European tech founders are turning to the U.S. to find funding for artificial intelligence (AI) projects.
That’s according to a report Saturday (Oct. 4) from The Wall Street Journal (WSJ), which said this trend is being driven by the heavier upfront costs of AI computing infrastructure and specialist talent.
This is worrisome for Europe, the report added, as the region hopes to make a name for itself as a global AI hub rivaling China and the U.S.
Although the European venture capital scene has grown in recent years, WSJ said, it still trails the U.S., where AI and machine learning startups raised upwards of $160 billion in the first nine months of the year. That’s compared to $20 billion earned by startups in Europe, the report said, citing data provider PitchBook.
U.S. investors also account for an increasing share of the funds raised by AI startups in Europe. As of Sept. 30, these investors had funneled around $14.2 billion in 549 European AI and machine learning VC projects, up from $11.7 billion in all of 2024, PitchBook data show. That represents just over 71% of deals in terms of value, compared to 57.5% in 2024.
Patrick Smith told WSJ his AI cybersecurity company, Zally, needed “a hell of a lot of money” for initial research and development and patent filing, funds he said would be impossible to raise from investors in Europe. American investors, on the other hand, “understand the runway and how much money you need to burn,” he added.
As PYMNTS wrote last week, AI is among the most capital-intensive industries in tech. Citi forecasts that global spending on AI infrastructure could surpass $2.8 trillion through 2029.
“That pull is drawing capital not only to model developers but also to adjacent players in chips, cloud, and physical infrastructure,” that report said. “The result is a market where AI platforms and infrastructure startups are flush with resources, while companies in sectors like healthcare, mobility, and climate face slower deal cycles and smaller rounds.”
CFOs are also adding restraint, PYMNTS reported, with just 26.7% of finance leaders planning to spend more on generative AI in 2026, down from 53.3% a year earlier. Half of firms who saw strong returns say they will increase spending, while just 16.7% of those seeing negligible ROI plan to do so.
“That split reflects what PYMNTS has called the ROI paradox: adoption is soaring, with infrastructure spending forecast to reach trillions, but the economics have yet to catch up,” the report continued.
Source: https://www.pymnts.com/