{"id":131021,"date":"2025-11-12T09:19:30","date_gmt":"2025-11-12T09:19:30","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/131021\/"},"modified":"2025-11-12T09:19:30","modified_gmt":"2025-11-12T09:19:30","slug":"the-global-race-for-the-ai-app-layer-is-still-on","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/131021\/","title":{"rendered":"The global race for the AI app layer is still on"},"content":{"rendered":"

The U.S. is far ahead of Europe in the race for large AI models \u2014 but the picture is different for the application layer, with emerging category leaders such as Lovable and Synthesia. That\u2019s the conclusion made by global VC firm Accel in its 2025 Globalscape<\/a> report, which focuses on the AI and cloud market. (Accel is an investor in both Lovable and Synthesia.)<\/p>\n

Surprisingly, cloud and AI applications in Europe and Israel have attracted 66% as much private funding as their American peers in 2025 so far. \u201cWhen we started this report 10 years ago, Europe was one tenth of the U.S.,\u201d Accel partner Philippe Botteri told TechCrunch.<\/p>\n

\"\"Image Credits:Courtesy of Accel<\/p>\n

For Botteri, the ratio has increased because the region has developed an ecosystem of founders and investors \u201cwho really understand how to build great software companies, and that flywheel has been running for 10 years.\u201d<\/p>\n

It\u2019s also a reminder that Europeans and Israelis can do more staffing Big Tech AI labs \u2014 an observation also shared by Jonathan Userovici, a Paris-based general partner at Headline. \u201cAcross every vertical, from legal and healthcare to manufacturing and marketing, we\u2019re seeing founders who combine world-class technical talent with a deep market expertise,\u201d Userovici told TechCrunch.<\/p>\n

This aligns with the findings of the AI Europe 100 report<\/a> published by Headline earlier this year, in which it curated AI-native application startups around Europe that it sees as having \u201cthe potential to become tomorrow\u2019s winners in Europe\u201d thanks to a combination of growth velocity, team, and tech advancement.<\/p>\n

Growth velocity is also one of the key differences that Accel sees between this AI wave and previous ones. A new breed of AI native applications has reached $100 million in annual recurring revenue in a matter of years, a feat that used to take decades.<\/p>\n

\u201cThey\u2019re growing faster than anything we\u2019ve seen in the past, and they\u2019re doing this with an incredible level of efficiency, meaning that revenue per head count is the highest we\u2019ve ever seen for software companies. And that\u2019s happening on both sides of the [Atlantic] ocean,\u201d Botteri said.<\/p>\n

Techcrunch event<\/p>\n

\n\t\t\t\t\t\t\t\t\tSan Francisco
\n\t\t\t\t\t\t\t\t\t\t\t\t\t|
\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026\n\t\t\t\t\t\t\t<\/p>\n

However, he noted that \u201cexisting cloud software companies are not going away.\u201d Accel\u2019s Public Cloud Index is up 25% year-over-year, and these players are \u201call adding agentic capabilities to their products.\u201d As for private companies, some are integrating AI so fast that they can be considered AI-native, he argued, naming Accel portfolio company Doctolib as an example.<\/p>\n

While Europe has kept high hopes for homegrown foundation model companies like Mistral AI<\/a>, Accel\u2019s outlook for European model companies is less sunny. But Botteri didn\u2019t dismiss the space entirely as a space for future leaders to emerge, as could still happen for smaller models. He said only, \u201cit is not a very target-rich environment.\u201d\u00a0<\/p>\n

In contrast, VCs are actively competing for investment opportunities in the AI application layer, despite recurring questions about defensibility. For Botteri, there is still defensibility in building a product-centric offering with fast adoption.<\/p>\n

Another false dichotomy is the thought that there is no space outside of models and applications. \u201cWe see that most of the market today is chasing models, compute and actions, and we think that data is undervalued at the moment,\u201d said Lotan Levkowitz, a managing partner at Israeli VC firm Grove Ventures. \u201cWe strongly believe that companies focused on proprietary data and data flywheels are indeed very lucrative.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The U.S. is far ahead of Europe in the race for large AI models \u2014 but the picture…\n","protected":false},"author":2,"featured_media":131022,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[1214,365,363,364,90298,36446,111,139,69,145],"class_list":{"0":"post-131021","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-accel","9":"tag-ai","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-grove-ventures","13":"tag-headline","14":"tag-new-zealand","15":"tag-newzealand","16":"tag-nz","17":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/131021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=131021"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/131021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/131022"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=131021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=131021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=131021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}