Klarna IPO and ASML Mistral bet revive Europe’s tech dreams

LONDON — It’s been a busy week for the European technology sector.

On Tuesday, London-headquartered artificial intelligence startup ElevenLabs announced it would let employees sell shares in a secondary round that doubles its valuation to $6.6 billion.

Then, Dutch chip firm ASML on Wednesday confirmed it was leading French AI firm Mistral’s 1.7 billion-euro Series C funding round at a valuation of 11.7 billion euros ($13.7 billion) — up from 5.8 billion euros last year. Mistral is considered a competitor to the likes of OpenAI and Anthropic.

To cap it off, Swedish fintech firm Klarna on Thursday debuted on the New York Stock Exchange after a long-awaited initial public offering. Klarna shares ended the day at $45.82, giving it a market value of over $17 billion.

These developments have revived hopes that Europe is capable of developing a tech industry that can compete with the U.S. and Asia. For the past decade, investors have been talking up Europe’s potential to build valuable tech firms, rebuffing the idea that Silicon Valley is the only place to create innovative new ventures.

However, dreams of a “golden era” of European tech never quite came to fruition.

A key curveball came in the form of Russia’s 2022 invasion of Ukraine, which caused inflation to soar and global central banks to hike interest rates as a result. Higher rates are considered bad for capital-intensive tech firms, which often need to raise cash to grow.

Ironically, that same year, Klarna — which at one point was valued as much as $45.6 billion in a funding round led by SoftBank — had its market value slashed 85% to $6.7 billion.

Now, Europe’s venture capital investors view the recent buzz around the region’s tech firms as less of a renaissance and more of a “growing wave.”

“This started 25 years ago when we saw the first signs of a European tech ecosystem inspired by the original dotcom boom that was very much a Silicon Valley affair,” Suranga Chandratillake, partner at Balderton Capital, told CNBC.

Balderton has backed a number of notable European tech names including fintech firm Revolut and self-driving vehicle tech developer Wayve.

“There have been temporary setbacks: the 2008 financial crisis, the post-Covid tech slump, but the ecosystem has bounced back stronger each time,” Chandratillake said.

“Right now, the confluence of a huge new technological opportunity in the form of generative AI, as well as a community that has done it before and has access to the capital required, is, unsurprisingly, yielding a huge number of sector-defining companies,” he added.

Investors backing the continent’s tech startups say there’s plenty of money to be made — particularly amid the economic uncertainty caused by President Donald Trump’s trade tariffs.

For one, there’s a clear discount on European tech right now. Venture firm Atomico’s annual “State of European Tech” report last year pegged the value of the European tech ecosystem at $3 trillion and predicted it will reach $8 trillion by 2034. Compare that to the story in the U.S., where the tech sector’s biggest megacap stocks combined are worth over $20 trillion.

Several tech entrepreneurs and investors have backed a new initiative called “EU Inc.” Launched last year, its aim is to boost the European Union’s tech sector via the formation of a “28th regime” — a proposed pan-European legal framework to simplify the complex regulations across various individual EU member states.