Europe continues to lag behind the US and Asia in venture capital investment for high-tech and digital industries, according to a study from global consultancy Kearney.
The study has shown that from 2019 to 2024, the Americas invested over three times more than the EU in these sectors, averaging $221 billion annually compared to just $68 billion in the EU. Asia also outpaced Europe with an average annual investment of $110 billion. This investment gap is limiting Europe’s ability to compete in critical future technologies such as AI, cloud computing and quantum infrastructure, according to the report.
Between 2019 and 2023, China filed 1.7 times more high-tech patents than the US and 7.6 times more than Europe. While Europe retains strength in industrial automation, power semiconductors and communications, it is failing to attract sufficient capital in “capital-intensive or security-critical sectors, such as quantum computing or AI infrastructure.”
Despite a 32% increase in EU R&D spending since 2019, this falls short of the 69% and 54% growth seen in the US and China, respectively. Kearney pointed out that the divergence not only reflects disparities in current capital flows but also threatens Europe’s longer-term capacity for innovation and competitiveness.
The report also warned that without decisive action to close the investment gap, Europe risks growing dependence on non-EU suppliers for critical technologies.
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Kearney’s recommended strategic policy moves to improve the scenario include establishing a pan-European investment framework, attracting specialist Science, technology, engineering and mathematics talent through targeted migration, and reinforcing supply chain resilience. The report also urged greater public-private R&D collaboration and the creation of EU-wide initiatives in strategic sectors such as semiconductors and AI, citing models like Airbus and Japan’s Rapidus as potential blueprints.
Arndt Heinrich, partner at Kearney, commented: “Europe’s tech potential is not in question, but its ability to scale and compete may well be. Despite clear strengths in specialised sectors, Europe lacks the financial firepower, policy ambition, and regional collaboration to match the pace of the US and China.
2025 is a pivotal moment. Without bold investment and coordination, we risk locking in long-term dependency on others for the most critical technologies. But with the right moves, Europe can build a resilient, sovereign tech ecosystem that reflects its industrial strengths and secures its strategic future.”
