Five months ago, the Draghi Report on the EU’s innovation gap with the U.S. was published. This sprawling 400-page document has become fodder for endless Euro-bashing among critics. Yet, the claims about the demise of European tech are greatly exaggerated. President Trump’s new term could usher in a golden age for Europe’s tech ecosystem, provided the right actions are taken.

First, let’s confront the harsh realities. Europe has been facing problems in creating large-scale, competitive tech companies. According to the Draghi Report, between 2008 and 2021, the U.S. produced over 600 unicorns. During the same period, the EU— an economy of similar size—produced just 147 unicorns; of these, 40 relocated to the U.S. to accelerate their growth.

The gap is even bigger for decacorns (companies valued at over $10 billion). Andrew McAfee, Director of the MIT Initiative on the Digital Economy, highlights that the collective market cap of U.S.-based decacorns is a staggering $30 trillion. In contrast, the EU’s figure is around $430 billion.

Critics use these numbers as evidence of Europe’s falling behind in the tech race. While that interpretation has merit, we must also question whether the U.S. numbers reflect innovation or simply an overinflated market bubble. With Trump back in the Oval Office, the question arises: Will he continue to inflate this bubble or pop it with new tariffs and macro risks?

I think it is a bit early to make estimations about the U.S. for the moment, but Trump’s presidency presents three tangible opportunities for Europe’s tech ecosystem to thrive:

1. The Climate Tech Windfall. Trump’s first major move—a sweeping executive order—has dismantled President Biden’s $400 billion Inflation Reduction Act, which turbocharged public funding for climate technologies. This creates a potential exodus of climate-tech startups from the U.S. to Europe. Ironically, some of these startups have European roots but migrated to the U.S. to capitalize on its generous subsidies. With America’s climate funding facing a setback, the EU can position itself as the global hub for climate innovation by offering an attractive regulatory environment and funding ecosystem.
2. The Defense Innovation Surge. Trump’s insistence on NATO members increasing their defense budgets to 5% of their GDPs could almost double defense spending in Europe. As the war in Ukraine demonstrated, the future of defense lies in agile, cost-effective technologies such as drones, AI-based surveillance, and cybersecurity. If Europe channels even a fraction of this expanded budget toward defense tech and support startups, it could fuel a new wave of innovation and entrepreneurship.
3. Immigration as a Talent Magnet. President Trump’s restrictive immigration stance, even for skilled workers, will likely persist despite protests from Silicon Valley. This creates a strategic opening for Europe. As the U.S. tightens its borders, Europe can become the new attractive destination for high-skilled immigrants. Attracting global talent could be a game-changer for a continent grappling with a demographic crisis.

The European tech ecosystem’s challenges are undeniable, but crises often create opportunities. Trump’s policies could potentially destabilize the U.S. However, if policymakers and industry leaders act decisively, the new setting could serve as a springboard for Europe. To capitalize on this moment, instead of focusing on regulating every new piece of technology, Europe must double down on funding innovation, review and redesign its immigration policies to attract top global talent, and nurture sectors like climate tech and defense where it has the chance to lead.