Sonali De Rycker, a general partner at Accel and one of Europe\u2019s most influential venture capitalists, is bullish about the continent\u2019s prospects in AI. But she\u2019s wary of regulatory overreach that could hamstring its momentum.<\/p>\n
At a TechCrunch StrictlyVC evening earlier this week in London, De Rycker reflected on Europe\u2019s place in the global AI race, balancing optimism with realism. \u201cWe have all the pieces,\u201d she told those gathered for the event. \u201cWe have the entrepreneurs, we have the ambition, we have the schools, we have the capital, and we have the talent.\u201d All that\u2019s missing, she argued, is the ability to \u201cunleash\u201d that potential at scale.<\/p>\n
The obstacle? Europe\u2019s complex regulatory landscape and, in part, its pioneering but controversial Artificial Intelligence Act.<\/p>\n
De Rycker acknowledged that regulations have a role to play, especially in high-risk sectors like healthcare and finance. Still, she said she worries that the AI Act\u2019s broad reach and potentially stifling fines could deter innovation at the very moment European startups need space to iterate and grow.<\/p>\n
\u201cThere\u2019s a real opportunity to make sure that we go fast and address what we\u2019re capable of,\u201d she said. \u201cThe issue is that we are also faced with headwinds on regulation.\u201d\u00a0<\/p>\n
The AI Act, which imposes stringent rules on applications deemed \u201chigh risk,\u201d from credit scoring to medical imaging, has raised red flags among investors like De Rycker. While the goals of ethical AI and consumer protection are laudable, she fears the net may be cast too wide, potentially discouraging early-stage experimentation and entrepreneurship.<\/p>\n
That urgency is amplified by shifting geopolitics. With U.S. support for Europe\u2019s defense and economic autonomy waning under the current Trump administration, De Rycker sees this moment as a decisive one for the EU. <\/p>\n
\u201cNow that Europe is being left to fend [for itself] in multiple ways,\u201d she said, \u201cwe need to be self-sufficient, we need to be sovereign.\u201d<\/p>\n That means unlocking Europe\u2019s full potential. De Rycker points to efforts like the \u201c28th regime,\u201da framework aimed at creating a single set of rules for businesses across the EU, as crucial to creating a more unified, startup-friendly region. Currently, the mishmas of labor laws, licensing, and corporate structures across 27 countries creates friction and slows down progress.<\/p>\n \u201cIf we were truly one region, the power you could unleash would be incredible,\u201d she said. \u201cWe wouldn\u2019t be having these same conversations about Europe lagging in tech.\u201d<\/p>\n In De Rycker\u2019s view, Europe is slowly catching up, not just in innovation but in its embrace of risk and experimentation. Cities like Zurich, Munich, Paris, and London are starting to generate their own self-reinforcing ecosystems thanks to top-tier academic institutions and a growing base of experienced founders.<\/p>\n Accel, for its part, has invested in over 70 cities across Europe and Israel, giving De Rycker a front-row seat to the continent\u2019s fragmented but flourishing tech landscape.<\/p>\n Still, on Tuesday night, she noted a stark contrast with the U.S. when it comes to adoption. \u201cWe see a lot more propensity for customers to experiment with AI in the U.S.,\u201d she said. \u201cThey\u2019re spending money on these kinds of speculative, early-stage companies. That flywheel keeps going.\u201d<\/p>\n Accel\u2019s strategy reflects this reality. While the firm hasn\u2019t backed any of the major foundational AI model companies like OpenAI or Anthropic, it has focused instead on the application layer. \u201cWe feel very comfortable with the application layer,\u201d said De Rycker. \u201cThese foundational models are capital intensive and don\u2019t really look like venture-backed companies.\u201d<\/p>\n Examples of promising bets include Synthesia, a video generation platform used in enterprise training, and Speak, a language learning app that recently jumped to a $1 billion valuation. De Rycker (who dodged questions about Accel\u2019s reported talks with another big name in AI<\/a>), sees these as early examples of how AI can create entirely new behaviors and business models, not just incrementally improve existing ones.<\/p>\n \u201cWe\u2019re expanding total addressable markets at a rate we\u2019ve never seen,\u201d she said. \u201cIt feels like the early days of mobile. DoorDash and Uber weren\u2019t just mobilized websites. They were brand new paradigms.\u201d<\/p>\n Ultimately, De Rycker sees this moment as both a challenge and a once-in-a-generation opportunity. If Europe leans too heavily into regulation, it risks stifling the innovation that could help it compete globally \u2013 not just in AI, but across the entire tech spectrum.<\/p>\n \u201cWe\u2019re in a supercycle,\u201d she said. \u201cThese cycles don\u2019t come often, and we can\u2019t afford to be leashed.\u201d<\/p>\n With geopolitical uncertainty rising and the U.S. increasingly inward-looking, Europe has little choice but to bet on itself. Whether it can do so without tying its own hands remains to be seen. But if the continent can strike the right balance, De Rycker believes it has everything it needs to lead, and not just follow, in the AI revolution.<\/p>\n Asked by an attendee what EU founders can do to be more competitive with their U.S. counterparts, De Rycker didn\u2019t hesitate. \u201cI think they are competitive,\u201d she said, citing companies Accel has backed, including Supercell and Spotify. \u201cThese founders, they look no different.\u201d<\/p>\n You can catch catch the full conversation with De Rycker here :<\/p>\n \n![\"\"](\"https:\/\/techcrunch.com\/wp-content\/uploads\/2025\/05\/54517452381_1a2d6254b2_c.jpg?w=680\")
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