Europe's tech industry is worth $4 trillion, but investment in Italy is falling dramatically

Here's what the 11th Atomic Investment Fund report on the state of technology in Europe says this year

by Gianni Rusconi

20 November 2025

5' min read

Translated by AI

Versione italiana

5' min read

Translated by AI

Versione italiana

The Old Continent is at a crossroads: it has the talent, ambition and ideas to be a leading digital player but has not yet realised its full potential on the global stage. So says the note accompanying the 11th report by the Atomico investment fund on the state of technology in Europe published in these hours (and available at www.stateofeuropeantech.com), confirming that the conditions for betting in the tech business have been created and that the level of optimism has reached its highest level in the last ten years.

The Belpaese step backwards

Some numbers explain well the potential of this sector: Europe has almost 40,000 funded technology companies, up from 13,000 in 2016, and the value of the sector can be calculated at USD 4 trillion, a figure that represents 15% of its total GDP. The number of innovation investors active in the region now stands at 2850, up from 1350 in 2016, yet some structural gaps mean that there is a risk of not generating trillions in production value. Nevertheless, only 20% of European companies actively interact with startups, compared to 50% in the US, and only 9% of public procurement in Europe is invested in technology, compared to 20% in the US. And Italy? For our country, the balance of investments in the technology sector is negative, falling from 1.3 billion recorded in 2024 to an estimated 758 million in 2025.

The 40 per cent drop is unequivocal but two indicators give cause for hope: the first sees 56 per cent of respondents declaring themselves more optimistic about the future of European technology than the previous year and the second formalises the entry of a new name in the list of tricolour unicorns, with Namirial joining Bending Spoons, Domyn, Technoprobe, Tatatu, Moltiply Group, ScalaPay, Satispay and Kong. Europe's imperative to grow, according to Tom Wehmeier, Partner and Head of Intelligence at Atomico, is reflected in the fact that 'technology is the driving force reshaping the way we govern, defend, manage money and deliver healthcare'. The reference to the concept of continental digital sovereignty, and thus the ability to define the future on one's own terms, is explicit and the report outlines the roadmap to be followed to create the conditions for Europe's first EUR 1 trillion tech company.

The goal: large-scale simplification

Almost 70 per cent of technology start-up founders say that the current European regulatory environment is too restrictive (only 18 per cent of respondents consider it favourable) and an intervention in this direction is not surprisingly seen as one of the changes that would improve the exit environment. What is needed, and what politicians are also realising, is a unified European business framework, with harmonised regulations designed for today's companies and ensuring that founders can raise capital and operate smoothly across borders within 48 hours.

Speed and ambition, Atomico's experts point out, are therefore crucial and so are actions to incentivise inventors to become founders and to bring the terms of spin-outs in line with global standards. Confirming a trend that is already gaining momentum, London dominated the venture capital market in 2024 with eight funds in the top ten while French and German companies occupied seven seats in the top ten in 2025.

Hunting for talent

The figure will sound strange to some, but the European talent pool is growing (albeit by only 4%), reaching 4.6 million figures in the last year, and the region is on a par with the US and Asia in terms of startup creation also thanks to international brainpower inflows in and Another positive figure concerns the percentage of founders of artificial intelligence companies staying in Europe, which has risen from 74% in 2016 to 81% today, while 42% say that becoming an entrepreneur in Europe today is more attractive than a year ago and 51% finally say they believe that doing tech business in the Old Continent is essential to their mission. The good preconditions are not lacking, therefore, but the challenge to be overcome is still very demanding: if only 18% of the tech companies being seeded in Europe are based outside the region's borders, this percentage rises to around 30% with Series C and beyond, with the United States elected as the preferred destination for founders 'fleeing' Europe. The solution to this problem? Fair and accessible employee share ownership, a single, fast-track visa system that makes the transfer of talent to Europe easy and transparent, and greater talent mobility within the continental aera.

The VC investment barometer

Venture capital investments increased by 7% to USD 44 billion, with European pension funds increasing their VC allocations by 55% from USD 650 million to USD 1 billion in 2024. And if the second half of the past year generated $14.7 billion in new capital (the strongest second half since 2021), the estimated collection for Southern European technology companies (Italy therefore included) for 2025 speaks of $2.9 billion. The above numbers, as the Atomico report points out, dispels the myth of European VC underperformance, which instead outperforms US returns over a ten-year horizon and (by 10 percentage points over 10 years) those of the Old Continent's equity markets. Europe's problem, if anything, is the allocation levels of pension funds (three times behind US levels) and the level of investment

as a percentage of GDP, which stands at 0.06%, less than half the European average of 0.17%. And when companies reach maturity, they encounter fragmented public markets lacking the depth, liquidity and sophistication to support European champions with truly global ambitions. Europe, and this is one of the key figures to reflect on, absorbed only 10 per cent of the $608 billion in exit value from the global technology sector in 2025. Deep tech and AI today capture 36% of European venture capital, up from 19% in 2021, but in the United States, investments in artificial intelligence companies will reach USD 146 billion in 2025, compared to USD 14 billion in Europe, where, on the other hand, funding for defence technology has increased by 55% year-on-year (touching the 1.6 billion mark), and where 31% of all European funding raised in 2025 is earmarked for companies developing AI and machine learning algorithms. And while Italy's Domyn has raised USD 764 million in funding (including USD 377 million through debt) for AI gigafactory projects for applications in defence, finance and advanced manufacturing, the share of US deep tech companies raising rounds of more than USD 100 million is five times higher than in Europe.