Sebastian Siemiatkowski, CEO and Co-Founder of Swedish fintech Klarna, offers a thumbs up through the firm’s IPO on the New York Stock Exchange in New York City, U.S., Sept. 10, 2025.
Brendan McDermid | Reuters
LONDON — It’s been a busy week for the European expertise sector.
On Tuesday, London-headquartered synthetic intelligence startup ElevenLabs introduced it will let workers promote shares in a secondary spherical that doubles its valuation to $6.6 billion.
Then, Dutch chip agency ASML on Wednesday confirmed it was leading French AI firm Mistral’s 1.7 billion-euro Series C funding round at a valuation of 11.7 billion euros ($13.7 billion) — up from 5.8 billion euros final yr. Mistral is taken into account a competitor to the likes of OpenAI and Anthropic.
To cap it off, Swedish fintech agency Klarna on Thursday debuted on the New York Stock Exchange after a long-awaited initial public offering. Klarna shares ended the day at $45.82, giving it a market worth of over $17 billion.
These developments have revived hopes that Europe is able to growing a tech trade that may compete with the U.S. and Asia. For the previous decade, traders have been speaking up Europe’s potential to construct priceless tech companies, rebuffing the concept that Silicon Valley is the one place to create revolutionary new ventures.
However, dreams of a “golden era” of European tech by no means fairly got here to fruition.
A key curveball got here within the type of Russia’s 2022 invasion of Ukraine, which induced inflation to soar and international central banks to hike rates of interest in consequence. Higher charges are thought of unhealthy for capital-intensive tech companies, which regularly want to lift money to develop.
Ironically, that very same yr, Klarna — which at one level was valued as a lot as $45.6 billion in a funding spherical led by SoftBank — had its market worth slashed 85% to $6.7 billion.
Now, Europe’s enterprise capital traders view the current buzz across the area’s tech companies as much less of a renaissance and extra of a “growing wave.”
“This started 25 years ago when we saw the first signs of a European tech ecosystem inspired by the original dotcom boom that was very much a Silicon Valley affair,” Suranga Chandratillake, companion at Balderton Capital, informed CNBC.
Balderton has backed a variety of notable European tech names together with fintech agency Revolut and self-driving automobile tech developer Wayve.
“There have been temporary setbacks: the 2008 financial crisis, the post-Covid tech slump, but the ecosystem has bounced back stronger each time,” Chandratillake stated.
“Right now, the confluence of a huge new technological opportunity in the form of generative AI, as well as a community that has done it before and has access to the capital required, is, unsurprisingly, yielding a huge number of sector-defining companies,” he added.
Europe vs. U.S.
Investors backing the continent’s tech startups say there’s loads of cash to be made — notably amid the financial uncertainty brought on by President Donald Trump’s commerce tariffs.
For one, there is a clear low cost on European tech proper now. Venture agency Atomico’s annual “State of European Tech” report final yr pegged the value of the European tech ecosystem at $3 trillion and predicted it’s going to attain $8 trillion by 2034. Compare that to the story within the U.S., the place the tech sector’s largest megacap shares mixed are worth over $20 trillion.
“Ten years ago, there wasn’t a single European startup valued at over $50 billion; today, there are several,” Jan Hammer, companion at Index Ventures, which has backed the likes of Revolut and Adyen, informed CNBC.
“Tens of thousands of people now have firsthand experience building and scaling global companies from companies such as Revolut, Alan, Mistral and Adyen,” Hammer added. “Crucially, European startups are no longer simply expanding abroad — they are born global from day one.”
Amy Nauikoas, founder and CEO of fintech investor Anthemis, advised that traders could also be viewing Europe as one thing of a protected haven market amid heightened geopolitical dangers and macroeconomic uncertainty.
“This is an investing opportunity for sure,” Nauikoas informed CNBC. “Macroeconomic dislocation always favors early-stage entrepreneurial disruption and innovation.”
“This time around, trends in family office, capital shifts … and the general constipation of the U.S. institutional allocation market suggest that there should be a lot more money flowing from … global investors to U.K. [and] European private markets.”
Problems stay
Despite the bullish sentiment surrounding European tech, there stay systemic challenges that make it more durable for the area’s tech companies to attain the size of their U.S. and Asian counterparts.
Startup traders have been pushing for extra allocation from pension funds into enterprise capital funds in Europe for a while. And the European market is very fragmented, with laws various from nation to nation.
“There’s really nothing that stops European tech companies to scale, to become huge,” Niklas Zennström. CEO and founding companion of early Klarna investor Atomico, informed CNBC.
“However, there’s some conditions that make it harder,” he added. “We still don’t have a single market.”
Several tech entrepreneurs and traders have backed a brand new initiative referred to as “EU Inc.” Launched final yr, its intention is to spice up the European Union’s tech sector by way of the formation of a “28th regime” — a proposed pan-European authorized framework to simplify the advanced laws throughout numerous particular person EU member states.
“Europe is in a bad headspace at the moment for quite obvious reasons, but I don’t think a lot of the founders who are there really are,” Bede Moore, chief business officer of early-stage funding agency Antler, informed CNBC.
“At best, what you can say is that there’s this secondary tailwind, which is that people are feeling galvanized by the need for Europe to … be a bit more self-standing.”