Taavet Hinrikus, co-founder of Wise, believes that Europe has the potential to cultivate trillion-dollar tech companies in the coming years, despite historically lagging behind Silicon Valley.

The 2024 State of European Tech report, now in its tenth year, reveals significant advancements in Europe's tech industry, coinciding with a shifting legislative landscape in the EU.

Investment levels in 2024 have stabilized following a surge in 2021 and 2022, reflecting a more cautious funding environment.

In the competitive arena of AI funding, Europe raised $11 billion in 2024, still trailing the US, which garnered $47 billion, but surpassing China due to a decline in Chinese investment.

Despite this progress, Europe's deep tech investment remains significantly lower than that of the US, with American firms raising $52 billion compared to Europe's $14 billion.

A notable trend is the increasing investment in 'deep tech' ventures, focusing on high-tech innovations in areas like AI and robotics, with funding for such companies exceeding 30% in the past two years.

Estonia has emerged as a leader in venture capital funding relative to its GDP, with 17 European countries ranking among the top 30 globally for VC funding, although larger economies like Spain and Italy are falling behind.

Despite facing a net outflow of talent to countries like the US, Australia, and Canada, Europe has seen an influx of tens of thousands of tech professionals in recent years.

Since the first report in 2015, Europe's tech workforce has expanded sevenfold, and the number of companies valued at over $1 billion has significantly increased.

However, many European tech companies and experts argue that EU regulations, such as the GDPR and the AI Act, are hindering their growth and scaling potential.