Unlocking Innovation: The Impact of AI-Powered Dual-Use Technology in the EU Startup Scene

Europe is at a crucial juncture as it strives to integrate artificial intelligence (AI) into both civilian and defense innovation ecosystems, according to a new report published by the European Commission and the StepUp StartUps Consortium. The successful integration of AI in these sectors will play a significant role in determining Europe’s technological competitiveness and strategic autonomy.

The report emphasizes the growing importance of AI in Europe’s dual-use technologies, with the startup and scale-up ecosystem in Europe providing new avenues for innovation, competitiveness, and security. While AI is not officially classified as a dual-use technology, it serves as a key enabler across various capability areas, including autonomy, sensing, cybersecurity, logistics, and decision-support.

Marc Lemaître, the Directorate General for “Research and innovation” (RTD), states that advancing European leadership in dual-use technologies is essential for addressing critical dependencies, shaping international standards, and positioning the EU as a global leader in value chains and key industries.

The report highlights the progress made by Europe in expanding both civil and defense innovation programs, particularly through initiatives like Horizon Europe and the European Defence Fund. These programs place a strong emphasis on AI, with increasing synergies between civil and defense initiatives. The recent inclusion of dual-use innovation in the EIC Accelerator reflects this trend.

Despite these advancements, the report underscores the need for better integration in European efforts, as civil research and defense programs are currently not adequately connected. Improving structural connections could facilitate the progression of AI solutions from early research stages to real-world deployment.

Europe is already demonstrating strong capabilities in dual-use AI, particularly in key clusters focused on security, transportation, and robotics. Dynamic hubs in cities like Munich, Berlin, Paris, Helsinki, Tallinn, and Vilnius support these clusters, with a rising number of investment deals in dual-use AI. Specialized funds and accelerators are also emerging to support defense and dual-use startups and scale-ups.

Andrius Kubilius, European Commissioner for Defence and Space, emphasizes the importance of initiatives like the Defence Equity Facility in fostering the development of a robust ecosystem for private funds investing in defense in the EU.

AI-driven startups and scale-ups in Europe face challenges such as limited access to test environments, complex procurement processes, funding gaps, and restricted contract opportunities, which can hinder their growth. Overcoming these barriers is crucial to ensuring that innovations progress beyond the prototype stage.

Ekaterina Zaharieva, European Commissioner for Startups, Research and Innovation, stresses the importance of protecting research security across Europe to maintain academic freedom and empower Member States to take action.

In conclusion, Europe’s advancements in dual-use AI technologies are promising, but overcoming barriers to scale is essential for realizing the full potential of these innovations. The full report can be accessed here.