The European Commission and European Investment Fund (EIF) are launching a €2bn fund to invest in fundamental technologies amid fears that the US and China are pulling ahead in areas such as artificial intelligence (AI) and blockchain.

The fund is expected to invest around €300-€400m in these areas in 2020, with €100m of that money coming from the EU and EIF and the rest from independent venture capital funds. From 2021 the plan is to scale up the fund to €1bn to €2bn under the InvestEU Programme.

This is an attempt to help Europe catch up with investment in the US and China. The EU pulled in a record $34bn in venture capital funding this year, but this is still only half the amount invested in Asian companies and a third of US investment.

The differences are particularly stark in AI: US-based AI companies received around two-thirds of all private investment into AI between 2011 and 2018, while Chinese companies took in an average 21% of the global total, according to figures from the Organisation for Economic Co-operation and Development (OECD). Europe’s share over that period, though increasing, was less than 10%.

Brexit is likely to depress these figures further given that UK-based companies account for the majority (55%) of private AI investments. In blockchain, the problem is even more severe, with US companies taking 33% of investment, European companies 22% and Chinese companies 21%.

European officials said that the €100m from the EU was not enough, but was a good base. Tomasz Kozlowski, head of mandate and product development at the European Investment Fund: “€100m is not enough but we plan to multiply that amount.” The EIF aims to encourage VCs, institutional investors and corporations to coinvest with them in AI and blockchain startup.

Helen Kopman, deputy head of the digital innovation and blockchain unit at DG Connect: “There is still not enough investment coming into Europe compared to the US and Asia, especially in AI. It is more even in blockchain but there we don’t want to lose the good position we have.”

She added: “€100m may seem like a drop in the ocean, it isn’t enough, but we see it as a starting point… This is the first time the European Union has tried such a targetted financial instrument.”