26th Sep 2021

EIB warns of €10bn investment gap in AI and blockchain

  • The US and China account for 80 percent of the €25bn of annual equity investment in AI and blockchain (Photo:

The EU is falling behind the US and China in artificial intelligence (AI) and blockchain technologies, partly due to an annual investment shortfall of up to €10bn, the European Investment Bank (EIB) has found.

In a report, published on Tuesday (1 June), the EU bank said that the US and China together account for 80 percent of the €25bn of annual equity investments in both technologies, while the 27-nation bloc accounts only for seven percent of the total, investing around €1.7bn.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Equity investment refers to the expenditure made in a firm by purchasing shares of that company in the stock market.

Between 2010 and 2019, global equity investments in AI and blockchain technologies had an annual growth rate of 38 percent - amounting to some €80bn-€85bn.

The EIB said these technologies are expected to play a central role in the bloc's green and digital transitions, accelerating the transformation of sectors hit hardly by the Covid-19 pandemic, such as financial services, healthcare and business intelligence.

However, it has identified an annual investment gap of about €5bn to €10bn.

"Companies and governments in Europe are substantially underinvesting in AI and blockchain compared to other leading regions, and it has become clear that the European Union struggles to translate its scientific excellence into business application and economic success," the EIB said.

The EU mainly provides early-stage financing for small and medium-sized enterprises (SMEs) working on AI and blockchain, but then it underperforms in subsequent rounds of financing, such as expansion and growth stages, the report points out.

As a result, there has been a strong movement of companies from the EU to the US.

American companies account for about 44 percent of European startup acquisitions.

In Europe and the US, most AI companies focus on information and communications or in scientific and technical activities, while about half of China's AI firms operate in the manufacturing sector.

Among the reasons for the EU's investment gap, the EIB cited the limited appetite for investments in these technologies due to high upfront investment needs, the lack of knowledge and specialisation of EU venture capital funds, 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 endowments in financing later-stage startups involved in AI and blockchain.

Yet, this shortfall appears to be dominated by AI, compared to the gap in blockchain investments.

Since its creation in 2008, blockchain technology has been mainly used for financial services and cryptocurrencies. But it is now expanding to other sectors such as media and telecommunications, healthcare and government services.

'Widening the gap'

Meanwhile, the EIB also said that access to finance might become more challenging in the short run as a result of market conditions, "potentially widening the investment gap".

"EU and member state support schemes could plug part of the gap, but private markets will clearly need to contribute the balance," the bank said.

Moreover, innovation hubs need to be better connected to increase the flow of talent, experience and funding access.

In the EU, Paris and Berlin are the largest hubs of AI and blockchain SMEs, followed by Amsterdam, Barcelona and Madrid - although the highest number of companies in these sectors are located in Germany and Austria.

Last April, the European Commission announced that it aims to turn Europe into a global hub for trustworthy AI - with the first-ever legal framework on AI and a new coordinated plan with member states.

EU seeks global AI leadership with new rules

The European Commission unveiled the first-ever legal framework to regulate the use of artificial intelligence in Europe - banning 'social scoring' systems and facial recognition for law enforcement in public spaces, with narrow exceptions.


EU vs US tech agenda under Biden

What will the new Joe Biden administration bring to the realm of digital policy, and how will it affect the relationship with the EU?

EU Commission sticks to €20bn AI target, despite Covid

Despite the coronavirus crisis, the European Commission wants member states to attract more than €20bn of investment in artificial intelligence (AI) annually over the next decade to make Europe a leader of so-called 'trustworthy artificial intelligence'.

Activists: 'More deaths' expected on Polish-Belarus border

The European Commission has demanded Warsaw "ensure that people at the border are given the necessary care and assistance". But activists say without any help, more stranded people along the Polish-Belarus border will likely die as temperatures plummet.

News in Brief

  1. Italy arrests Puigdemont on Spanish warrant
  2. EU and US hold trade talks despite French wrath
  3. EMA to decide on Pfizer vaccine booster in October
  4. EU welcomes Polish TV-station move
  5. Ukrainian parliament passes law to curb power of oligarchs
  6. EU could force Poland to pay lignite-coal fine
  7. Report: EU and US concerned by tech-giants' power
  8. EU states sign 'transparency pledge'

VW emissions software was illegal, top EU lawyer says

Volkswagen used software to alter emissions illegally, according to the European advocate-general on Thursday. The German carmaker installed devices that could detect when the car would be subjected to testing - which would then distort parameters to show lower emissions.

Stakeholders' Highlights

  1. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  2. Nordic Council of MinistersCan you love whoever you want in care homes?
  3. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  4. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  5. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  6. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed

Latest News

  1. Activists: 'More deaths' expected on Polish-Belarus border
  2. EU unveils common charger plan - forcing Apple redesign
  3. Central Europe leaders rail against 'new liberal woke virus'
  4. Yemen's refugees in 'appalling conditions', says UN agency
  5. VW emissions software was illegal, top EU lawyer says
  6. Sexism and the selection of the European Parliament president
  7. More French names linked to Russia election-monitoring
  8. Negotiations set for new, tougher, EU ethics body

Join EUobserver

Support quality EU news

Join us