The Silent Shift Happening in European Tech

Geopolitical tensions between Trump and the rest of the world are dominating the headlines. But the implications for Europe go far beyond a redefinition of the transatlantic alliance. The European tech scene is quietly but confidently retaliating with a protectionist stance toward American tech companies and capital.

America has a top-down problem — the administration is acting in a non-strategic and volatile way that makes it risky to do business there. Because of this unpredictability, hedge funds and retail investors are dumping their assets, both in stocks and, even worse, T-Bonds.

The American economy is facing a quadruple threat of inflation, slow growth, a weakening currency and higher unemployment. Given how interconnected the U.S. economy is with Europe and the rest of the world, this puts the global economy under significant stress, hence why even the CEOs of top asset managers like Lary Fink and Ray Dalio are predicting a recession and long-lasting damage to U.S. position as a superpower in the western world.

But beyond that, the unreliability of the U.S. as a political and business partner is forcing Europe to unite and become less dependent on the market. There is a movement going on that will strengthen Europe’s unity and finally force it to become more competitive. It is quite telling that the EU and the business community needed this kind of wake-up call to finally take the topic of European self-sufficiency and competitiveness more seriously, but here we are.

Here are three trends that I think will continue to push Europe forward, as the geopolitical crisis between the U.S., China and the rest of the world continues to unfold:

1. Offshoring of U.S. SaaS vendors and the rise of European alternatives

Being an American vendor hurts your standing and will make selling into the European market more difficult. Trump's admin. will tarnish the reputation of American companies, as the level of trust has decreased and the need for localized cloud infrastructure becomes more and more important to European companies.
This will create a massive opportunity for European software providers who can offer local, regulation-first solutions. Offshoring has reversed course—now it's U.S. companies scrambling to set up in Europe, not the other way around.

2. A funding renaissance for EU tech

To meet this moment, the European tech scene is seeing an unprecedented surge in funding. The EU Commission is doubling down on digital sovereignty with bold investments, while local governments are launching ambitious innovation programs of their own. Venture capital, too, is shifting gears: European VCs are no longer playing catch-up but are actively shaping a distinct tech ecosystem. Funds like EQT Ventures, Speedinvest, and Atomico are raising record-sized funds with specific mandates to back European deeptech, AI, and climate-focused startups, further accelerating the momentum. The data shows that AI startups are dominating this funding frenzy: According to data from Dealroom analysed by Balderton Capital, AI companies have already raised $3.4B (approximately €3B), up from $2.2B (approximately €1.94B) in Q1 2024. And the first mega success stories are starting to raise more eyeballs, prime example being Swedish company Lovable, growing to $17 Million in just three months. I expect more success stories like this to pop up and attract even more capital into this space.

3. Brain Drain - U.S. talent is crossing the Atlantic

The anti-intellectual, anti-immigration wave sweeping across parts of the U.S. is driving top-tier talent to seek safety and freedom elsewhere. Europe, surprisingly to some, is emerging as that safe haven. As Trump wages a cultural war on free thought in academia and continues to threaten deportation of skilled migrants, a growing number of researchers, engineers, and founders are moving to cities like Berlin, Amsterdam, and Lisbon. This is an excellent opportunity of European countries to benefit from the insane brain power that the American elite has to offer – the talent is endless and the European tech scene stands to benefit from it in a big way.

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