The battle for AI-dominance: “What Europe needs, is one single capital market”

Earlier this week, the fifth edition of the State of Dutch Tech report by Techleap.nl revealed that “early-stage investment remains the biggest challenge for Dutch startups.”

While the number of Dutch startups successfully scaling up to become scale-ups remained low. A decline in the number of new startups and the lack of Dutch investors in major funding rounds are also unsettling trends that emerged over the past year.

Meanwhile, the global “battle” for domination in key tech industries such as deeptech and AI is “on”, as the EU is wary that the region can still compete.

To find out how Europe and the Netherlands can maintain a competitive position in those fields, Silicon Canals visited State of Dutch in The Hague (Netherlands) and spoke with influential leaders about what needs to be done. We asked them, should we invest, regulate, compete or innovate more? 

Marjut Falkstedt, Chief Executive at European Investment Fund (EIF)

“In terms of competitiveness, the European Union has already done great work to build up an excellent talent pool, thanks to our fantastic universities. Many startups in the deep tech have matured, and we have developed a much more mature venture capital ecosystem. 

But in order for companies to grow and scale-up, the most important aspect is that we have to convince more institutional investors to invest in venture capital.  Because when we have companies who become big enough, strong enough, they will invest in other companies, and they will help to create new startups, who will then help to move innovation further on. So we need to be scaling up of the whole ecosystem of venture capital funds. 

The size of the funds have to grow because otherwise they cannot follow the growth of the underlying tech companies. Until now, Europe has been focused heavily on the early stages, and not enough on the scale-up phase. 

That needs to be done hand-in-hand, at the same time. Otherwise, we will not have a large enough population of innovative companies that can be developed into global leaders. 

It would be a mistake to focus on AI, if we don’t take the full industrial ecosystem and the enabling infrastructure surrounding it into account as well. Everything that is connected to AI will need huge investments. Whether this is for energy grids, whether it’s in data centres, in quantum computing, or for AI training centres.

At EIF, we are investing in the venture capital ecosystem to help all those deep tech companies grow. Not only via investing in the venture capital funds of Europe, but also as a venture debt provider through the EIB as a provider of loans to those growing companies. 

It’s EIF’s mission to build up a strong venture capital and private equity ecosystem to help those entrepreneurs – deep tech entrepreneurs, to start ánd to scale-up and become not just European, but global leaders. A technology company doesn’t limit its business within the country’s borders. That’s why venture capital has to think in a European context, not just at a national level. “

René van Vlerken,  CEO Euronext Amsterdam NV & Member of the Managing Board

“The key assignment that Europe has, as confirmed in the Draghi report, is how can we make sure that the EU remains competitive and at least makes Europe less dependent on the US. How can we make sufficient funding available to support the ambitions that we currently have? 

I think there is sufficient capital available, but it doesn’t go to the companies that need it the most. If you look at the funds that come from the private sector in the Netherlands, a lot of it actually is managed by our pension funds and then goes “outside”: we see a lot of money flowing from Europe into the US or into global mandates. 

We need to reactivate that money and make it flow back into Europe. At the same time, it’s not only about pension funds and global institution. We also need to consider, how can we reactivate retail investors? 

I believe retail investors have a crucial role to play to assure there is sufficient capital available to fund our ambitions; whether it’s in artificial intelligence, deep tech, biotech, etcetera. 

That’s also part of our responsibility as an exchange. We have to harmonise the public capital market and create one that is more efficient, more simplified, less regulated into one liquidity pool for Europe so that money is made accessible to the companies here that need it. 

By doing so, it will be much easier for a Dutch company or a Belgian entity or an Italian startup to access that one European capital market. And then, of course, we have to make sure that there is an ecosystem between the private and the public sector to support that. 

If you look at us as Euronext: we are a pan-European stock exchange, and we already cover seven markets across Europe. We have European ambitions: that’s how we started our journey in 2014 when we became a public company ourselves.

We believe that there’s only one way for Europe to become more competitive to the US or to Asia or any other region: to make sure that there is one European economy. And to support a European economy, you need to have one single European capital market. “

Constantijn Van Oranje-Nassau, Envoy at Techleap.nl

“Well, if we are discussing to regulate AI even more… That is probably not the best option. 

I do think we need to invest more in the infrastructure, but also invest in entrepreneurs. Every so often we hear that we have lost the AI battle, but I don’t see it as a lost cause yet. 

With Deepseek, we’ve witnessed that even with strong constraints, you can still build technology that is competitive. I’m actually quite optimistic that we are now wide awake (in Europe).

I don’t think we should have only public money flowing in to AI and deeptech, so the best thing to do is to incentivise private capital to flow into our ventures. 

I hope that governments don’t conclude that they should all be pouring billions of public money into all kinds of infrastructure and into these companies, but rather I hope they will ignite the venture capital sector in Europe. 

For that to happen, we also need to have the pension funds on board. Not as direct investors, but having them as LPs in venture capital would be excellent. 

As for private equity, we have a lot of PE and I am not convinced that’s our biggest weakness: it’s more growth funding what we need. That’s true also for AI and deep tech companies that require high capital expenses for building first-of-a-kind facilities. 

That type of money is typically a blend of private and public, so we require more of that, too. 

At Techleap,nl, we have a strong focus on deep tech to bring together companies we think have an opportunity to scale into successful global companies. We provide a peer-to-peer learning environment and the expertise from, for instance, leading Dutch semiconductor companies who share insights with the younger companies to get a flywheel effect going. 

Our next theme is Future of Compute, but we’ll be looking to develop others too in strategic areas together with, for instance, TNO and Invest-NL. 

What we have been doing at Techleap.nl for quite a while is to build community. 

We recently did a report on AI and asked Dutch founders what they needed. 

The AI community would like to be more connected and meet regularly, so we’re looking at ways that we can bring them together so they can learn from each other and, at the same time, attract the capital they need.”