AI surge stretches US-Europe venture funding divide

Artificial intelligence is widening the investment divide between the United States and Europe, with American companies absorbing the overwhelming majority of global AI venture capital while European firms continue to face shortages of large, late-stage funding.

OECD data show US-based AI companies attracted about $194 billion in venture capital in 2025, roughly 75% of worldwide AI deal value. Companies across the EU27 drew $15.8 billion, or 6%, while Britain attracted $13.8 billion. The figures show the AI boom reinforcing an existing transatlantic financing imbalance.

Artificial intelligence accounted for 61% of all global venture capital investment last year, equal to $258.7 billion of $427.1 billion, according to the OECD. The concentration was especially pronounced in large transactions: deals worth more than $100 million represented about 73% of AI investment value.

Advanced AI businesses require unusually large amounts of capital for computing infrastructure, model training, specialist talent and expansion. OECD figures show AI infrastructure and hosting companies alone raised $109.3 billion in 2025, reflecting the cost of the computing capacity needed for frontier systems.

Europe’s weakness is most visible after the early funding stages. The European Central Bank said US-based venture funds total about €930 billion, around six times the roughly €150 billion held by EU funds. It said the funding gap grows as companies move into later-stage rounds, when capital requirements become substantially larger.

European investors still finance many local AI start-ups in smaller rounds, but their participation drops sharply as deal sizes rise. European Commission analysis found EU investors account for only 26% of investment in AI deals above €25 million, leaving many high-growth companies dependent on capital from the United States and Britain.

That dependence can help European companies scale, but policymakers worry that ownership, intellectual property and future returns may increasingly migrate outside the bloc. It also raises the risk that promising companies relocate to markets where larger financing pools, cloud infrastructure and customers are easier to secure.

The United States benefits from several reinforcing advantages: deeper pension and institutional capital markets, larger venture funds, a stronger pipeline of technology listings and acquisitions, and hyperscale technology groups willing to spend heavily on AI infrastructure. American investors accounted for about 56% of identified global outgoing AI venture investment in 2025, compared with 7% for EU27 investors.

Europe is trying to respond through a combination of public financing, infrastructure investment and efforts to mobilise private capital. The European Commission’s AI Continent Action Plan is built around an InvestAI initiative intended to mobilise €200 billion, including €20 billion for up to five AI gigafactories capable of supporting the training of advanced models.

The Commission says 19 AI factories are now deployed across Europe’s supercomputing network, with regional satellite facilities designed to give start-ups, researchers and industrial users greater access to computing power. Policymakers also want to expand data availability, AI skills and corporate adoption.

Private investment is showing signs of growth, although from a smaller base. EU private equity and venture firms invested about $6.8 billion in local AI companies in 2025, an increase of more than 80% from the previous year, while the number of deals declined. That suggests capital is moving into larger transactions, but scale remains far below US levels.

Large technology companies are also increasing European infrastructure spending. Google announced this week that it plans to invest €13 billion in AI and data-centre infrastructure in Finland over two years, its biggest investment of this type in Europe. The project includes new data-centre capacity and long-term energy arrangements.

For European technology leaders, the financing challenge extends beyond raising more venture capital. Industry executives and policymakers increasingly argue that Europe needs larger domestic growth funds, more participation from pension and insurance capital, easier cross-border investment and stronger exit markets so successful start-ups can remain and expand locally.