Presented by ESMT Berlin
Can Europe still catch up with China and the US when it comes to innovation? Jeannette zu Fürstenberg, Managing Director and Head of Europe at General Catalyst and Founding Partner of La Famiglia VC, shares what it takes to strengthen competitiveness and defense – and why she still believes in a European Renaissance.
Interviewed by Klara Marie Schroeder
I wrote this book because I believe deeply in the future of Germany and Europe. For too long, the narrative of Germany as the "sick man of Europe" has shaped how we perceive ourselves. I want to challenge that view and focus on the strengths that have historically defined us: a commitment to craftsmanship, scientific discovery, and entrepreneurial spirit.
This moment is critical because we are at the intersection of profound technological, geopolitical, and economic shifts. Technologies like AI and digitization present unprecedented opportunities to transform industries and Europe is uniquely positioned to lead this change.
However, to do so, we must embrace risk-taking, foster a culture of innovation, and invest in bold ideas. My book aims to ignite a conversation about how we can leverage these opportunities to create a new European renaissance—one rooted in our traditions but oriented toward the future.
These sectors are critical for Europe’s resilience and competitiveness, and many solutions in these fields will increasingly become AI-enabled.
Europe must modernize its defense infrastructure and integrate advanced technologies like AI and cybersecurity. A great example of how start-ups can contribute is Helsing, which applies AI to upgrade legacy defense systems, ensuring that democracies are better equipped to protect themselves.
Our industrial base must embrace digital transformation to remain competitive. Start-ups can drive innovation by optimizing supply chains, introducing advanced automation, and helping traditional companies adopt AI.
Addressing Europe’s energy transition requires innovation in energy storage, renewable technologies, and decarbonization solutions. Start-ups are uniquely positioned to bring agility and new approaches to this pressing challenge.
While Europe has excellent healthcare systems, there is a lack of scalable, AI-driven solutions for preventive care, diagnostics, and patient management. Start-ups can help fill this gap by leveraging AI to make healthcare more efficient, accessible, and personalized.
Strengthening resilience in these areas will not only address immediate vulnerabilities but also position Europe as a global leader in the 21st century.
EU regulations, while promoting transparency and ethics, often create significant compliance burdens for start-ups, particularly those aiming to scale globally. Horizontal frameworks such as GDPR and the AI Act potentially struggle to keep pace of innovation, and this regulatory complexity discourages some investors from deploying capital in Europe, perceiving it as a less favorable environment for high-growth ventures. Additionally, fragmented regulatory interpretations across member states create inconsistencies, complicating cross-border operations.
To address these challenges and foster innovation, the EU needs to focus on a few key areas.
We urgently need to simplify compliance processes. Regulatory sandboxes and phased implementations are a good start, but their success depends on execution at the member-state level. Countries like Germany often establish stricter guidelines compared to others like Estonia, creating a locational disadvantage. Start-ups operating across markets may leave stricter countries, further exacerbating fragmentation. A more unified and consistent approach across the EU is crucial.
We also need greater access to growth capital. The EU could introduce tiered incentives, such as tax reductions tied to revenue milestones, to help deep-tech and AI start-ups scale while encouraging them to remain in Europe.
In addition, we need to foster public-private collaborations. Governments, corporates, and start-ups need to work together to streamline partnerships. At General Catalyst and through our General Catalyst Institute, we have spent considerable time engaging with governments and would be glad to share insights on fostering better understanding and collaboration between public officials and start-ups.
Europe has the chance to lead the next wave of innovation but to achieve this, we need a regulatory environment that combines clarity with flexibility and fosters long-term growth. This is also why I welcome the direction of the new Commission under President von der Leyen, signaling clear ambitions to harmonize fragmentation and create one single and simple framework under the 28th regime spanning across the Union to help startups thrive.
Europe faces five critical challenges as it moves into the implementation phase of AI.
First, talent retention remains a pressing issue. While Europe produces world-class AI researchers, many leave for the US or Asia, attracted by better funding opportunities and more dynamic entrepreneurial ecosystems.
Second, there is an adoption gap, as many European companies, particularly SMEs, are slow to integrate AI due to limited expertise and uncertainty about its return on investment.
Third, infrastructure investments are urgently needed, especially in cloud computing and high-performance computing, to support AI applications in industries where Europe has a competitive edge, such as manufacturing and industrials.
Fourth, regulation poses a challenge. While Europe's regulatory frameworks are essential for ensuring ethical AI use, they can be overly complex and fragmented across member states, making compliance difficult for multinational companies. Over-regulation risks stifling innovation and reducing Europe's global competitiveness.
Finally, uneven competition remains a concern, as large corporations often dominate standard-setting processes, creating barriers for start-ups trying to compete on an equal footing. Addressing these challenges will be crucial to ensuring that Europe remains a leader in the AI-driven economy.
This is a pivotal moment for Europe. By addressing these challenges head-on and focusing on execution and partnerships between established industry and startup ecosystems, Europe can unlock AI’s potential to transform industries, increase productivity, and lead on a global stage. The key lies in moving beyond analysis and embracing the entrepreneurial mindset of courage and execution.
Balancing innovation with ethics in defense requires clear principles and accountability. We focus on companies that align with democratic values and are committed to responsible innovation. For instance, Helsing's work enhances defense systems to safeguard democratic societies. In addition, our portfolio companies adhere to high standards of transparency, ensuring that AI applications in defense are explainable, accountable, and compliant with ethical guidelines. Lastly, we engage with policymakers, researchers, and industry experts to address the ethical implications of emerging defense technologies.
This approach ensures that innovation serves the greater good while respecting human rights and ethical boundaries.
There are four critical areas for defense tech: AI-enhanced decision-making, where AI’s ability to process and analyze data in real time significantly improves situational awareness and operational decision-making. Autonomous systems, including drones and unmanned vehicles, provide tactical advantages while reducing risks to human life, all while maintaining full human control and oversight. AI updates for legacy systems enable the integration of advanced technologies into existing platforms, extending their lifecycle and enhancing their capabilities. Cybersecurity is equally vital, as cyber warfare becomes a primary threat, making robust cybersecurity solutions essential for protecting critical infrastructures and military systems.
Together, these technologies form the backbone of future defense capabilities.
Dr. Jeannette zu Fürstenberg is Managing Director of the global investment and transformation company General Catalyst and in charge of its European business. Jeannette is also Founding Partner of La Famiglia VC, one of Europe’s most distinguished early-stage Venture Capital platforms. She is the author of “Wie gut wir sind, zeigt sich in Krisenzeiten. A wake-up call”.
