“The conceived wisdom was once your business gets to a particular size, all of our predecessors would encourage the company to actually move itself to the U.S.,” said Rana Yared, a general partner at London-based venture capital firm Balderton Capital which has invested in companies like Citymapper, Depop, and Revolut. She moved to Europe in 2008 from the U.S.

Yared gave the example of business partner Bernard Liautaud, who cofounded the enterprise software company BusinessObjects in France in the 1990s, but then later ran it out of California. SAP acquired BusinessObjects in 2007.

“Then people don’t know if they have a French business or an American business,” Yared said. “All of the talent that grew his business—and he’s not alone—stayed” in the U.S.

Ben Fletcher, a partner at VC group Accel (behind Deliveroo, Dropbox, Slack, Spotify, and many more), has also noticed that many European startups move to the U.S. once they reach $10 million or $20 million in revenue. 

“It’s almost a foregone conclusion that they’re going to then move to New York, San Francisco, Austin—and they’re going to start bringing their commercial leaders out there,” Fletcher said. “One of the disadvantages or gaps [in European AI development] is just that ability to have the scaling leaders that can take you all the way from early stage all the way through IPO.”

Although those U.S. cities undoubtedly have ripe tech talent pools, Europe has many esteemed math and science programs in its universities. In fact, it’s home to three of the top 10 research universities on the planet (Imperial College, the University of Oxford, and the University of Cambridge), said Tom Hulme, managing partner and head of Europe at venture capital firm Google Ventures (GV), which has backed ClassPass, Nextdoor, and GitLab.

Hulme said another problem is that these universities aren’t graduating enough students each year to keep up with demand. 

“If you just look at roboticists and computer scientists graduating from Imperial and Oxbridge, it’s only about 500 a year. It’s kind of farcical,” Hulme said. “The demand is an order of magnitude more than that.”

And then, much of that talent ends up moving to the U.S., Fletcher noted, and it’s important to “keep and contain that talent here in Europe.”

With less homegrown talent and fewer companies staying in Europe, that means fewer major success stories, said Alex Lim, a general partner at the London office of VC firm IVP that’s invested in companies including Perplexity, Figma, and Robinhood. There are exceptions of course, such as Spotify (founded in Stockholm, Sweden), UiPath (founded in Bucharest, Romania), and Revolut (founded in London), but they tend to prove the rule.

To put it in perspective, Lim said, the AI startup ecosystem in Europe is just about 15% to 20% the size of Silicon Valley. 

“We’ve had less of these success stories come through, and that’s where great growth talent generally comes from,” Lim said. It “comes from successful scale-ups and successful companies that have gone through the path of hyper growth and then through IPO.”

However, Yared said the tune at VCs in Europe is starting to change. 

“Now the tune is [that] you can build a global winner from Europe—and if that happens enough times—you get these tribes of people who actually have the talent and have seen it,” she said. “That grows not only their companies, but the next companies that they go into and found.”