European Startups Lead AI-Native Revolution in Tech Sector

The emergence of AI-native startups is reshaping the technology landscape across Europe. Unlike traditional companies that retrofit artificial intelligence into existing workflows, these innovative firms are built around AI from the ground up. This year, a notable **27 companies** from Sifted’s **B2B SaaS Rising 100** list fall under the category of AI-native, dominating the rankings by taking the top nine positions.

Andreas Weiskam, a partner at Sapphire Ventures, which co-sponsored the report, explains that AI-native companies represent a significant shift in how technology is developed. “We think of AI not so much as a new vertical but more like a foundational technology,” he stated. Weiskam highlights that this technology is expected to define a new era of innovation, similar to the transitions seen with mainframes, PCs, and the internet.

Redefining Business Models

For Jan Oberhauser, founder and CEO of Berlin-based **N8n**, being AI-native is about more than just technology. “Being AI-native starts with a belief: that human intelligence should stay at the centre of how we build, decide and work,” he noted. N8n, which ranked fourth on the Rising 100, leverages its AI-native foundation to create complex systems that enhance user capabilities, allowing for greater efficiency compared to traditional methods.

Similarly, **Tacto**, a Munich-based supply chain and procurement platform that secured the seventh spot, has found that starting as an AI-native company liberates it from legacy constraints. “Traditional procurement tools were built around static forms and workflows, so re-engineering them for autonomous agents and real-time data is almost impossible,” said CEO André Petry. This flexibility enables Tacto to deliver features much faster than larger competitors.

For **FlexAI**, which holds the third position on the Rising 100, being AI-native has streamlined growth. COO Sundar Balasubramaniam explained that their approach allows for rapid iterations that not only enhance internal processes but also improve customer operations significantly.

Investor Interest and Market Potential

The growing interest among investors in AI-native startups reflects their unique business propositions. “The numbers are an investor’s dream, because the value proposition is often so clear,” Weiskam pointed out. Unlike traditional models that might show incremental improvements, AI-native startups often demonstrate dramatic enhancements, sometimes achieving growth rates of tenfold or more.

Investors have taken notice. Oberhauser reported that the response to N8n has been overwhelmingly positive, with venture capitalists eager to explore practical applications of AI rather than just hype. As the market matures, however, the expectations are rising. Petry remarked, “Investor interest is strong, but since the **2023 hype wave**, VCs are looking more closely at the fundamentals.”

With the stakes higher, startups recognize they are at the forefront of a significant shift. Balasubramaniam predicts that in five years, AI-native approaches will become standard practice. “AI will become a ubiquitous layer, like databases or microservices are today,” he stated.

Guy Podjarny, founder and CEO of London-based **Tessl**, which ranked second, emphasized that to harness AI’s full potential, companies must rethink their operational frameworks. “As a startup, we can optimize directly for an AI-fuelled world,” he explained, suggesting that established organizations may struggle to adapt.

Weiskam believes that the current trajectory suggests a rapid transformation in the tech landscape, forecasting that a majority of companies in next year’s B2B 100 list will be AI-native. He cautioned, “Some companies will thrive by building with AI in mind from the start, while others may struggle to adapt and could even disappear.”

The rise of AI-native startups signifies a pivotal moment in technology, one that is likely to reshape not only the industry but also the way organizations operate in the future. The implications are far-reaching, indicating that those who fail to adapt risk being left behind in an increasingly AI-driven world.