Sonali de Rycker, Accel’s general partner and one of Europe’s most influential venture capitalists, is bullish on the outlook for the AI continent. But she is wary of regulatory overreach that can hit that momentum.
On the night of TechCrunch StrictlyVc in London earlier this week, De Rycker reflected European locations in the world’s AI races, balancing optimism and realism. “We have all the pieces,” she told people gathered for the event. “We have entrepreneurs. We have ambitions, we have schools, we have capitals, we have talent.” She argued that the only thing missing is the ability to “unleash” that potential on a massive scale.
hindrance? The complex regulatory landscape of Europe, and its pioneering but controversial artificial intelligence laws.
De Rycker acknowledged that regulations have a role to play, particularly in high-risk sectors such as Healthcare and Finance. Still, she said she is worried about the wide range of AI laws and the potential for fines.
“There’s a real opportunity to make sure we go faster and deal with what we can,” she said. “The problem is we are facing regulatory headwinds.”
From credit scoring to medical imaging, the AI Act, which imposes strict rules on applications that are deemed “high risk,” has raised a red flag among investors like De Rycker. While the goals of ethical AI and consumer protection are praiseworthy, she fears that the net could be thrown out too widely and hinder early stage experimentation and entrepreneurship.
That urgency is amplified by changing geopolitics. De Rycker has waned support for European defense and economic autonomy under the current Trump administration, and sees this moment as decisive for the EU.
“Now Europe is being made to be bitten in multiple ways (in itself),” she said. “We need to be self-sufficient.
It means unlocking the fullest potential of Europe. De Rycker points to efforts like the 28th Regime, a framework aimed at creating a single set of rules for businesses across the EU, as it is essential to creating a more unified, startup-friendly region. Now, mishmashes of nationally-wide labor laws, licensing and corporate structures create friction and slow down progress.
“If we were truly one area, the power you could unleash is incredible,” she said. “We haven’t had these same conversations about Europe falling behind in technology.”
In De Rycker’s view, Europe is slowly catching up by embracing not only innovation but risk and experimentation. Cities such as Zurich, Munich, Paris and London are beginning to create their own self-enhancing ecosystems thanks to an increase in top-notch academic institutions and the hubs of experienced founders.
Accel has invested in more than 70 cities in Europe and Israel, giving De Rycker a front row seat to the fragmented but thriving technological environment of the continent. Still, on Tuesday night, she noted that adoption was a stark contrast to the US. “I think there’s a much more trend for customers to try AI in the US,” she said. “They spend their money on these kinds of speculative, early stage companies, and that flywheel continues.”
Accel’s strategy reflects this reality. The company doesn’t support either of the major basic AI model companies like OpenAI or humanity, but instead focuses on the application layer. “I feel very comfortable with the application layer,” says De Rycker. “These basic models are capital-intensive and don’t look like venture companies.”
Examples of promising bets include Synthesia, the video generation platform used in enterprise training, and the language learning app that has recently jumped into a $1 billion valuation. De Rycker (dodged questions about Accel’s reported talk with another big name in AI) sees it as an early example of how AI creates whole new behaviors and business models.
“We’re expanding our total addressable market at a rate we’ve never seen,” she said. “It feels like the early days of mobile. Doordash and Uber were more than just mobilized websites. They were a brand new paradigm.”
Ultimately, De Rycker sees this moment as both a challenge and a generation of opportunity. If Europe is leaning heavily towards regulations, there is a risk of suppressing innovations that will help compete globally not only on AI but across the technology spectrum.
“We’re in the supercycle,” she said. “These cycles don’t come often. We can’t afford to chain it up.”
With geopolitical uncertainty increasing and the US appears increasingly inward, Europe has no choice but to bet on itself. If we can balance it right, De Rycker believes there’s everything it needs to guide.
Attendees asked what EU founders could do to make them more competitive with their US counterparts, but she didn’t hesitate. “I think they’re (competitive),” she said. “These founders, they don’t look the same.”
You can catch the full conversation with De Rycker here: