Presented by ESMT Berlin
Something remarkable happened last week in Paris. Standing alongside President Macron, leaders from over 70 European companies didn't just talk about catching up in technology – they charted a bold new path forward. The launch of the EU AI Champions Initiative marks a watershed moment: Europe is finally playing to its strengths rather than lamenting its weaknesses. Jeannette zu Fürstenberg, Founding Partner of La Famiglia VC and Managing Director at General Catalyst, shares what comes next.
For the past years, Europe watched from the sidelines as American tech giants built trillion-dollar empires in the consumer internet wave. The region's fragmentation and lack of a large, coherent single market where startups and scale-ups could equally participate meant European companies couldn't match the network effects of their U.S. and Chinese counterparts. This experience bred a defensive, reactive stance towards technology – a prevailing perception that Europe had "missed the boat" on each new innovation wave.
But AI is fundamentally different, and it plays right into Europe's hands. The economic potential is staggering. Analysis suggests AI could boost Europe's productivity by up to 3% annually through 2030, adding €575 billion in economic value(equivalent to the size of the Belgium economy) each year. But these gains aren't automatic – they require coordinated action across the public and private sectors.
What makes these partnerships particularly powerful is their strategic importance to both sides - established industries provide real-world validation and deployment opportunities, while AI innovators bring cutting-edge capabilities. This symbiotic relationship creates a virtuous cycle where industrial expertise helps refine AI systems, and improved AI capabilities drive industrial innovation.
Unlike previous technological revolutions, AI success doesn't depend on massive consumer markets or network effects. Instead, it thrives on three factors where Europe holds natural advantages.
First, Europe's research prowess and open-source culture provide a critical foundation. Despite worries about brain drain, European universities and research institutes continue producing top AI scientists and engineers. These experts have built some of the world's to open-source AI models which are creating a technological backbone to also chart European solutions as part of the global supply chain of AI technology.
Second, Europe's economy is rooted in advanced engineering and specialized manufacturing. From automotive and aerospace to pharmaceuticals and energy, European companies possess the deep domain expertise and real-world datasets that enable powerful AI applications. Consider what's happening: Leading companies across industries - from Airbus to Deutsche Bank to L'Oréal - are already using AI for mission-critical operations, creating real competitive advantages.
Third, Europe's cultural and linguistic diversity becomes an asset rather than a liability. This new technology will be able to abstract away the scaling challenges posed by 24 different official languages and cultures across Europe. AI systems can inherently handle multiple languages and cultural contexts, lending themselves to be deployed and scaled across Europe.
Europe is now taking decisive action to lead rather than follow. The EU AI Champions Initiative signals this transition from regulatory focus to active industry development. The initiative is not just noble intentions or innovation theater– it activates strategic partnerships and collaborative investments between Europe's industrial giants and its most innovative startups and scaleups to accelerate AI adoption and development across key sectors. Our report from the AI Champions initiative assembles key European use cases, including Novo Nordisk and Cradle Bio's collaboration to transform therapeutic discovery and development. The report also showcases how SAP and Mistral AI are joining forces to power the next generation of enterprise software. Sanofi is partnering with Owkin to revolutionize the operating system for biology reasoning. These partnerships, among others, combine Europe's industrial might with its AI innovation, creating a flywheel effect that can accelerate adoption across sectors.
As AI transforms everything from healthcare to defense, Europe must also build sovereign AI capabilities that reflect European values, priorities, and needs next to partnering with international providers. The answer is clear, but making it real requires action on multiple fronts.
First, Europe must modernize its critical infrastructure. AI at scale requires massive computing power, robust networks, and reliable energy supplies. We need coordinated investments in these foundational elements, from expanding data center capacity to strengthening power grids and accelerating network deployment. Yet hardware alone is not enough - Europe needs a new kind of infrastructure that bridges traditional industry and AI innovation. This means creating a network of industrial data centers and sovereign cloud infrastructure that can handle the unique demands of AI systems while maintaining European control overcritical technologies. More powerful than building individual data centers is creating an interconnected industrial AI infrastructure that transforms foundational AI into specialized industrial applications.
Second, the public sector must step up as an early adopter and anchor customer. Government agencies should commit significant procurement budgets to European AI solutions, particularly in strategic sectors like defense, healthcare, and energy. When the French military or German healthcare system becomes a customer, it doesn't just provide revenue – it validates technology, attracts private investment, and creates reference cases for global expansion. For example, the French Ministry of Armed Forces partnership with Thales on AI systems shows how this approach can drive innovation forward.
Third, industrial leaders need to move beyond incrementalism. Small pilot projects and innovation labs won't generate the scale needed to compete globally. Europe needs full-scale transformation programs that embed AI throughout operations, reimagining entire value chains. The strategic partnership between Helsing and Mistral AI to develop Vision-Language-Action models for defense applications demonstrates exactly this kind of ambitious transformation. Yes, this requires significant investment and risk-taking. But the bigger risk is falling behind as AI reshapes global competitiveness.
Fourth, regulators must support European AI Champions rather than hinder them. The AI Act should focus on addressing real harms, not hypothetical risks. To enable AI companies to scale, Europe needs a unified market—one that eliminates the need to navigate 27 different regulatory frameworks. This requires harmonizing rules, simplifying compliance, and establishing clear guidelines for AI development and deployment.
What is emerging is a distinctly European model of AI development - one that leans into value creation that will happen at the application layer, and accelerates a flywheel of innovation and adoption. This approach leverages Europe's industrial strength while building new capabilities in AI infrastructure and development. The growing deployment of AI in field operations, manufacturing processes, and industrial systems demonstrates that this model can deliver real-world results.
The window for leadership remains open, but it will not stay open forever. The technology is still evolving, enterprise adoption is in early stages, and the rules of the game are being written. Europe has everything needed to lead –world-class research, industrial expertise, engineering talent, and now a framework for collaboration. What's missing is urgency.
The EU AI Champions Initiative provides the vehicle. The companies are committed. The roadmap is clear. Now, Europe must act—boldly and decisively. This is not just about competing in AI but about securing the future of European technology, industry, and strategic autonomy. The moment to act is now.
