The EU lags behind the US and China in artificial intelligence (AI) and blockchain technologies, in part due to an annual investment gap of up to 10 billion dollars. euros, noted the European Investment Bank (EIB).
In a report, Released on Tuesday (June 1), the EU bank said the US and China together accounted for 80% of the € 25 billion annual equity investment in the two technologies, while the bloc of 27 countries did not represents only 7% of the total, investing around 1.7 billion euros.
Equity investment refers to the expenses made in a company by purchasing shares of that company on the stock exchange.
Between 2010 and 2019, global equity investments in AI and blockchain technologies recorded an annual growth rate of 38%, or between 80 and 85 billion euros.
The EIB said these technologies should play a central role in the bloc’s green and digital transitions, accelerating the transformation of sectors hard hit by the Covid-19 pandemic, such as financial services, healthcare and business intelligence .
However, he identified an annual investment gap of around 5-10 billion euros.
“European companies and governments are significantly underinvesting in AI and blockchain compared to other leading regions, and it has become clear that the European Union is struggling to translate its scientific excellence into commercial applications and economic success “, said the EIB.
The EU primarily provides start-up funding to small and medium-sized enterprises (SMEs) working on AI and blockchain, but then underperforms in subsequent funding cycles, such as expansion and growth stages, underlines the report.
As a result, there has been a strong movement of companies from the EU to the US.
American companies represent around 44% of acquisitions of European startups.
In Europe and the United States, most AI companies focus on information and communications or scientific and technical activities, while about half of Chinese AI companies operate in the manufacturing sector.
Among the reasons for the EU investment gap, the EIB cited limited appetite for investment in these technologies due to high initial investment needs, lack of knowledge and specialization of venture capital funds. of the EU and the difficulty for SMEs to connect with investors.
Another explanation for this gap is the limited role played by large institutional investors such as pension funds, insurers, and foundations in funding late stage startups involved in AI and blockchain.
Yet this deficit appears to be dominated by AI, compared to the gap in blockchain investments.
Since its inception in 2008, blockchain technology has mainly been used for financial services and cryptocurrencies. But it is now spreading to other sectors such as media and telecommunications, healthcare and government services.
“Widening the gap”
At the same time, the EIB also said that access to finance could become more difficult in the short term due to market conditions, “potentially worsening the investment gap”.
“Support programs from the EU and Member States could close part of the gap, but private markets will clearly have to contribute to the balance,” the bank said.
In addition, innovation clusters must be better connected to increase the flow of talent, experience and access to funding.
In the EU, Paris and Berlin are the largest hubs of AI and blockchain SMEs, followed by Amsterdam, Barcelona and Madrid, although the largest number of companies in these sectors are found in Germany and Austria.
Last April, the European Commission announced its intention to make Europe a trustworthy global AI hub – with the first-ever AI legal framework and a new plan coordinated with member states.