to spending millions over years. Its models rapidly increase the speed with which new pharmaceuticals and therapeutics can be taken to clinical trials. The company hopes to share clinical data from 10 new drug trials within 18 months—an unprecedented pace.

Beyond healthcare, AI is being used to detect financial fraud, predict floods and drought, create financial forecasts, write software, and increase cybersecurity protections globally, alongside countless applications in retail, logistics, marketing, sales, and entertainment. And while it is still in its relative infancy, the changes to come create significant opportunities for innovation.

Despite these rapid advances, it has become fashionable to compare the whole enterprise of AI to overhyped industries like blockchain, a category which enjoys nowhere near the bandwidth and excitement it once did. In June 2024, experts at MIT and Goldman Sachs published advice predicting “only limited economic upside from AI over the next decade.”

But companies and commentators dismiss AI at their peril. The world’s biggest tech companies across the US and China are investing heavily in both tech and infrastructure, racing for supremacy and openly declaring that their futures depend on its continued development. Governments around the world are hastily developing AI policy they hope will allow them a slice of this computer-generated pie.

Where does Europe fit into this picture? Globally it isn’t seen as a leader in AI today, despite some major successes and an understanding from within the bloc that its potential for growth is vast. Paris-based Mistral is only two years old, but is already valued at €6bn and its LLM is a major competitor to models like ChatGPT and Google’s Gemini. And while the Stanford Global Vibrancy Tool puts France and Germany in the top 10 AI ecosystems, the US is still ahead on almost every metric. China, too.

This macro picture belies a more interesting micro story and overlooks the fact that, in many cases, Europeans are building the best tools both here and overseas. Influential AI leaders at Microsoft, DeepMind, Open AI, Hugging Face, and Synthesia are European, and as you’ll see in the interviews with Phelim Bradley, Dali Kilani, and Nabil Toumi over the following pages, a growing number of AI tools and platforms are choosing to launch and grow in Europe, scaling at speed into niche verticals (a UK-based startup, Basecamp Research, has already surpassed the capabilities of AlphaFold 2 with its BaseFold model by utilizing a more robust proprietary dataset).

So while France, the UK or Germany are unlikely to overtake the US or China in the next decade, and Europe certainly isn’t rushing to be the next AI superpower, there are still huge wins to be made for AI investors right here on European soil.