Call it Europemaxxing. Call it a Scandinavian surge. Whatever is happening, Europe’s tech scene is feeling hot.
From Legora to Lovable, Klarna to Yann LeCunn’s new AMI Labs, a new generation of European startups is bedding in and defying the pull of Silicon Valley. In some areas, they’re matching or pulling in front of their US rivals.
Swedish AI legal startup Legora, a challenger to US-headquartered Harvey, says it counts 20% of the 100 highest-grossing US law firms among its customers, and last month hit a major revenue milestone. The Swedish vibe-coding titan Lovable, valued at $6.6 billion, recently saw its recurring revenue jump 33% in a month — and now it’s looking for acquisitions.
“A structural shift is happening in the European business landscape,” Lovable CEO Anton Osika told Business Insider. “Europe has a long history of producing deep technical talent but was traditionally viewed as weaker in growing companies to global scale.”
What’s behind the shift? Founders and VCs told Business Insider that it’s a combination of AI, access to capital, and the flywheel effect from established European tech companies like Spotify and Klarna. And it’s changing how tech talent flows across the Atlantic.
“It is not recency bias,” George Robson, a partner at the US-headquartered VC firm Sequoia, told Business Insider. “Something has genuinely shifted — and I think it has been building for a lot longer than the last 12 months of headlines suggest.”
AI shakes up scaling
For decades, the pattern was similar: a company born in Europe would grow, struggle to scale beyond a certain point, and then move to the US. DeepMind and Darktrace are some of the biggest companies to have ended up under the purview of the US, one way or another.
“I think there’s still a huge issue with scale-up capital,” Douglas Brion, CEO of London-based manufacturing startup Matta, told Business Insider. While access to seed and early-stage capital is still strong, Brion said, it remains challenging later.
Yet AI may be shaking up startup scaling laws, both in terms of the speed at which they can grow and the amount of capital needed to do so. Tech companies worldwide are shifting toward leaner teams that use AI to improve efficiency. That can mean lower overheads for startups, allowing funding to go further.
“What’s changing is the underlying logic of why companies had to move in the first place,” said Lovable’s Osika. He predicts a “virtuous cycle” in which AI reduces the need for large amounts of capital to scale, leading more startups to succeed in Europe and VC money to follow. “We’re at the very beginning of that shift,” he said.
“Large language models, and the infrastructure around them, have compressed the timeline from research idea to product in a way that plays to European strengths,” Sequoia’s Robson told Business Insider. “Europe has always had exceptional research depth — now that depth converts to product faster than it ever did before.”
Capital flows
US startups raised six times more than those in Europe did last year, but there are signs that access to capital is improving. The median European VC fund has tripled in size since 2016, from $32 million to $105 million, according to data from Atomico.
Following his departure from Meta, AI researcher LeCun announced in March that he raised $1 billion for his new Paris-based AI startup, AMI Labs. LeCun said the new company would be among the few frontier labs that are “neither Chinese nor American.”
Alex Kendell, CEO of the London self-driving car company Wayve, said he was also “seeing a new market open up with AI” right now. “Europe has really strong research and technical talent, and this is now being matched with the capital and ambition to grow,” he told Business Insider.
Kendell said Europe is still behind the US in terms of valuations and access to capital, but that he also sees encouraging signs of change.
“The best funds in the world are now wanting to invest in markets like the UK, and are setting up offices and general partners locally to make those investments,” he said. “I think we’re seeing those funds grow to a size and ambition where they want to globalize.”
‘Silicon Valley with a Scandinavian flair’
The upside of a European tech-aissance is that the continent may stop being a talent farm for US megacaps. Data from Revelio shows that more tech workers are now moving from the US to Europe than the other way around. It suggests Europe isn’t just better at retaining talent, but also attracting more from the States.
“Five years ago, if you were a top AI researcher or a founding engineer and you wanted to work on the most consequential problems, you felt a genuine pull toward San Francisco,” said Sequoia’s Robson. “That pull has not disappeared, but it has weakened, because the problems are now being worked on in Paris and London and Zurich and Berlin too.”
Stockholm has become something of a tech hub — one some like to refer to as “Silicon Valhalla.” The founding place and headquarters of Spotify has given birth to a stable of tech companies — Lovable, Klarna, Legora — that are true challengers to their US rivals.
Adrian Parlow, director of product at Legora, recently moved from the US to join Legora in Stockholm. He describes the vibe as “Silicon Valley with a Scandinavian flair,” which he said means low ego, hunger to grow, hunger to win.
Not everyone is fully sold on this idea. Paul Graham, the founder of YC, said this month that while Stockholm has potential, ambitious founders should still go to Silicon Valley.
There are other factors at play that may be both driving more talent into Europe and keeping it there.
“We know that the H1B visa thing is starting to drive people away,” said Mike Smeed, managing director of London-based Inmotion Ventures, referring to Donald Trump’s crackdown on the visa that thousands of tech workers obtain to work in the US each year. Data reviewed by Business Insider showed that H-1 B filings by tech giants such as Google and Amazon dropped sharply late last year.
Founder flywheel
Success often begets success, and several founders said this will be key to creating the European flywheel.
“You need early success examples to prove that the thing is possible,” said Legora’s Parlow. He cites Spotify and Klarna as big early successes that now inspire companies like Lovable and Legora. “And then, you know, maybe a few years from now, Legora is going to be the one the next founder is going to look at and be like, ‘Oh, this is possible.'”
Sequoia’s Robson said today’s trend stems from a decade of compounding effects in which founders who have sold their startups put their experience and money back into the ecosystem.
“The generation of founders who built and exited European companies in the 2010s did not leave,” he said. “They stayed, and they hired, and they backed the next generation. That flywheel is now spinning in a way it simply was not a decade ago.”
And why not build in Europe? Some countries across the continent consistently rank among the highest in global quality-of-life rankings.
Finland has been making a push to poach tech and AI talent from the US on that premise.
“I would like to get as many international tech experts to Finland as possible,” Finnish President Alexander Stubb told Politico on behalf of the Axel Springer Global Network. “The work-life balance is very good here. We are top of the world. Good schools, high living standards, comfortable life, safe in many ways.”
InMotion Venture’s Smeed says similar arguments can be made across other parts of Europe.
“The way of living is beautiful. So if you offer people the opportunity to stay and to grow, then of course they would want to do that,” he said. “But you’ve got to set up the right environment for that to happen.”
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