Europe’s AI startups are attracting record sums, but funding alone won’t give the region more control over its AI future. Governments and large businesses also need to buy what those startups are building — a missing link that emerged in my conversations at last month’s HumanX conference in Amsterdam.
European AI-focused startups raised $23 billion in the first half of 2026, up 130% year over year and accounting for 55% of the region’s venture funding, according to a joint Crunchbase and HumanX report. That investment surge is sharpening a question at the heart of the sovereign AI debate: Where should countries concentrate their resources to capture the technology’s economic value and retain control over their data?
But sovereignty does not require owning every layer of the AI stack, according to two executives I spoke with onstage at the conference: Axelera AI founder and CEO Fabrizio Del Maffeo and Mehdi Ghissassi, AI71’s chief product and technology officer.
Their perspectives from Europe and the United Arab Emirates, respectively, pointed to opportunities in specialized chips and applications and underscored how purchasing decisions, government mandates and access to computing power can determine whether AI ambitions translate into growth.
Five-layered cake
Jensen Huang, CEO and president of chip giant Nvidia, has detailed a “five-layer cake” to deliver AI that includes energy, chips, infrastructure, models and applications.
For Del Maffeo, whose company develops chips for inference, the opportunity lies in the semiconductor layer, as more AI processing moves beyond centralized data centers and onto devices.
“Artificial intelligence will expand from cloud computing, from centralized data centers, to devices closer to us in the physical world,” he said. “To enable this, you need specific chips which can run efficiently, at a lower cost, to connect these networks that today are running in the cloud. We are here to solve this problem.”
Five-year-old Axelera AI has two generations of chips it sells to around 600 customers. The company next plans to expand to products for decentralized cloud computing.
AI transformation
Abu Dhabi-based AI71 partners with large organizations and government agencies to help them benefit from AI transformations.
The United Arab Emirates has the largest compute per capita in the world and has a three-month mandate for every government agency to set up agentic processes for its citizens, according to Ghissassi. Energy is abundant and cheap. Over the next two years, the goal is to reach half of every citizen’s interactions with the government with an AI agent, he said.
Competing at the model layer does not make sense, said Ghissassi. He believes there will be two, three or four companies that can afford to be in the race, given the amount of capital required and the fact that it commoditizes very quickly.
The application layer is the one that is really important, for sovereignty where you want to own your data, said Ghissassi, who previously led product development at Google DeepMind. “You want to make sure that it stays with you, be it that you’re a government or an enterprise. If you’re giving away your trade secrets and know-how, nobody stops whoever is being a provider to you today, from replacing you.”
In the UAE, “what helps is the mandate, the pace at which things happen, the availability of compute, both in terms of sovereign clouds, or on-prem, or global clouds, and then the amount of capital that is being invested to help transform these companies to benefit from these technologies,” Ghissassi said.
By contrast, Europe struggles as it is a net importer of energy. It has strengths in the semiconductor industry but lacks all the real compute for AI, in neural networks and frontier labs.
“We should not be obsessed with controlling the entire stack,” said Del Maffeo. In Europe we have to create value instead of just paying for a service, he added. “Creating value means creating a wealthy economy.”
Europe’s strengths include its large pools of research talent and its population of 440 million people who can benefit from AI. However, the culture of large businesses purchasing from startups is less established, meaning it doesn’t have the same flywheel for growth seen in the U.S., said Del Maffeo.
“What worries me is that we are a little bit lagging behind, and therefore we are missing this value creation, and this will weaken the economies of Europe,” he said.
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Illustration: Dom Guzman
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