"AI development is frequently described as a race for frontier models. But considerable economic value will also be generated by AI development and adoption in existing markets. This data brief examines where EU competitiveness stands in the five applied markets where most of the EU’s AI startup activity in our dataset takes place – horizontal enterprise software, healthcare and life sciences, manufacturing and supply chain, finance and insurance, and research and development tools. Drawing on data from Dealroom.co covering 24,468 active AI startups launched between 2012 and 2025 across the EU, Switzerland, the UK, and the U.S., we compare geographic patterns at the level of regions, countries, and cities through original analysis [...]
Manufacturing and supply chain is the only market where the EU accounts for a larger share of AI startups than the U.S., though our data likely underestimates the number of U.S. startups in general. This suggests the competitiveness gap across applied AI markets may be even larger than our data indicates [...] AI startup activity in the EU is geographically dispersed: 75 percent of analysed EU AI startups are spread across 95 cities, with no single hub dominating any market. Paris, Berlin, Amsterdam, Munich, and Stockholm are the largest hubs but together account for only a quarter of EU AI startups. EU city rankings across markets largely reflect general AI startup hub sizes rather than genuine market specialisation – but specialised niches do begin to emerge at the local level, e.g. Munich in manufacturing and supply chain and Barcelona in healthcare and life sciences. As our data skews towards larger startup hubs, specialisation patterns in smaller cities and regions may not be fully captured. Our findings have important implications for policymakers. Europe's challenges in AI competitiveness extend well beyond frontier models. The manufacturing and supply chain market, a strategic priority for the European Commission, presents grounds for cautious optimism, where existing industrial strengths align with national and regional specialisation signals based on AI startup activity, especially in Germany and Munich. The geographically distributed startup activity in the EU can support AI adoption across diverse regional economies and existing industrial strengths. At the same time, it raises questions about whether European hubs can achieve the scale and specialisation needed to compete globally. The technological diversity of AI also presents competitive opportunities that go beyond market specialisation alone. Whether the emerging specialisation patterns identified in this analysis develop into globally competitive positions will depend on continued access to growth capital, compute resources, and cross-border market integration." (Executive summary, pages 3-4)