US Dominates AI Investment as European Start-ups Struggle

Investment in generative artificial intelligence (GenAI) has surged dramatically in the United States, leaving Irish and European start-ups in a precarious position. A report from EY Ireland reveals that a staggering 97 percent of global venture capital funding is directed toward American companies, raising concerns about the future of AI innovation in Europe. In the first half of 2025, global VC investment in GenAI reached $49.2 billion (€42.5 billion), surpassing the $44.2 billion total for all of 2024 and doubling the full-year total from 2023.

The study, titled “Generative AI Key Deals and Market Insights,” highlights a trend where significant capital is funneled into a shrinking number of GenAI firms. While the overall deal value has increased, the number of transactions has dropped by nearly 25 percent in the first six months of 2025. This shift indicates a preference for fewer, larger investments, which could pose challenges for smaller and mid-sized companies seeking funding.

Investment Landscape Shifts Towards US Dominance

According to EY, the United States accounted for 97 percent of global deal value and 62 percent of all transactions in the GenAI space. In contrast, the Europe, Middle East, and Africa (EMEA) regions collectively represented only 2 percent of deal value despite making up 23 percent of transaction volume. Among the 39 global AI unicorns—private companies valued at over $1 billion—only three are based in Europe, while 29 are in the United States.

Grit Young, technology, media, and telecoms lead at EY Ireland, pointed out that the rapid rise of GenAI is reshaping the investment landscape, creating a risk of sidelining smaller players. “Many high-potential start-ups find themselves in a difficult middle ground, too advanced for early-stage support, yet not quite large enough to attract global VC attention,” Young noted. This scenario is particularly concerning for Irish start-ups, which have shown promise in AI adoption but struggle to secure necessary capital and infrastructure.

Challenges Facing Irish Start-ups

The funding environment for AI start-ups in Ireland remains challenging, particularly for those seeking between €1 million and €10 million. Young emphasized that a limited number of large-scale investments dominate the sector, with notable examples including SoftBank’s potential $40 billion commitment to OpenAI, a $10 billion funding round for xAI, and significant investments in Databricks ($5 billion), Anthropic ($3.5 billion), French start-up Mistral AI ($600 million), and legal tech firm Harvey ($600 million).

The clear pattern emerging from the data indicates an ongoing widening of US dominance in GenAI innovation and investment. “With increased regulatory divergence on AI between the US, Europe, China, and beyond, it will be important for Europe to balance essential regulation with supporting and enabling innovation,” Young stated.

As the AI investment landscape continues to evolve, the disparity between the US and Europe in securing funding raises critical questions about the future of technology development and innovation on the continent. Irish start-ups must navigate these challenges carefully to ensure their survival and growth in an increasingly competitive global market.