Europe's tech sector shows signs of revival thanks to the successes of Klarna, Mistral and ElevenLabs
The European tech sector was boosted this week by news that AI companies Mistral and ElevenLabs doubled their valuations, and Swedish fintech company Klarna finally went public.
As CNBC reports, these events have revived hopes that Europe is capable of creating a technology industry that will compete with the US and Asia.
It is noted that the week turned out to be busy for the technology sector in Europe:
▪️Klarna debuted on the New York Stock Exchange, ending its first day of trading with a market value of over $17 billion;
▪️French AI startup Mistral, a competitor to OpenAI, confirmed raising €1.7 billion in a funding round led by Dutch chip giant ASML — Mistral's valuation has risen to €11.7 billion;
▪️London-based AI startup ElevenLabs announced a secondary share sale, doubling its valuation to $6.6 billion.
These successes come against the backdrop of previous difficulties, when Russia’s invasion of Ukraine in 2022 and rising interest rates hit Europe’s tech sector. European venture capitalists are now viewing some of the excitement surrounding the region’s tech companies not as a renaissance but as a "growth wave." Experts believe that European startups are now "born global from day one," and Europe itself can be seen as a "safe haven" for investment amid geopolitical risks.
"Ten years ago, there wasn’t a single European startup valued at over $50 billion; today, there are several. Tens of thousands of people now have firsthand experience building and scaling global companies from companies such as Revolut, Alan, Mistral and Adyen. Crucially, European startups are no longer simply expanding abroad — they are born global from day one," said Ian Hammer, partner at Index Ventures.
Investors backing the continent's startups also say there is a lot of money to be made in them, especially amid economic uncertainty caused by U.S. President Donald Trump's trade tariffs.
In particular, they believe there is currently a discount on European technology. In the annual report on the "State of European Technology" by venture capital firm Atomico last year, the value of the European technology ecosystem was estimated at $3 trillion and was predicted to reach $8 trillion by 2034. For comparison, the shares of the largest mega-cap companies in the US tech sector are worth more than $20 trillion.
The publication also noted that despite the optimism, Europe still faces systemic problems that prevent its companies from reaching the scale of American and Asian competitors. The main ones are insufficient funding from pension funds and, most importantly, market fragmentation. To address this problem, the EU Inc. initiative was proposed, which involves the creation of a single pan-European legal framework for startups.
As a reminder, Ukraine ranks second in terms of the number of AI companies among Central and Eastern European countries. There are over 240 AI companies operating here, including Ukraine being home to three world-renowned startups — Grammarly, Preply, and People.ai.
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