Reporter’s Notebook: Europe’s Sovereign AI Push Needs Customers As Well As Capital

Europe’s artificial intelligence startups are pulling in record capital, yet funding alone will not secure the region’s control over its AI destiny. Based on conversations at the recent HumanX conference in Amsterdam, local enterprises and governments must also begin purchasing what these emerging firms create — a critical missing element.

Data from a joint Crunchbase and HumanX report shows that European AI-focused startups secured $23 billion during the first half of 2026, marking a 130% year-over-year surge and making up 55% of the region’s overall venture funding. This investment boom brings the core sovereign AI question into sharp focus: Where should nations direct their resources to capture economic value and keep control of their data?

Attaining sovereignty does not mean owning every tier of the AI stack, according to two industry executives who spoke onstage: Fabrizio Del Maffeo, founder and CEO of Axelera AI, and Mehdi Ghissassi, chief product and technology officer at AI71.

Drawing on their respective viewpoints from Europe and the United Arab Emirates, they highlighted opportunities in specialized applications and chips, while emphasizing how government mandates, purchasing choices, and computing access dictate whether AI goals turn into actual economic growth.

Five-layered cake

Jensen Huang, president and CEO of semiconductor titan Nvidia, has outlined a “five-layer cake” framework for delivering AI, which encompasses energy, chips, infrastructure, models, and applications.

For Del Maffeo, whose enterprise builds inference chips, the primary opportunity resides in the semiconductor layer as AI processing shifts away from centralized data centers toward edge devices.

“Artificial intelligence will expand from cloud computing, from centralized data centers, to devices closer to us in the physical world,” he noted. “To enable this, you need specific chips which can run efficiently, at a lower cost, to connect these networks that today are running in the cloud. We are here to solve this problem.”

Operating for five years, Axelera AI supplies two chip generations to roughly 600 clients and aims to launch decentralized cloud computing products next.

AI transformation

Headquartered in Abu Dhabi, AI71 collaborates with government bodies and major enterprises to assist them in navigating AI transformations.

Ghissassi pointed out that the United Arab Emirates possesses the highest compute per capita globally, alongside a three-month directive requiring every government agency to implement agentic processes for citizens. Energy is abundant and cheap. The objective over the next two years is for half of all citizen interactions with the government to involve an AI agent, he explained.

Trying to compete at the model tier is impractical, Ghissassi asserted, noting that the immense capital costs and rapid commoditization mean only two, three, or four companies can sustain the race.

Instead, the application layer remains vital for data sovereignty, according to Ghissassi, a former product development lead at Google DeepMind. “You want to make sure that it stays with you, be it that you’re a government or an enterprise. If you’re giving away your trade secrets and know-how, nobody stops whoever is being a provider to you today, from replacing you.”

In the UAE, “what helps is the mandate, the pace at which things happen, the availability of compute, both in terms of sovereign clouds, or on-prem, or global clouds, and then the amount of capital that is being invested to help transform these companies to benefit from these technologies,” Ghissassi stated.

Conversely, Europe faces headwinds as a net energy importer. While it boasts strengths in semiconductors, it lacks comprehensive compute power for AI, neural networks, and frontier laboratories.

“We should not be obsessed with controlling the entire stack,” Del Maffeo remarked. Europe must focus on generating value rather than merely paying for services, he added. “Creating value means creating a wealthy economy.”

Europe benefits from abundant research talent and a population of 440 million potential AI beneficiaries. Nevertheless, Del Maffeo observed that its large corporations lack a deep-rooted culture of buying from startups, depriving the region of the growth flywheel seen in the United States.

“What worries me is that we are a little bit lagging behind, and therefore we are missing this value creation, and this will weaken the economies of Europe,” he cautioned.

Related Crunchbase query:

• Europe AI Funding In 2026

Related reading:

• Crunchbase & HumanX 2026 European AI Economy Report: Funding, Innovation and Growth
• Europe Posted Its Strongest Venture Funding Quarter In 4 Years As UK Gains, M&A Holds Up

?Frequently Asked Questions

01Why is funding alone not enough for Europe’s AI startups?

While venture capital is flowing into European startups, the region lacks the commercial adoption loop where large businesses and governments actively purchase local AI products and services.

02What is the “five-layered cake” of AI?

Coined by Nvidia CEO Jensen Huang, it is a framework for delivering AI that consists of energy, chips, infrastructure, models, and applications.

03Why does Mehdi Ghissassi believe competing at the model layer is difficult?

The enormous capital requirements and rapid commoditization mean that only a handful of global players can realistically afford to compete in building foundational AI models.

Illustration: Dom Guzman