Europe can build

It's our collective responsibility to tell a story that will shape a prosperous future. Some facts that should help.

Can Europe build? My friend Ramzi asked this question at its annual meeting yesterday, where I participated in a panel discussion with fellow venture investors Lola and Julien. I've wanted to write a post about Europe for some time, and with the AI summit in Paris concluding, this feels like a good time to do it.

The narrative around European innovation has been particularly sceptical and negative lately, European bashing seems “in vogue”. I'm fortunate to work with people who've been bullish and vocal about Europe's potential since the beginning of this century. This 2010 FT article about my partner Saul’s “European Mission” helped draw me into tech 15 years ago. Since that article was published, Europe has delivered Adyen, Spotify, Revolut, UiPath, Wise, and many others. Yet the question of whether Europe can produce substantial companies seems to persist.

Looking at the facts, Europe's foundation for innovation is remarkably strong. At LocalGlobe, we like to say that “it has taken us 20 years to get to the starting line; it's the next decades that are going to be the most interesting”. Europe hosts a third of the world's top research institutions, produces almost one-fifth of the world's scientific publications (ranked second only to China), and generates over 20% of global cleantech innovation (energy is the mother of all abundance to power our future). In AI, while the US and China are ahead, Europe's contribution is far more significant than people think or report:

• LLMs: Mistral is competitive with the best AI labs (and its new app Le Chat is very fast…), LLama, Meta's foundational model, was invented in Paris, DeepMind emerged from London before Google's acquisition, and its founder Demis Hassabis, now Nobel Prize winner, runs Google AI efforts. Hugging Face, the heart of the open-source AI community globally was started by French founders.

• Applications: As I wrote in a previous post, the intense competition at the foundational layer has made the application layer more exciting than ever, and Europe is producing its fair share of beloved fast-growing products, such as 11x, ElevenLabs, Granola, and Lovable.

• Supply chain and infrastructure: ASML (Netherlands) holds a monopoly in EUV lithography, making it indispensable for manufacturing cutting-edge chips, ARM (UK) is a global leader in chip design IP used by companies like Apple, Qualcomm, and Nvidia to create their CPUs and GPUs (and will soon produce its own chip), and some of the most promising emerging technologies in AI chip architecture are being built in France with VSORA.

Where the US clearly excels over Europe is in capturing value and capitalizing on it when they see it: OpenAI shifting from an open research organization to a closed for-profit tech company, Google acquiring UK-based DeepMind and supercharging it with compute, or Nasdaq attracting ARM for its IPO. And then, there's the narrative. The US has mastered the art of turning ambition into self-fulfilling prophecies - from Silicon Valley to the space race. Meanwhile, in Europe, crafting our own narrative and celebrating our successes hasn't been our strongest suit. Pia Michel captures it perfectly on her blog about her (very cool) European grand tour:

It’s no secret that storytelling about the future and the role of technology in building it isn’t our greatest strength. But ambitious and inspiring ideas can act as magnets aligning talent, capital and energy — and we’re not going to accelerate growth without being able to point towards a future worth wanting.

That’s not a bad problem to have — culture and narratives are incredibly malleable. Imagine we didn’t already have free education and public healthcare, industrial powerhouses and a skilled workforce, beautiful and safe cities or intact democratic institutions, social safety nets and capital markets. None of them are perfect, but all of them are more difficult to create than to get people excited about the future during a time of rapid technological progress.

Culture is "upstream of politics" so while we're pressing politicians to create a more open and innovation-friendly environment in Europe - which initiatives like EU Inc are already making progress on - it's our collective responsibility to shape this culture and drive the narrative. Every time you hear someone lazily complain about Europe, I urge you to take the opposite side of the debate, correct the facts, celebrate the wins, talk about the opportunities, and, yes, address the challenges to be solved like Andreas Klinger and my former colleague Vojtech Horna have been doing brilliantly with EU Inc (building on the success of the Not Optional campaign).

The ingredients are here. The talent is here. Europe can build, so what are we building next?

PS: to make your life easier, I’ve asked Claude to summarise a couple of facts about European innovation, which you can use at your next dinner party or conference when the topic of Europe comes up. If you want more titbits about Europe’s potential and performance, follow Steeve.

• "Excluding Nvidia, European stocks have outperformed the S&P 500." (source: FT)

• “LLama, Meta’s LLM was designed in Paris, Google’s AI brain is UK-Deepmind, Mistral is at the forefront of efficient AI models”.

• "ASML in the Netherlands is the sole producer of EUV lithography machines required for manufacturing advanced chips globally. The US and China haven’t managed to replicate the technology to date”.

• "The London-Paris-Amsterdam “New Palo Alto” cluster ranks third globally for unicorns, after the Bay Area and Beijing." (source: Dealroom)

• "The EU produces more cars (12 million vs 10.6 million) and more steel (126 million tonnes vs 80.7 million tonnes) than the US." (source: Dealroom)

• "The EU's electricity mix is 68% clean compared to 40% in the US." (source: Dealroom)

• "EU exports to the US amount to €502 billion, while US exports to the EU are €344 billion." (source: Dealroom).