The global race for the AI app layer is still on (techcrunch.com)

Accel’s 2025 Globalscape report finds that while the U.S. still dominates large foundation models, Europe and Israel are strong contenders at the AI application layer — with cloud and AI apps in those regions drawing about 66% as much private funding as the U.S. so far in 2025. The firm highlights emerging category leaders like Lovable and Synthesia and cites a maturing founder-investor flywheel that pairs world-class technical talent with vertical market expertise across legal, healthcare, manufacturing and marketing. Accel also notes that some AI-native apps now hit $100M ARR in a few years, with record-high revenue per employee, signaling unprecedented growth velocity and capital efficiency on both sides of the Atlantic. For engineers and investors, the report reframes where durable opportunities lie: incumbents aren’t going away (Accel’s Public Cloud Index is up 25% YoY) and cloud vendors are embedding agentic capabilities, but VCs are fiercely competing for app-layer deals where fast product-led adoption can be defensible. Accel is less optimistic about Europe producing many large foundation-model leaders (Mistral AI aside), but sees pockets for smaller models and — importantly — argues data and proprietary data flywheels are undervalued. The practical implication: differentiation may come less from raw compute or models and more from proprietary data, verticalized products, and rapid go-to-market execution.