Europe’s Digital Sovereignty - Navigating the Path to Digital Sovereignty

Jack Wang’s Analysis of Europe’s Sovereign Cloud Ecosystem, Co-Published with Resilience Media

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Jack Wang & Jannic Meyer
May 20, 2025

Europe’s Digital Sovereignty

Welcome back to the Resilience Newsletter!

European digital sovereignty initiatives gained their first significant momentum in early 2021, with multiple member states calling for accelerated action to strengthen the continent’s digital sovereignty. Since then, we’ve seen meaningful developments across the continent: the landscape of European cloud infrastructure has evolved significantly and what was once primarily a regulatory concern has developed into a strategic priority with substantial implications for the investment community.

The European Commission has advanced its digital sovereignty framework and the European Investment Bank has broadened its focus to include critical digital infrastructure projects, encouraging European investors to increase their allocation to cloud technology companies with sovereignty-focused approaches.

With this institutional backing and growing investor attention, we’re presenting Jack Wang’s detailed analysis of Europe’s sovereign cloud ecosystem and a perspective on how these developments are reshaping technology investment opportunities across the region. Today’s analysis is co-published with our friends at Resilience Media, who will also feature this piece in their newsletter, and we’re proud to present to you Jack’s perspective on Europe’s digital sovereignty landscape.

Yours,
Uwe, Jack and Jannic

Venture Capital Is Taking a Closer Look at Europe’s Cloud Frontier

Investors are beginning to view the European sovereign cloud space through two distinct lenses. On one hand, there’s an emerging thesis that the current wave of cloud and compute providers across Europe is experiencing genuine financial momentum - largely driven by surging demand for AI workloads, foundational models, and constrained access to compute resources like NVIDIA GPUs. For believers in this school of thought, the macro environment is unlikely to shift significantly over the next five years, offering just enough time for growth-oriented bets to pay off. This, combined with the narrative of “European tech sovereignty,” makes the category newly compelling to venture capitalists - especially in areas traditionally dominated by infrastructure private equity.

On the other hand, there’s a more skeptical view that attributes this momentum primarily to the short-term GPU supply shortage. As manufacturing capacity expands, particularly at NVIDIA, these optimists-turned-pessimists believe the market may return to the hands of hyperscalers. While it’s only a matter of when (not if) capacity increases, the timeline to build new fabs is long (5 to 20 years), the fundamental question centres on whether this provides adequate runway for European providers to establish sustainable competitive positions.

Sovereignty: More Signal or More Noise?

Interestingly, while “tech sovereignty” might seem like the natural rallying cry for European cloud providers, most growth-stage startups aren’t leaning on it heavily in investor conversations. Take Ori, for example, a European player that recently raised capital from Saudi-based Wa’ed Ventures to expand into the Middle East. That kind of strategy doesn’t exactly scream “fortress Europe.” Instead, investors are more often responding to bottom-line growth, product differentiation, or cost advantages (such as cheap electricity for high-performance compute clusters).

At earlier funding stages, we are seeing more startups use the sovereignty narrative as part of their pitch. Pre-seed and seed founders highlight advantages such as lower GPU costs tied to national energy policies or novel infrastructure optimisations targeting specific verticals (e.g. computer vision or NLP). These narratives are interesting and technically sound, but whether they translate into venture-scale outcomes remains to be seen.

Is Data Infrastructure the Right Sovereignty Focus?

The broader question for us - and perhaps the most relevant one for early-stage European investors - is whether data centres and cloud infrastructure are truly the strategic focus of tech sovereignty initiatives in Europe. Our work and investments in the DefenceTech industry and our exploration into how European Ministries of Defence (MoDs) manage their infrastructure suggests otherwise.

Most MoDs operate via a hybrid model: domestic IT service providers partner with US hyperscalers to deliver managed infrastructure, maintaining sovereign oversight while leveraging global expertise. In fact, only Poland currently runs its MoD infrastructure directly on a US hyperscaler (Azure), and even the UK is considering American providers in its future infrastructure tenders. This model has persisted for a decade, pointing to a practical approach where sovereignty is more about governance and control than complete technical independence.

Moreover, tariffs and trade restrictions reveal a deeper vulnerability. European subsidiaries of hyperscalers such as AWS may avoid direct tariffs, but they still rely on US-made GPUs subject to export controls and price fluctuations. Thus, even if cloud services are legally and operationally localised, Europe’s dependency on US semiconductors remains a critical bottleneck to genuine compute sovereignty.

Conclusion

Europe’s push for sovereign cloud capabilities is real, but its complexity is often underestimated. Growth-stage VCs are investing not because of the sovereignty story, but in spite of it - driven by performance, margins, and macro trends. Meanwhile, early-stage founders may find the sovereignty narrative useful to attract initial interest, but the infrastructure layer might not be where Europe ultimately finds its technological independence. Until Europe builds its own semiconductor capacity, true sovereignty will remain an aspirational (and distant) goal.

Sources and further reading

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European Resilience Tech Newsletter Team

Uwe Horstmann co-founded Project A Ventures in 2012 as General Partner and has built Project A to be a leading European early-stage investor with over $1bn USD under management and having backed 100+ founders. In addition to Project A, Uwe serves as Reserve Officer in the German armed forces and advises the German Ministry of Defence in digital transformation issues.

Jack Wang is a software engineer turned product-driven tech investor and joined Project A in 2021 to lead the firm’s deep tech investing, which has grown to include DefenceTech. Prior to joining Project A, Jack worked in a variety of organisations such as Amazon and Macquarie Group across Australia, US and UK / Europe. Jack holds a MBA from London Business School and Bachelors of Engineering (Bioinformatics, 1st) from UNSW, Australia.

Jannic Meyer joined Project A initially contributing to what is now known as the Project A Studio, partnering with founders at the pre-idea stage, where he covered a variety of topics ranging from energy infrastructure to dual-use robotics and led our investment in ARX Robotics. He is now part of the investment team at Project A covering all things resilience.

Project A Ventures is one of the leading early-stage tech investors in Europe with offices in Berlin and London. In addition to 1 billion USD assets under management, Project A supports its 100+ portfolio companies with a platform team over 140 functional experts in key areas such as software and product development, business intelligence, brand, design, marketing, sales and recruiting. Project A have backed founders of Trade Republic, WorldRemit, Sennder, KRY, Spryker, Catawiki, Unmind and Voi as well as founders building in European Resilience: