Europe’s technology sector is entering a decisive period as a major report warns of a critical crossroads. Atomico’s State of European Tech 2025 says future progress relies on bold investment in climate tech, artificial intelligence and defence capabilities. The firm argues that Europe has strong talent but still lacks the commitment needed to match its ambitions.
The report highlights a growing gap between impressive innovation and limited large-scale backing across the continent. It urges policymakers and investors to help create Europe’s first trillion-euro technology leader. Atomico insists that technological sovereignty depends on Europe building enough capability to act independently in global markets.
AI now dominates the region’s funding landscape and continues to attract rising interest from industry and governments. About 31 per cent of all European funding this year went to AI or machine learning companies. French developer Mistral AI secured Europe’s biggest 2025 investment round with €1.73 billion raised. Data centre specialist Nscale followed with €952 million as demand for computing power increased.
The report also notes the rapid ascent of new AI stars such as Sweden’s Lovable, which reached unicorn status within six months. Other emerging leaders include video platform Synthesia and workflow developer n8n.
Defence technology is expanding faster than at any time in the past decade. Investment rose to €1.38 billion this year, with German company Helsing attracting a third of the sector’s total support. Several aerospace start-ups also secured significant backing.
Atomico says Europe must attract more global AI talent and broaden research funding beyond industrial sectors. It warns that computing capacity remains far behind the United States and China. The report concludes that simpler rules, stronger public support and patient capital are essential if Europe wants to shape its own technological future.
