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Europe’s AI Talent Tops the US, Atomico’s State of Tech Report Reveals

Europe has experienced a remarkable surge in the field of AI, witnessing a more than 10x increase in active AI roles over the past decade, Atomico’s latest State of European Tech report reveals.
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Only have 1 minute? Here are 3 key takeaways from the piece:

 • Europe has experienced a remarkable surge in the field of AI, witnessing a more than 10x increase in active AI roles over the past decade, Atomico’s latest State of European Tech report reveals.

 • European tech investments in 2023 are expected to hit $45B, marking a significant 55% decline from the record-breaking $100B invested in 2021.

 • Europe lags behind the US on a GDP-adjusted basis, with Southern and Central Eastern Europe (CEE) in particular showing a pronounced gap in this disparity.

Over the past decade, Europe has not only witnessed a greater than 10x increase in the number of active AI roles, but also claims a larger resident population of highly-skilled AI professionals compared to the US, Atomico’s latest State of European Tech report shows, based on data from deal counting platforms and a survey of more than 4,100 startups, founders, and VCs.

Although many of these AI professionals are working in roles at US-headquartered tech companies that have built a large AI research presence in Europe, such as Alphabet or Meta, companies such as France-based Mistral AI illustrate how European-based pools of AI talent have become the primary destination for founders and talent in the industry.

The report also shows that Generative AI is making a boom in Europe and that investors have been betting big on AI. Data from the report says that as of the end of Q3 2023, European AI companies had raised 11 rounds of $100M or more, compared to 37 rounds by US AI companies over the same period. 

However, European AI companies have not yet raised billion-dollar or multi-billion-dollar rounds as compared with the fastest-growing US AI companies, such as OpenAI or Anthropic. For example, while Europe is now consistently seeing rounds of investment of $100M or more, and even up to $0.5B, this pales in comparison with Microsoft’s $10B investment into OpenAI, the report adds.

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Investment into AI in Europe has been also defying the broader downturn, with 2023 total investment on track to come close to last year’s record-breaking amount of $8.7B, the report states. CEE companies for instance, as already shown in The Recursive’s State of AI report, attracted $4.2B in funding in the past three years, showcasing growing interest from top-tier international investors.

Additionally, the report shows that AI has been the most popular sector for rounds of less than $5M. 

Total invested capital for 2023 to reach $45B, down more than half from 2021

According to Atomico’s report, the total amount of capital that has been invested in European tech in 2023 is poised to reach $45B, which is going to drop more than half, or 55% from the record in 2021, when investments surpassed $100B.

Europe’s AI Talent Tops the US, Atomico’s State of Tech Report Reveals,
Source: Atomico

The decline can also be seen when compared to 2022 when investments were $82B. Reasons for  such developments range from many later-stage companies delaying fundraising, as well as materially slower deployment pacing by investors, 

However, the report also emphasizes that 2023 is on track to be the third-largest year on record by total capital invested, as well as it is on track to come in at four times the volume seen 10 years ago in 2014. 

Furthermore, the report also shows that one-year VC returns are now well into negative territory in both Europe and the US, as a consequence of increased down rounds, write-offs, and markdowns reflected in the data.

The slowdown of capital invested in private European tech companies is evident across the region, with significant year-on-year declines recorded in every major European country between 2022 and 2023. 

Only a small number of countries, including Romania, and together with Lithuania, and Luxembourg have recorded a year-on-year increase in total capital invested in 2023.

According to the report, the UK retains its top spot with a projected $12.7B of capital invested, followed by France ($8.0B) and Germany ($7.8B). The Netherlands ($2.1B projected) has risen back into the top five countries, displacing Switzerland ($1.7B) to join Sweden ($1.7B) to round out the top five countries by capital invested in 2023.

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The report also shows that on a GDP-adjusted basis, Europe continues to lag behind in terms of its share of total capital invested globally in technology. Thus, the projected total of $45B of capital invested in the region will equate to around 18% of global investment volumes, while the US which accounts for 25% of global GDP, has a massive 46% share of total capital invested.

Europe’s AI Talent Tops the US, Atomico’s State of Tech Report Reveals,
Source: Atomico

As the report outlines, this gap is particularly visible in Southern Europe and Central and Eastern Europe. 

European tech constantly creating new positions

Even in the face of challenges in the capital markets and concerning indicators such as layoffs that may impact the perceived attractiveness of joining the industry, the report shows that European tech has not seen an exodus of talent, but that new positions are constantly being created.

In this regard, the report shows that in five years, European tech has expanded its workforce from slightly over one million employees to more than 2.3 million today.

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Bojan is The Recursive’s Western Balkans Editor, covering tech, innovation, and business for more than a decade. He’s currently exploring blockchain, Industry 4.0, AI, and is always open to covering diverse and exciting topics in the Western Balkans countries. His work has been featured in global media outlets such as Foreign Policy, WSJ, ZDNet, and Balkan Insight.