The article in Accel’s 2025 Globalscape report—highlighted by TechCrunch—argues that while the U.S. remains well ahead in foundation AI models, the real battleground is shifting to the application layer of AI.
In particular, the report notes that venture-backed AI and cloud applications in Europe and Israel have amassed 66 % as much private funding in 2025 as their American counterparts—a dramatic jump from just ten years ago, when Europe’s funding was roughly one-tenth that of the U.S.
Accel partner Philippe Botteri emphasises that the increase is driven by a matured ecosystem of founders and investors in Europe who “really understand how to build great software companies … and that flywheel has been running for 10 years.”
However, the report also flags a caveat: while the application layer is thriving globally, the foundation-model side remains heavily skewed toward the U.S. and select players. For example, while Europe has seen successes in “AI-native” application firms, the report views the region’s opportunity in large foundational model companies as “not a very target-rich environment.”
For companies and investors alike, the takeaway is that the next wave of AI growth may depend less on “who builds the biggest model” and more on “who wraps the best product around it, embeds the right data flywheel, and secures distribution.” The report emphasises that proprietary data, fast growth velocity, and efficient monetisation are becoming the differentiators.
