Welcome to a new episode of the EUVC podcast, where our good friends Dan Bowyer from SuperSeed, in discussion with Andrew J. Scott, Founding Partner at 7percent Ventures, and Lomax Ward, General Partner at Outsized Ventures, cover recent news and movements in the European tech landscape 💬
Watch it here or add it to your episodes on Apple or Spotify 🎧, with chapters for easy navigation available on the Spotify/Apple episode.
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✍️ Show notes
Europe’s Defence Boom: A Lifeline or a Mirage?
Europe’s defence sector is booming—and not quietly. Defence giants like Rheinmetall, Saab, and Kongsberg are now trading at luxury-level valuations, with forward earnings multiples hitting 40x. Germany's massive lift of its defence budget—freeing military spending from its usual fiscal constraints—has sparked talk of a full-on industrial revival. One theory even suggests this could stealthily revive the German auto sector, as VW pivots to building tanks and submarines. Stock prices in defence primes have surged (Thyssenkrupp +140%, Rheinmetall +120%), and Europe is now spending in ways that echo the US military-industrial complex. With €500 billion also earmarked for infrastructure, this could be the continent’s chance to leap back into global relevance.
But here’s the kicker—this shift doesn’t automatically mean good news for startups. While the headlines scream “gold rush,” the reality is more nuanced. Most of this money will likely go to the usual defence heavyweights. For founders, getting a slice of this pie is tough. Selling to governments is slow and bureaucratic, and most real innovation opportunities lie in “boring” back-end areas like logistics, cybersecurity, or AI-driven infrastructure. Even as funding ramps up, dual-use startups—those blending military and civilian tech—will need patience, connections, and clever positioning to break through. It’s not just about drones and robots; it's about resilience, energy, and intelligence. The trickle-down will come, but it’ll be a grind, not a flood.
Can Europe Be the Japan of the AI Era?
In his article, Nicolas Colin draws a bold and hopeful comparison between Japan’s lean manufacturing revolution of the 1970s and the current rise of AI, suggesting that the real winners of this new tech wave won’t necessarily be the ones building the biggest models—but the ones who can embed AI deeply and effectively into their economies. He argues it’s not about raw power, but about integration. Just as Japan turned crisis into global leadership through smarter production systems like Toyota’s “jidoka,” he believes Europe could be uniquely positioned to win at the application layer of AI—where process, culture, and workforce management really matter.
But here's the counterpoint: history and current data don’t exactly back that optimism. The US has already outpaced Europe on almost every meaningful tech adoption metric—AI usage, cloud infrastructure, R&D investment, and productivity. Europe faces structural headwinds like high energy costs, slower regulatory environments, and fragmented markets. Sure, there’s a case to be made for Europe playing to its strengths in workforce management or physical AI integration, but that’s a long-term play—and far from guaranteed. The Japan analogy is thought-provoking, but maybe more wishful thinking than roadmap. Right now, the smart money is still on the US.
Liberation Day: Tariffs, Trump, and the European Tech Puzzle
Trump’s so-called “Liberation Day” is less about celebration and more about disruption. Tariffs are taxes on imported goods, and historically, they helped build the US—before income tax, America ran on them. Now, Trump’s threatening to use them like a wrecking ball, slapping a 10% universal tariff, 20% on the EU, and up to 54% on China. The goal? Either to bring manufacturing back home or to strong-arm countries into dropping their own tariffs. Either way, this is one of the few levers he can pull without Congress—and he's pulling it hard. The trouble is, supply chains today are global and fragile. Just one car involves 25,000 parts and 12,000 suppliers across dozens of countries. Tariffs could shock the system, raise inflation, and ripple across industries like autos, machinery, and luxury—where Europe dominates. For context, the EU exports about $500 billion to the US each year.
For startups and tech, the fallout is mixed. Software? Largely untouched—for now. Hardware, though? That’s where the squeeze begins. Companies in deep tech may have to rethink plans and accelerate US-based manufacturing. And while pharma seems exempt, inflationary pressure from tariffs could still raise interest rates, drying up capital and making fundraising even tougher. But as always, with disruption comes opportunity. There’s now a real need for innovation around virtual manufacturing, resilient supply chains, and regulatory workarounds. Europe could also lean into intra-regional trade and potentially get smarter about how it taxes big tech (hello, digital services tax). Trump may have just detonated the global trade system—but where there’s chaos, there’s room to build something new.
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🗓️ The VC Conferences You Can’t Miss
There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!
0100 Europe 2025 | 📆 02 - 04 April 2025 | 🇳🇱 Amsterdam, The Netherlands
0100 Emerging Europe 2025 | 📆 14-16 May 2025 | 🇭🇺 Budapest, Hungary
GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🇩🇪 Berlin, Germany
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