As artificial intelligence (AI) reshapes global industries, Europe’s engineering and innovation sectors are falling behind. Despite world-class talent, the sectors are now less defined by genius and expertise, and more tainted by a failure to translate research into approachable, real-world solutions.
A late 2024 study revealed that European startups continue to struggle due to the lack of a unified capital market. Unlike the United States, which benefits from the Nasdaq and a robust network of venture capitalists funding innovation, Europe offers few comparable financing channels.
Apart from a handful of exceptions—such as Sweden, Denmark, and the Netherlands—most institutional investors, including pension and mutual funds, remain hesitant to back high-risk ventures. This cautious approach persists as EU regulators still classify AI-driven enterprises as high-risk investments, in contrast to North America, where the technology has already become deeply integrated into the economy.
Underinvestment, fragmented ecosystems, and exclusive leadership have deepened this gap. Yet, female-led businesses and women entrepreneurs are increasingly stepping in, leveraging perspective, risk-awareness, human-centred design, and long-term vision so that Europe not only adapts to AI, but thrives with it.
The EU AI Act, which entered into force on August 1, 2024, is the world’s first comprehensive artificial intelligence law. It introduces a risk-based framework: applications with “unacceptable risk” like social-scoring and non-consensual biometric surveillance are banned, while “high-risk” uses in sectors like healthcare, education, or hiring face strict oversight.
Though praised for its ethical safeguards, the law has also drawn criticism for its heavy compliance demands. The EU’s strict AI regulations have left many companies feeling disadvantaged compared to markets like the U.S., where AI regulations are less-strict and have resulted in stronger third-party investment and business success. Some European firms have even relocated to North America, prompting business leaders to warn that the “EU AI Act is killing innovation,” according to the VDI Wissens Forum.
But, in December of 2024, Carme Artigas, former Co-Chair at the UN AI Advisory Body, countered that it was an “absolute lie” that the EU AI Act was responsible for setting Europe back in innovation. Instead, she argued, Europe’s real challenge lies in a conservative innovation culture that has historically sidelined diverse voices, effectively closing the door on populations that could help drive more inclusive growth.
Within this landscape, a new opportunity is emerging. Women entrepreneurs, long underrepresented in the region’s tech ecosystem, are uniquely positioned to thrive in this regulatory environment that values ethics, long-term planning, empathetic design and fairness as much as performance success.
Women: the EU’s untapped potential
For decades, women in Europe have faced structural and cultural barriers to entering technology and innovation, according to UNESCO reports. While women often perform well in STEM subjects, they remain significantly underrepresented in tech careers and ICT roles. However, data suggests that when women are present in leadership roles, economic potential is unlocked: a study by the European Institute of Technology revealed that women-founded tech scale-ups grew 1.2 times faster than their peers from 2018 to 2023.
The business case is clear: tapping into female talent results in profit. European women who have been historically sidelined from the entrepreneurial world could bring billions in untapped revenue and help the region regain its position as a global leader.
Still, the funding gap is striking. Studies by the European Investment Bank (EIB) and Boston Consulting Group (BCG) found that 85% of VC partners are men – which clearly puts female founders at a disadvantage, considering that women-founded startups receive less than 2% of total venture capital in Europe.
Further research from Columbia University showed that female founders are often asked risk-oriented questions such as “How will you avoid failure?”, while men are asked growth-focused ones like “How big can this get?”.
According to Mastercard, 40% of women in Europe have considered running their own business, particularly in Portugal (62%), Poland (47%) and Greece (46%), which all surpassed the global average. Among younger women, entrepreneurial ambition is even higher, with 52% of Gen Z and 41% of millennial formally-employed women wanting to launch a secondary venture in the next three years.
Despite this entrepreneurial spirit, women still account for just 14.8% of startup founders and 34.4% of self-employed individuals in Europe. Even fewer lead high-growth tech or AI ventures.
The “female touch”?
In modern innovation, the “female touch” reflects a leadership style grounded in empathy, collaboration, intuition, and creativity – not as gender essentialism, but as a strategic counterbalance to traditional, competitive business models.
Women entrepreneurs often identify unmet human needs and design solutions with greater sensitivity to user experience, social impact, and sustainability. Such qualities are now central to building trust, inclusion, and ethical innovation.
A January 2025 report found that empathetic leadership strongly correlates with team cohesion, trust, conflict resolution, and overall performance – traits more frequently observed in women.
As Liz Priestman, CEO of International Deal Gateway, noted after the Canaccord Genuity 44th Annual Growth Conference, the qualities women were once criticized for, like emotional intelligence and empathy, “are now recognized as powerful tools.”
“Women intentionally build trusted environments that foster creativity and risk-taking, knowing trust is what drives innovation,” she added.
Jenny Sagstrom agrees. As the Founder and CEO of creative agency Sköna, she aims to revolutionize modern advertising by infusing it with “empathy, mutual respect, and wild, free-thinking openness.”
According to Sagstrom, some more “feminine” traits give women the leg up when it comes to AI innovation. She says: “We’re more risk-averse and therefore build for the long run, and we build more diverse teams that we’re more open to receiving feedback from.”
“Considering the sheer power – and potential catastrophic consequences – of AI as a technology, these types of traits are critical to build tools that are actually innovative and systems-changing, rather than simply accelerating what’s already in place, Sagstrom added.
As AI, automation, and regulation expand the opportunities of what is possible within the realm of entrepreneurship and innovation, leadership demands shift, where human qualities become as important as technical or financial acumen.
“The difference between human and artificial intelligence lies in soft skills. I believe they are an asset for women to have more possibilities,” said Rosalía Arteaga, former President of Ecuador and education activist, while in conversation with Fast Company Mexico last month.
Europe is thus witnessing a cultural awakening that is redefining leadership and traditional systems.
For example, SheAI, a European initiative created to close the gender gap in AI by empowering women through accessible education, mentorship, and community, is now a partner of the United Nations’ AI for Good Coalition, proving that women are not waiting to be included — they’re building entirely new ecosystems that embrace them.
The mission, however, extends beyond digital literacy. Women are redefining leadership via empathy, collaboration, and collective intelligence.
“I think the biggest thing is community,” said Kris Talova, Co-Founder and COO of SheAI, while in conversation with 150sec.
“We’re building a space where women support each other- not just through online courses, but through real connection […] It’s not just about learning once and leaving; it’s about constant guidance and growth together,” she added.
The executive also explained that 60% of the jobs that are going to be replaced by automation are currently held by women, for which it is critical that women learn and prepare for the jobs of the future.
“We look at AI and Society, showing both the benefits and the risks of AI — the ethical questions, governance issues, and the impact this technology has on our communities. It’s not all through rose-colored glasses,” Talova added.
However, innovation is futile without purpose. Ventures that identify underserved communities, build user-centered products, and prioritize ethical frameworks, will ultimately enrich Europe’s strained tech environment. The “female touch”, then, goes beyond a soft skill; it is a strategic asset.
The time for women is now
Women’s momentum is building. In 2024, 1,196 female-founded startups raised €5.76 billion ($6.66 billion USD) across 1,305 deals, with a quarter of the largest funding rounds going to AI-driven companies like Cradle, Dexory, and Sana Labs.
Other women-led firms like Newcleo, Pigment, and Cardior Pharmaceuticals have reached unicorn status, while M&A activity among women-led ventures rose by 15% year-on-year, according to JP Morgan data.
EU-backed initiatives like Women TechEU are helping further bridge the gaps, providing targeted funding and mentoring to deep-tech startups led by women.
Regardless, women remain underrepresented; a 2025 survey by the European Innovation Council found that women represent 42% of STEM graduates in the EU, but hold fewer than 25% of leadership roles.
Despite these challenges, women-led deep tech startups have increased from 8% in 2020 to 30% in 2024 under EIC leadership programs.
This increase is evident in various areas of sustainability and development, as women have started to take the lead in fields of medicine, software development, education and neuroscience.
Elina Berglund, Co-Founder of and CEO of Sweden-based Natural Cycles, has revolutionized traditional contraceptive methods in Europe, creating the first algorithm-based contraceptive app approved by EU regulators. The platform is grounded in science and is supported by a team of fertility experts, physicists and data scientists.
“We are constantly looking for ways to enrich the field of female health, collaborating with academics, scientists, and doctors around the world,” Berglund stated.
Berglund came up with the idea for Natural Cycles as she began planning for her own pregnancy and realized that most birth control pills caused hormone disruptions, while others felt invasive.
“After my own struggle to find a natural, effective contraception, I’m proud to share Natural Cycles with thousands of women around the world,” Berglund said.
Similarly, Ana Maiques of Spain’s Neuroelectrics tackles neurotechnology by integrating modern tech with strong ethical and regulatory standards to treat neurological disorders, emphasizing patient safety and responsible innovation.
“Neuroelectrics’ products are being used worldwide for basic neuroscience and clinical research in hundreds of universities and academic medical centers. Our vision is to create a powerful neurotechnology platform upon which verticals can be developed to improve the lives of as many people as possible,” Maiques noted.
Rewriting Europe’s innovation story
Europe’s entrepreneurial stagnation stems from underinvestment, fragmented ecosystems, and limited inclusive leadership. While the EU AI Act primarily focuses on creating a risk-based framework for the safe and transparent use of AI, it has also revived broader conversations about the future of innovation in Europe — including who gets to lead it.
For years, female-led startups have already been pushing for a more ethical, human-centred, and inclusive approach to technology.
With women founding only a third of EU businesses, expanding access and support for their ventures could transform both their lives and the wider European economy — boosting employment, competitiveness, and credibility in the AI age.
Diversity and inclusion, then, are not just about fairness. They are about Europe’s competitive advantage in the AI era.
Image Source: Getty Images via Unsplash+