Europe risks losing startups over regulation and a shortage of funding

what happened

Regulatory hurdles, funding shortages and gaps in workforce skills are pushing European startups to consider moving abroad. Tanuja Randery, AWS managing director for EMEA, told Reuters this could trigger a mass exit of the region's most promising new companies.

According to Randery, European businesses say they could spend as much as 40 cents of every euro on regulatory compliance rather than technology. Nearly 40% of European startups would consider leaving the region to scale, and among the fastest-growing firms the share exceeds half, citing an AWS survey. Although more than half of European businesses use AI, only one in five has a clear AI strategy and governance model.

Randery also said Europe should invest most in inference, the stage where trained models are deployed for real-world use. She argued the region needs to move faster and that safety and progress should not be treated as a trade-off.

why it matters

For markets, the story highlights Europe's lag behind the US and China in AI, as strict regulation, energy constraints and reliance on OpenAI and Anthropic weigh on the region's tech sector. It has no direct effect on prices, but it matters for long-term views on European technology companies.

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