France’s President Emmanuel Macron and Germany’s Chancellor Friedrich Merz at a Berlin summit on Europe’s technological sovereignty in November John MacDougall/Getty Images Sovereignty has become the word du jour, but some investors worry that imposing geopolitical constraints…
portfolios might impact returns. Reducing dependence on US technology has become a priority for European governments during President Donald Trump’s second term, as transatlantic relations have soured
Surging tariffs last year, along with the prospect of a tech “kill switch”—where companies would be ordered to suspend services in Europe—have become a new reality that the continent might have to face. This political urgency has started to influence the flow of capital. In just the past month, the UK launched a £500 million Sovereign AI Fund, German startup Aleph Alpha sold itself on a sovereignty pitch, and now Brussels is weeks away from what it says will be the EU’s most significant digital sovereignty legislation yet.
Against this backdrop, sovereignty is rising up the agenda not just for governments but also among VC investors. “Sovereignty is the new buzzword at the moment,” Simone Lavizzari, principal at Berlin-based deep tech VC firm Join Capital, said. “When you look at a lot of technology [in Europe], we don’t own it, and it could be taken away from one day to the next. We never thought this could be a possibility, but I’m not so sure that’s the case anymore.” State money, state priorities US tech companies dominate Europe’s digital infrastructure, controlling more than 70% of the region’s cloud market and about 60% of its enterprise software market. Hyperscalers and AI infrastructure are largely concentrated in the US, and European defense relies heavily on American tech.