Sonali De Rycker, a prominent general partner at Accel and one of Europe’s most influential venture capitalists, is optimistic about the continent’s prospects in the field of Artificial Intelligence (AI). However, she expresses concerns about the potential regulatory hurdles that could hinder its progress.
During a recent TechCrunch StrictlyVC event in London, De Rycker shared her thoughts on Europe’s position in the global AI landscape, striking a balance between optimism and pragmatism. “We possess all the necessary components,” she emphasized to the attendees. “We have entrepreneurs, ambition, academic institutions, capital, and talent.” According to her, the only missing piece is the ability to “unlock” this potential on a larger scale.
The primary obstacle lies in Europe’s complex regulatory environment and the Artificial Intelligence Act, which is both pioneering and contentious. De Rycker acknowledges that regulations play a vital role, particularly in high-risk sectors such as healthcare and finance. Nonetheless, she is concerned that the broad scope of the AI Act and the potential for stringent penalties could deter innovation at a time when European startups require the freedom to experiment and grow.
“There is a genuine opportunity for us to move swiftly and capitalize on our capabilities,” she stated. “The issue is that we are also facing headwinds from regulations.” The AI Act, which imposes stringent rules on applications deemed “high-risk,” such as credit scoring and medical imaging, has raised concerns among investors like De Rycker. While the goals of promoting ethical AI and consumer protection are commendable, she worries that the scope may be too broad, potentially discouraging early-stage experimentation and entrepreneurship.
The urgency of this situation is amplified by shifting global politics. As the current U.S. administration under Trump scales back its support for Europe’s defense and economic autonomy, De Rycker views this moment as pivotal for the EU. “Now that Europe is being left to fend for itself in multiple ways,” she said, “we need to be self-sufficient and sovereign.”
De Rycker believes that unlocking Europe’s full potential is crucial. She points to efforts like the “28th regime,” a framework aimed at creating a single set of rules for businesses across the EU, as vital in creating a more unified and startup-friendly region. Currently, the diverse labor laws, licensing, and corporate structures across 27 countries create friction and slow down progress.
“If we were truly one region, the power we could unleash would be incredible,” she said. “We wouldn’t be having these same conversations about Europe lagging in tech.” De Rycker’s view is that Europe is gradually catching up, not just in innovation but in its acceptance 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.
Accel, for its part, has invested in over 70 cities across Europe and Israel, giving De Rycker a front-row seat to the continent’s fragmented but flourishing tech landscape. However, she noted a stark contrast with the U.S. when it comes to adoption. “We see a lot more propensity for customers to experiment with AI in the U.S.,” she said. “They’re spending money on these kinds of speculative, early-stage companies. That flywheel keeps going.”
Accel’s strategy reflects this reality. While the firm hasn’t backed any of the major foundational AI model companies like OpenAI or Anthropic, it has focused instead on the application layer. “We feel very comfortable with the application layer,” said De Rycker. “These foundational models are capital-intensive and don’t really look like venture-backed companies.”
Examples of promising investments include Synthesia, a video generation platform used in enterprise training, and Speak, a language learning app that recently reached a $1 billion valuation. De Rycker sees these as early examples of how AI can create entirely new behaviors and business models, rather than merely improving existing ones. “We’re expanding total addressable markets at a rate we’ve never seen,” she said. “It feels like the early days of mobile. DoorDash and Uber weren’t just mobilized websites. They were brand new paradigms.”
Ultimately, De Rycker views 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 – not just in AI, but across the entire tech spectrum. “We’re in a supercycle,” she said. “These cycles don’t come often, and we can’t afford to be leashed.”
With geopolitical uncertainty on the rise and the U.S. becoming increasingly inward-looking, Europe has
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