Europe has talent, data, ideas – but is building AI on foreign stacks. Startups cannot make any progress without their own data centers, data pipelines and clouds, says AI expert Fabian Westerheide.
Fabian Westerheide is a founding partner of the AI-focused venture capital investor AI.FUND and has been investing privately since 2014 Asgard Capital in AI companies. Westerheide provides strategic advice to public and private institutions in the area of AI and hosts annual AI conferences Rise of AI to Berlin. In this article he summarizes the extent to which AI turns the entire logic of how startups have been built up to now.
The discussion about artificial intelligence (AI) in Europe often revolves around the same questions: Do we have enough data? Do we have enough talent? Are we encouraging innovation? The honest answer: yes. Europe has excellent researchers, strong universities, competitive AI startups and a growing ecosystem. What’s missing is something else – and far more fundamental: the infrastructure to scale all of this.
Europe’s central AI problem is a structural scaling problem
And that’s exactly what hits startups first – and hardest. Because they compete with US platforms for capital, talent and distribution, but without their structural advantages: no own cloud platforms, no high-end data centers in European hands, no AI base models at an open source level, no platforms with global reach.
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This asymmetry is evident on three levels:
- Compute
Computing power is the new oil of AI. And Europe is not sitting in the fields. The infrastructure for training large models – GPU farms, foundation models, edge networks – is either non-existent or in foreign hands. Startups rent infrastructure instead of owning it. If you don’t have control over your basic technology, you can’t build a platform. - Depth of capital
The really big financing rounds – the sums with which you can build your own technology and scale it internationally – take place primarily in the USA. Investors there are more willing to finance large and risky platform ideas. In Europe, however, caution and small-scale support dominate. Often only enough is invested to create the first prototypes, but not enough to become real market leaders. Or to put it another way: Anyone who only finances the first small step should not be surprised if only small solutions emerge in the end. - distribution
Access to customers is via gatekeepers: Apple, Google, Microsoft, Amazon, OpenAI and SAPy. Anyone who sells AI does so via APIs, app stores or cloud marketplaces – rarely directly. The result: pressure on margins, limited control over the product and structural dependency.
The result is a pattern with serious consequences: startups in Europe are developing AI – but on foreign stacks.
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They become integrators, not owners. They create value, but not strategic depth. The added value is moving away, the adjustment costs remain here: rising API prices, regulatory pressure, a shortage of skilled workers. This creates a dangerous imbalance: innovation without infrastructure.
Startups in a dead end
This is a warning sign for European sovereignty. A strategic dead end for startups. Because entrepreneurial creative power does not arise in the app – but in the stack underneath: in the model, in the data infrastructure, in the platform logic. If you only access third-party APIs, you’re not building a platform – you’re using them. And remains replaceable.
What counts now is not “more of everything” – but targeted scaling power.
We need:
- Own compute infrastructurewhich gives startups access to powerful AI computing power – under European control.
- Financing modelswho think not just about software-as-a-service, but about deep tech, models and infrastructure.
- Platform strategieswhich ensure direct access to customers and data – instead of delegating it to third parties.
Because if we let Europe’s startups build permanently on third-party infrastructure, we will not only lose markets – but also the ability to shape the digital future ourselves.
Sovereignty means: We decide which stacks we build on – and who owns them.
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