European tech founders turning to U.S. for AI funding

This trend is being driven by the heavier upfront costs of AI computing infrastructure and specialist talent, according to a report from The Wall Street Journal

European tech founders are turning to the U.S. to find funding for artificial intelligence (AI) projects.

That’s according to a report on Saturday (Oct. 4) from The Wall Street Journal, 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 rivalling China and the U.S.

Although the European venture capital (VC) scene has grown in recent years, The Wall Street Journal 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 funnelled around $14.2 billion in 549 European AI and machine learning VC projects, up from $11.7 billion in all of 2024, according to PitchBook data. That represents just over 71% of deals in terms of value, compared to 57.5% in 2024.

Patrick Smith told The Wall Street Journal 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.

He further said: American investors, on the other hand, “understand the runway and how much money you need to burn”.