EIB says European org and govt are underinvesting in AI and blockchain

Europe’s venture capital ecosystem focuses predominantly on providing early-stage finance for AI/blockchain-based small and medium-sized enterprises (SMEs) but underperforms in the subsequent expansion and growth stages, according to the report. This is especially in comparison with other leading regions.

The study estimates a total investment gap in AI and blockchain technologies in the European Union of approximately EUR 5-10 billion per year. Whilst the US and China collectively account for over 80% of the EUR 25 billion annual equity investments in AI and blockchain technologies, the EU27 only represents 7% of this global amount with an annual equity investment of EUR 1.75 billion.

Apart from venture funding, Europe also lags when it comes to buying established companies. From 2000 to 2019, there were 526 acquisitions of AI companies in the US, but only 139 in the European Union (including the UK).

The study attributes the limited role played by EU corporate investors in acquiring AI and blockchain companies to the European Union’s dependence on non-EU investors. Compared to the US, the European Union has fewer venture capital investors specializing in AI and blockchain.

Similarly on the demand side, EIB’s report concludes that it is critical for small and medium businesses to enhance innovation and produce high-quality R&D. Other major actors such as government-led initiatives must take a central role in defining strategy and overseeing the cooperation of major players in the overall innovation ecosystem.

According to EIB’s research, three major areas require improvement in Europe’s AI and blockchain landscape: the development, increased deployment, and innovation of disruptive technologies. Disruptive technology possesses a central role in steering Europe’s green and digital transitions. R&D in AI and blockchain will ripple into other key areas, including security and defence, and climate-related issues.