The world is evolving.
Trends are shifting.
And markets are moving at the speed of technological innovation.
We are in the midst of a new industrial revolution.
Electrification, which until just a few years ago was considered one of the defining global megatrends, has not disappeared. But it is no longer the only force reshaping the industrial landscape.
Robotics, Defense, and Space are emerging as three of the major pillars of this new industrial cycle.
And the numbers tell a compelling story.
In 2024, approximately 542,000 new industrial robots were installed worldwide, more than twice as many as a decade ago. China alone accounted for 54% of global installations, with roughly 295,000 new robots deployed.1
Defense is undergoing an equally significant transformation.
Global military expenditure reached $2.718 trillion in 2024, rising 9.4% in real terms in a single year, the sharpest annual increase recorded by SIPRI since at least 1988. Over the decade from 2015 to 2024, global military spending increased by 37%, while spending in Europe rose by 83%.2
But defense today is increasingly about more than traditional military equipment. It is about drones, autonomous systems, satellites, advanced sensors, software, and artificial intelligence. NATO itself is accelerating the integration of AI and autonomous systems into defense capabilities.
And then there is Space.
The global space economy reached a record $613 billion in 2024, growing 7.8% year over year. More importantly, approximately 78% of the global space economy is now commercial, with government activity accounting for the remaining 22%.3
Space is no longer primarily about governments and exploration.
It is becoming economic and strategic infrastructure.
More importantly, these three industries are beginning to converge.
Robotics, Defense, and Space are no longer separate worlds. And the common thread connecting them is increasingly Artificial Intelligence.
AI is becoming a horizontal enabler across all three industries.
In robotics, computer vision and machine learning are allowing machines to perceive their environment, adapt, and make increasingly sophisticated decisions. In defense, AI is being integrated into autonomous systems, surveillance, situational awareness, and command architectures. And in space, AI is increasingly being used to process satellite data, sometimes directly in orbit, and transform enormous volumes of raw information into actionable insights.4
It is precisely at the intersection of these technologies that one of the most powerful macro trends of the coming decades may be taking shape.
But when we look at the broader competition for technological leadership, two players increasingly set the pace: the United States and China.
Not three.
Europe remains a major scientific and industrial power, but its position in many emerging technologies has weakened. As Mario Draghi highlighted in his report on European competitiveness, only four of the world’s 50 largest technology companies are European.
And that brings us to the European problem.
The European Scale-Up Gap
The numbers help explain why.
In 2023, the European Union invested approximately 2.2% of GDP in research and development, compared with roughly 3.6% in the United States and 2.6% in China.5
But Europe’s structural weakness becomes even more apparent when we move from research to the ability to turn innovation into globally competitive companies.
Among technology startups founded in 2015, only 4.1% of European companies went on to raise a funding round of at least $15 million, compared with 8.3% in the United States.
In other words, European startups were only about half as likely to reach that level of funding.6
The gap becomes even more visible in deep tech, the part of the technology ecosystem built around scientific and engineering breakthroughs.
In 2025, European deep-tech companies attracted approximately $20.3 billion in venture capital.
In the United States, the figure was approximately $144 billion.
That means the US deep-tech market attracted roughly seven times more venture capital than Europe in a single year.7
And yet, this is where the European paradox becomes clear.
Deep tech represented a record 32% of all European venture-capital funding in 2025, more than twice its 15% share a decade earlier.8
So Europe does not lack ideas.
Nor does it lack scientific expertise, engineering talent, or technological capability.
What it lacks is the ability to take enough of those companies to the next level of scale.
For European deep-tech funding rounds above $15 million, only 54% of the capital comes from within Europe.
In the United States, the equivalent figure is approximately 80%.
Dealroom estimates that simply closing that domestic-capital gap would require roughly $4 billion of additional European funding every year.
Europe knows how to innovate.
It struggles to scale.
And this is not because Europe lacks world-class technology or industrial expertise.
ASML, for example, is currently the only company capable of producing EUV lithography systems, the technology required for manufacturing the world’s most advanced semiconductors.
CERN operates the world’s largest and most powerful particle accelerator and remains one of the world’s leading centers for fundamental particle physics.
The problem is not Europe’s ability to create technology.
The problem is turning that technology into global champions.
And this brings us to the core issue: capital.
Europe’s financial system remains significantly more bank-centered than that of the United States, while its capital markets remain fragmented across national borders.
European companies obtain less than 30% of their funding from tradable equity and debt instruments, compared with nearly 70% for US companies, according to the European Commission.
The United States has deeper venture and capital markets capable of financing high-risk companies through successive stages of growth. China, meanwhile, has demonstrated an ability to mobilize very large amounts of capital toward industries considered strategically important.
Europe sits somewhere in between, with strong banks, substantial household wealth and world-class research, but shallower risk-capital markets and persistent fragmentation.
And this may be where one of the most important battles for Europe’s economic future will be fought.
The Draghi Question: From Capital to Scale
But perhaps Europe’s most interesting problem is not even a lack of capital.
It is what Europe does with the capital it already has.
European households hold approximately €10 trillion in bank deposits, around 70% of their financial savings.9
And yet, around €300 billion of European savings are invested outside the European Union every year, with a significant share ultimately financing investment in the United States.10
This is one of Europe’s great economic paradoxes.
Europe has capital.
It has technology.
It has talent.
But it still struggles to transform those resources into companies capable of competing at global scale.
And this is precisely where the Draghi Report becomes so important.
To close Europe’s competitiveness gap and meet its objectives in energy, digital infrastructure, defense and innovation, the report estimates that Europe will require approximately €750-800 billion of additional investment every year through 2030, equivalent to roughly 4.5% of EU GDP.11
That is an extraordinary amount of capital.
But the challenge is not simply to spend more.
It is to build a genuinely integrated European capital market, mobilize private savings toward productive investment, create deeper pools of risk capital, and overcome the national fragmentation that continues to limit Europe’s ability to finance innovation at scale.
And it is within this broader context that, on 24 August 2026, the Rhine Group was launched, co-founded and co-chaired by Mario Draghi and Patrick Collison, co-founder and CEO of Stripe.
Its ambition is not simply to produce another diagnosis of Europe’s problems. The group describes its mission as bringing together leaders from business, government and academia to turn evidence into action and strengthen European competitiveness.
Because Europe arguably does not need another diagnosis.
The problems are already well understood.
What Europe needs is the ability to do what the United States and China have proven particularly effective at doing:
turn capital, research, and technology into scale.
That may become one of the defining economic challenges of the coming years.
Europe still has the capital.
It still has the scientific expertise.
It still has the industrial base.
And it still has one of the largest markets in the world.
The real question is whether Europe can bring those strengths together, and finally begin to act as one integrated economic power.
Sources:
- International Federation of Robotics, World Robotics 2025 – Industrial Robots.
- Stockholm International Peace Research Institute, Trends in World Military Expenditure 2024.
- Space Foundation, The Space Report 2025 Q2.
- IFR; NATO; European Space Agency.
- European Commission, based on Eurostat/OECD data.
- Atomico, State of European Tech 2024; Dealroom and Crunchbase data.
- Dealroom, The European Deep Tech Report 2026.
- Dealroom, The European Deep Tech Report 2026.
- European Commission, Savings and Investments Union.
- European Commission; European Parliament.
- Mario Draghi, The Future of European Competitiveness; European Commission.
