Editor’s Note: Beyond the strobe lights and techno beats of Helsinki’s Slush 2025, a distinct signal has emerged for professionals navigating the intersection of law, security, and data. The release of the State of European Tech 2025 report exposes a continent aggressively pivoting toward “Sovereignty Tech”—a move that transforms the regulatory landscape from a compliance checklist into a matter of national security. The findings reveal massive capital shifts toward defense technology, a growing tension between AI ambition and infrastructure reality, and a push for “EU-INC” that could rewrite the rules of corporate liability. Understanding these trends allows professionals to anticipate data residency challenges, prepare for complex multi-jurisdictional litigation, and align governance frameworks with the aggressive speed of a market fighting for global relevance.
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The Sovereignty Paradox: Europe’s $4 Trillion Tech Dilemma at Slush 2025
ComplexDiscovery Staff
The artificial fog has cleared, and the strobe lights have dimmed inside the Messukeskus Expo and Convention Centre, but the aftershocks of Slush 2025 are only beginning to register across the continent.
Last week, 13,000 founders and investors descended upon Helsinki for the world’s most founder-focused startup event, Slush. Amidst the subterranean techno-club atmosphere—a stark contrast to the corporate sterility of typical trade shows—Atomico Principal Sarah Guemouri and Partner & Head of Intelligence Tom Wehmeier took to the Founder Stage to deliver a message that cut through the noise. Their presentation of the State of European Tech 2025 report revealed a technology ecosystem worth nearly $4 trillion, yet one standing at a precarious crossroads.
Guemouri described a region transforming into a “Silicon Valhalla”—a distinct, values-driven powerhouse rather than a mere imitation of California. Yet, she and Wehmeier warned that Europe lacks the cohesive machinery to convert its raw talent and research excellence into enduring global power.
The $4 Trillion Paradox
The headline figures delivered last week offer a deceptive sense of comfort. Europe’s technology sector now commands 15% of the region’s GDP, a staggering rise from just 4% a decade ago. The ecosystem boasts a density of 40,000 funded companies and an optimism index that has rebounded to a ten-year high. However, Wehmeier offered a sobering reality check regarding the capital fueling this engine.
While investment levels have stabilized at roughly $44 billion this year, the figure has remained essentially flat for three years running. In that same period, the United States has deployed nearly $500 billion into its technology sector. “It is abundantly clear,” Wehmeier noted from the stage. “We are bootstrapping our future.”
This misalignment manifests as a “growth stage valley of death.” While Europe creates startups at a rate rivaling the United States, it struggles to scale them. The report highlights a critical deficiency in domestic capital allocation: European pension funds allocate a microscopic 0.01% of their assets to venture capital, compared to 0.03% in the US. This disparity leaves approximately $210 billion on the table—capital that sits idle rather than fueling domestic expansion.
The Sovereignty Shift
Perhaps the most striking development detailed in the report is the reclassification of technology as a matter of national security. The presentation at Slush underscored a dramatic pivot toward “Sovereignty Tech”—a category encompassing defense, energy, and critical digital infrastructure. Investment in defense technology alone has jumped 55% year over year to $1.6 billion. This is no longer a niche vertical; it is becoming a central pillar of the European innovation strategy.
Guemouri highlighted that Europe is no longer just following global trends but setting the bar, citing the Swedish AI coding platform Lovable as a prime example. Lovable recently became the fastest software company in history to reach $100 million in revenue, outpacing its Silicon Valley rival Replit. This example, she argued, is proof that Europe can define the future of software from “Silicon Valhalla” rather than the Bay Area.
However, this agency requires infrastructure. While the US is pouring capital into the physical layer of artificial intelligence—spending ten times more than Europe on chips and data centers—Europe is carving out a niche in the application layer. The report notes that 31% of all capital invested in Europe in 2025 went to AI and machine learning companies. Yet, the disparity in infrastructure investment ($14 billion in Europe versus $146 billion in the US) raises concerns about long-term resilience. If European AI applications run entirely on American compute infrastructure, the concept of sovereignty remains theoretical.
Fixing the Friction: The EU-INC Proposal
A central tenet of the Atomico report, and a focal point of the conversations in Helsinki last week, was the urgent need to “Fix the Friction.” The fragmentation of Europe’s market—27 different rulebooks for payroll, incorporation, and data handling—is cited by 70% of founders as a major barrier to progress.
“The European Commission has promised to create a ’28th regime’ allowing startups to scale across the continent,” the report notes. The report rallies behind the concept of “EU-INC,” a standardized pan-European entity that would allow companies to incorporate under a single set of rules. Theoretically, this would allow a startup in Lisbon to operate in Berlin without the administrative friction that currently stifles cross-border growth.
For the founders navigating the crowded halls of Messukeskus, this is not an abstract policy debate. It is a daily operational hurdle. Wehmeier framed the stakes clearly: if policymakers fail to deliver a unified market, they cannot blame founders for leaving. Currently, 18% of seasoned entrepreneurs move their headquarters to the US to secure growth capital—a figure that nearly doubles for scaling companies.
The Human Element and Risk Culture
The presentation also emphasized the need to “Champion Risk.” The report suggests that Europe’s conservative approach to failure acts as a brake on innovation. The call to modernize insolvency laws and destigmatize bankruptcy is intended to accelerate the recycling of talent and capital.
“We need to make Europe the best place in the world to build,” the report urges. This modernization requires a cultural shift as much as a regulatory one. The “risk culture” discussed at Slush involves celebrating ambition and accepting failure as a necessary tuition for success.
This sentiment echoed throughout the venue, from the “Happiness Lounge”—a uniquely Finnish take on networking—to the side events where deals were hammered out over coffee. The resilience of the European founder was a recurring theme. Despite a restrictive regulatory environment and a shallower pool of growth capital, the talent base continues to expand, growing 4% to 4.6 million people in the last year.
Implications for the Guardians of Information
For the professionals tasked with the architecture of trust—cybersecurity leaders, information governance officers, and eDiscovery specialists—the macroeconomic shifts outlined last week signal a distinct operational pivot. The data suggests that the next decade of European technology will not just be about growth, but about navigating a complex web of security, governance, and rapidly evolving risk.
The surge in “Sovereignty Tech” fundamentally alters the risk profile for cybersecurity professionals. As civilian startups pivot toward dual-use technologies to capture a share of the growing defense spending, they inevitably become prime targets for nation-state actors. The attack surface is expanding from traditional defense contractors to agile, less-hardened startups integrating deep tech into national infrastructure. Security leaders must therefore reassess supply chain risk management, treating innovative deep-tech suppliers with the same scrutiny formerly reserved for established defense primes. The distinction between a commercial software vendor and a defense asset is evaporating, requiring security protocols to evolve to match this new reality.
Simultaneously, the report’s findings on the thawing exit market—exemplified by Swedish fintech Klarna’s recent filing—point toward a coming wave of intense M&A activity. A backlog of “exit-ready” companies suggests that liquidity events will spike, compressing timelines for due diligence and data consolidation. For the eDiscovery practitioner, this requires immediate preparation of incident response and M&A playbooks to handle the surge in data requests and regulatory scrutiny that accompanies such transactions.
The proposed “EU-INC” standard presents a double-edged sword for legal technology and governance. While it promises to streamline cross-border operations, the transition period threatens to create a legal gray zone regarding liability and jurisdiction. If a unified corporate entity creates a new layer of supranational obligation, legal teams will need to adjust their preservation and collection strategies accordingly. Governance professionals should review master service agreements now to ensure they account for potential changes in the legal domiciles of European partners, ensuring that “change of law” clauses cover pan-European corporate reclassifications.
Furthermore, the stark gap in AI infrastructure investment creates a specific vulnerability for information governance. With Europe investing far less in physical infrastructure than the US, the reliance on American compute power for European AI applications creates a sovereignty paradox. Governance professionals must demand transparency into the physical locations of the GPU clusters powering their AI tools, not just the software vendor’s legal address, to ensure compliance with strict data residency mandates.
Finally, the call to “Champion Risk” introduces a cultural clash between the mandates for speed and control. As organizations push for faster deployment of experimental technologies, the CISO and Chief Data Officer will find themselves as the final line of defense. Security leaders must learn to frame their controls not as brakes, but as essential guardrails that allow the vehicle to move faster without crashing.
The 2025 State of European Tech report ultimately presents a choice: consolidation or irrelevance. As Wehmeier implored the audience in his closing remarks, “Let’s not make European founders do it in hard mode.” For the governance professionals supporting those founders, the goal is ensuring that “hard mode” doesn’t become “impossible mode.”
News Sources
- ComplexDiscovery Staff. (2025, November 19). 2025 State of European Tech Report: Insight from the Slush 2025 Founder Stage (R. Robinson, Rep.). ComplexDiscovery.
- State of European Tech 2025 Report (Atomico)
- EU-INC: A Pan-European Entity (EU-INC)
- Slush 2025 | November 19 & 20, 2025 (Helsinki, Finland)
- Slush 2025 Event Information (Explore Slush)
Assisted by GAI and LLM Technologies
Additional Reading
- Data Provenance and Defense Tech: IG Lessons from Slush 2025
- How Finland Is Reshaping Defense: BORDERLAND at Slush 2025
- Google to CMOs at Slush 2025: Adapt to AI or Fall Behind
- Lessons from Slush 2025: How Harvey Is Scaling Domain-Specific AI for Legal and Beyond
- Building Stronger: The Porvoo Paradigm for Technology at Slush 2025
- Slush 2025 Survey: Startup Struggles Expose Risk, Resilience, and Opportunities for Governance Pros
Source: ComplexDiscovery OÜ





























