Trump 2.0 Policies Reshape Global Tech: European Capital Pours into Defense and AI Sovereignty

The prospect of a second Trump administration is creating unexpected ripple effects across European technology ecosystems. While ‘Making America Great Again’ remains the stated goal, the practical outcome is accelerating Europe’s push for technological independence. Investors and entrepreneurs are rapidly redirecting capital toward strategic sectors where European sovereignty appears most vulnerable. This reallocation isn’t just about profit—it’s about building resilience in an increasingly fragmented global order. The numbers tell a compelling story: record funding rounds for defense technology, unprecedented government commitments to artificial intelligence, and a fundamental reconsideration of what technologies deserve strategic investment. This represents perhaps the most significant realignment of European tech priorities in a generation. As one venture capitalist noted, the question is no longer which companies will return the most capital, but which technologies will ensure Europe’s future security and competitiveness. The Trump 2.0 effect is creating both urgency and opportunity in equal measure. European tech sovereignty has become the organizing principle for this massive capital reallocation. The movement spans from government offices to venture capital firms, all recognizing that technological dependence has become geopolitical vulnerability. What began as whispered concerns in policy circles has exploded into full-throated advocacy for building homegrown capabilities in critical technologies. The timing coincides with remarkable advancements in European startup ecosystems, which have matured enough to absorb this wave of strategic investment. The convergence of political will, available capital, and technical talent creates a historic opportunity for Europe to define its technological future. This isn’t merely about catching up—it’s about building something fundamentally different that reflects European values and strategic interests. European tech sovereignty represents both defensive necessity and offensive opportunity in the new global technology landscape. The commitment to European tech sovereignty is manifesting most visibly in defense technology investments, where funding has reached unprecedented levels. According to PitchBook data, European defense startups raised a record $2.4 billion last year, with $2.11 billion already invested in the current year. This represents a dramatic shift from just a few years ago, when defense technology was often excluded from venture capital portfolios due to ESG concerns and perceived ethical complications. High-profile rounds include Helsing’s €209 million Series B and Quantum-Systems’ €63 million Series C, both representing significant confidence in European defense capabilities. The funding surge reflects growing recognition that national security increasingly depends on technological superiority across domains from cybersecurity to autonomous systems. Alexander Lange, partner at Inflection, observes that uncertainty about Trump’s commitment to NATO ‘has served as another wake-up call for military and economic independence on the continent.’ This sentiment is driving a generation of entrepreneurs toward what Lange calls ‘actually important fields: energy, compute infrastructure, manufacturing, and defense.’ The defense investment boom represents just one pillar of Europe’s broader technological sovereignty agenda. The rethinking of defense investment reflects deeper changes in how limited partners and venture capitalists view their role in national security. Matthew Wright, UK head of defense technology company Delian, explains the transformation: ‘Defense tech was previously limited in fundraising because many VCs and their LPs had clauses in their agreements stating they wouldn’t invest in defense.’ These restrictions often stemmed from ESG investment policies that prioritized social responsibility over strategic necessity. Wright notes this is changing rapidly: ‘LPs are updating their investment theses, removing those restrictive clauses and allowing VC funds to invest more freely in defense-related technology.’ The shift demonstrates how geopolitical realities are overriding previously rigid investment criteria. Even traditionally conservative institutional investors are recognizing that technological sovereignty requires supporting technologies that might have previously fallen outside conventional ESG frameworks. This represents a pragmatic evolution in how Europe approaches strategic investment. European tech sovereignty extends far beyond defense applications into artificial intelligence, where governments are making unprecedented commitments. French President Emmanuel Macron and UK Prime Minister Keir Starmer have both pledged billions toward national AI initiatives framed explicitly around achieving AI sovereignty. The February AI Summit in Paris saw major companies, venture firms, and entrepreneurs commit approximately $150 billion to Europe’s AI ecosystem over five years—a staggering sum for a region that has traditionally lagged in venture funding. The initiatives aim to reduce dependence on American and Chinese AI infrastructure while developing capabilities aligned with European values and regulations. Arthur Mensch, CEO and co-founder of OpenAI competitor Mistral, highlighted how trade tensions have ‘accelerated the conversation about Europe reducing its dependence on US technology infrastructure.’ His company’s partnership with NVIDIA to build sovereign compute infrastructure in France exemplifies this trend. The AI sovereignty push represents Europe’s most ambitious attempt to claim a leadership position in next-generation technology. The European tech sovereignty movement creates particular opportunities in climate technology, where Trump’s policies have created unexpected advantages for European startups. With the US federal government reducing clean energy funding and incentives under Trump’s policies, many climate tech companies are looking toward Europe as a sanctuary for innovation and government support. This comes as the European Union continues strengthening its commitment to green technology through initiatives like the Green Deal and various national programs. The divergence creates opportunity for European climate tech companies to attract talent, investment, and customers who value stability and long-term commitment to climate goals. The sector represents a case where European values—particularly around environmental sustainability—align with strategic technological advantage. As one investor noted, Europe can position itself as ‘a sanctuary for those who believe in tech, science, progress, and meritocracy’ precisely because of its consistent policies in areas like climate technology. The contrast with Trump’s approach to clean energy creates unexpected competitive advantages for European startups in this sector. The push for European tech sovereignty represents both challenge and opportunity for startups and investors navigating this new landscape. Julien Codorniou, partner at 20VC, sees a ‘historic opportunity to build a more coherent identity and strategy in the global tech competition.’ This requires entrepreneurs to think differently about their markets, capabilities, and value propositions. Success in this environment means understanding both technological trends and geopolitical realities. The most successful companies will be those that can leverage European strengths—including its regulatory framework, research institutions, and values-based approach—while competing globally. Investors meanwhile must develop new frameworks for evaluating companies that account for strategic importance alongside commercial potential. The transformation requires rethinking many assumptions about what makes technology ventures successful in an increasingly fragmented world. The movement toward European tech sovereignty will likely accelerate regardless of US political developments. The genie is out of the bottle—European policymakers, investors, and entrepreneurs have recognized the strategic necessity of controlling their technological destiny. This doesn’t mean isolating from global innovation ecosystems, but rather engaging from a position of strength and specific capability. The coming years will see increased collaboration between European nations on technology initiatives, particularly in defense and AI where scale matters tremendously. We may also see new forms of public-private partnership that blend government strategic interest with private sector innovation and efficiency. The ultimate goal isn’t autarky but resilience—the ability to ensure that Europe can maintain technological capabilities even amid global disruptions. For entrepreneurs, investors, and policymakers, the message is clear: the era of European technological sovereignty has arrived. The question is no longer whether Europe should build strategic technological capabilities, but how quickly and effectively it can do so. The convergence of political will, available capital, and technical talent creates a historic opportunity that may not reappear for generations. Those who move decisively now will help shape Europe’s technological future for decades to come. The time for action is today—the future of European technology sovereignty is being written right now through investment decisions, startup formations, and policy initiatives that will determine whether Europe becomes a technology leader or remains dependent on others for its most critical capabilities.