Germany showed a huge improvement this year in a new ranking of the best hotspots for AI startups. Despite this, Europe’s strongest economy remains far from taking first place.
ADVERTISEMENTThe best European country for AI startups is Estonia, according to a new ranking by the Global Startup Ecosystem Map and StartupBlink research center.
The report, ranking the top 21 countries and 50 cities for AI startups, used, among other things, data on funding, team size and number of unicorns as well as total investment.
According to their findings, Estonia ranks sixth in the world for AI startups, surpassing major European AI powers such as France and Germany.
This is six places higher than the country occupies in the overall startup ecosystem ranking also published by Startup Blink earlier this year.
The small Baltic country, which has a population of less than two million, is known for the success of tech startups such as Skype and Bolt and has the largest number of tech unicorns (start-ups worth more than $1 billion/ 950 million euros) per inhabitant in Europe.
“Estonia’s remarkable performance in AI startup ecosystems comes from its focus on innovation and startup density, ranking second globally in terms of AI startups per capita, with around 48 per million people,” Ghers Fisman, head of research at StartupBlink told Euronews Business.
“The success of the ecosystem is reinforced by Veriff, an AI unicorn ranked in the top 20% by StartupBlink, based on investment, website traffic and number of employees,” he said. -he added.
The Estonian government aims to grow the startup and technology sector until it accounts for 15% of national GDP by 2025, offering programs including e-residency, startup and nomad visas digital, so a large proportion of the working population is engaged in startups.
Germany has climbed but France is lagging behind
Compared to the previous ranking, France fell two places in the rankings as it struggled to keep pace with the rapid growth of AI ecosystems in countries like Singapore, despite success stories like that of Mistral AI.
Meanwhile, Germany has moved up three places since last year, securing seventh place and overtaking France.
“Germany’s rise to 7th place globally in the AI startup ecosystem is driven by its impressive 244% increase in AI funding in 2023, far outpacing global trends,” said Fisman said.
“With 463 AI startups – more than France, which it replaced in the ranking – the country has built a solid foundation for innovation. Success stories like DeepL, one of the most successful AI unicorns ranked best by StartupBlink, further highlight how Germany is leveraging its resources to establish itself as a leader in AI.
Other European countries showing marked improvement include Sweden (17th) and Ireland (20th), which climbed five and four places respectively from 2023.
Romania (11th) also ranks highly, surpassing European countries like Norway, the Netherlands and Finland in encouraging AI startups.
Global ranking of AI hubs
Globally, the United States ranks first in AI, closely followed by Israel and the United Kingdom.
ADVERTISEMENTSingapore climbed three places to fifth, ahead of China, which is in eighth place despite the presence of the world’s most valuable AI startup, ByteDance.
According to the report, six of the top ten AI cities are in the United States. San Francisco leads this ranking, with a score four times higher than that of New York, the second highest ranking. Beijing took third place.
London is the number one AI city in Europe and fourth in the world, with a 50.6% lead over Paris, which is in eighth place.
In AI, Bucharest ranks well above its score for start-up ecosystems (26th). The city is also fifth in Europe, overtaking Cambridge (6th) and Oxford (11th).
ADVERTISEMENTA significant slowdown in AI funding in 2024
There is a notable slowdown in AI investments, compared to last year, coupled with a decline in the creation of AI unicorns in 2023 and 2024, notes the StartupBlink report.
By mid-2024, funding reached just over a quarter of the 2023 total. However, last year marked extraordinary highs and saw five massive fundraising rounds totaling $18.55 billion (17, 59 billion euros) – including OpenAI’s $10 billion (€9.5 billion) – which significantly boosted industry funding.
“In the first half of 2024, there were no funding rounds above $1 billion (€950 million), creating a sense of stagnation,” Fisman said. “However, a significant increase at the end of the year, such as OpenAI’s $6.6 billion (€6.26 billion) raise in October, illustrates how a single large funding event can reignite confidence investors and shape the trajectory of AI investments.”
Another reason for the investment delay is that the euphoria around AI is fading and investors are starting to feel the tension between costs and slow productivity growth.
ADVERTISEMENTBrussels-based think tank Bruegel said in a recent report: “Without significant productivity gains, the current trajectory of investment costs is unsustainable. We estimate that 3% annual productivity growth in advanced economies would be needed to support extrapolations of AI model costs through 2030.”