At Rise of AI 2022 in Berlin, Ragnar Kruse, co-founder of AI Hamburg and the Transatlantic AI eXchange and a former co-founder of Intershop, argues that European AI startups must internationalize into the US market much earlier than they typically do. Drawing on his own history building Intershop and a later advertising-technology company that generated 65% of its revenue in the US while employing 160 people in Hamburg, he presents figures from a PricewaterhouseCoopers study estimating AI could add over 15 trillion dollars to the global economy and roughly 11% to German GDP this decade, compared with a projected 26% gain in China. He describes AI Hamburg, a community of more than 700 members, the AI for Germany initiative with Applied AI in Munich, and a four-city German AI startup hub network built to help startups think in scalable products rather than one-off projects or proofs of concept. Kruse's central recommendation is that European AI startups should look past neighboring European markets and prioritize expanding into the US, provided they first have real local market fit, an English-language operating model and a concrete internationalization plan.
Key takeaways
- Kruse's advertising-technology company generated 65% of revenue from the US versus 15% from Europe despite most development staff being based in Hamburg.
- AI Hamburg has grown to more than 700 members since its 2019 founding, alongside a four-city German AI startup hub network.
- Citing PricewaterhouseCoopers, Kruse estimates AI could add about 11% to German GDP this decade versus a projected 26% for China.
- Kruse finds European AI startups often stay too long in local markets while faster-moving US competitors scale and later acquire or sideline them.
- Germany has roughly 700 AI startups compared to about 1,200 in Israel, despite Israel having a tenth of Germany's population.
Detailed notes
Background: building and scaling AI-driven companies across borders
Kruse describes moving from Hamburg to the US in 1996 to co-found Intershop, one of the first e-commerce companies, later joining a DFKI spin-off co-founded by Hans Uszkoreit that automated email responses for call centers. He then built an advertising-technology company in San Francisco with a large European development team, growing to 260 employees, 160 of them in Hamburg with 30 nationalities, while 65% of revenue came from the US versus 15% from Europe. He sold the company in 2016 and left in 2019 to focus on AI investment and ecosystem building.
AI Hamburg, funding and the German AI hub network
Kruse describes launching AI Hamburg in 2019 to connect the local ecosystem, now with more than 700 members, and co-founding an early-stage AI investment fund with tickets from 500,000 up to several million euros aimed at building European AI champions. He also describes AI for Germany, a set of nine joint initiatives with Applied AI in Munich, and a network of four German AI startup hubs, in Berlin, Munich, Darmstadt and Hamburg, that systematically support incubation, acceleration and internationalization; the Hamburg hub had recently run its first program batch. He cites roughly 120 AI startups in Hamburg, 600-700 across Germany, and about 4,000 across Europe.
The economic case for accelerating AI adoption
Citing a PricewaterhouseCoopers study, Kruse says AI could add more than 15 trillion dollars globally, with an estimated 11% GDP impact for Germany, which he calculates as roughly 400 billion dollars against Germany's 2017 GDP of about 3.7 trillion dollars, compared with a 26% projected impact for China, which he says would be worth a trillion dollars if Germany reached the same rate. He also cites that seven of the ten most valuable public companies by market cap use AI as a major value driver, and a prediction that deep learning will add 30 trillion dollars to global equity market capitalization, arguing companies without an AI investment plan need to get one.
Why European startups stall and the case for going to the US first
Based on looking at about 160 AI startups, Kruse observes that European teams tend to have strong research but stay too long in their local markets, partly because customers like German buyers compare many competitors and delay decisions. Meanwhile US competitors, often with less mature technology, move faster, capture the larger market, and then internationalize back into Europe, sidelining or acquiring the slower European companies. He argues that when a European AI startup considers expanding, it should prioritize the US over neighboring European countries such as the UK or Italy, since the US is the largest and most capital-rich market in the Western world.
A playbook: product thinking, market fit and international readiness
Kruse contrasts Silicon Valley's product-first culture, rapid MVP iteration and willingness to treat failure as learning with a more cautious German approach, and recommends startups build an MVP, gather customer feedback quickly, and only pursue internationalization once they have real local market fit, revenues, an English-language operating model (including contracts), and a dedicated expansion budget, since international expansion generally takes about twice as long as planned. He notes practical US specifics such as check payments alongside credit cards, and flags the German Accelerator, a government-funded program, as a resource for structured US market entry.
Q&A highlights
Asked why Germany moves more slowly on AI adoption than China or the US, Kruse says China is government-driven with strong execution, while the US benefits from a culture of entrepreneurship exemplified by Silicon Valley. He contrasts Germany's roughly 700 AI startups with Israel's approximately 1,200 despite a tenth of the population, and says Germany needs to learn to build more startups, calling them "the speedboats of innovation."
Quotes
We need to collaborate to get faster AI adopted here in Europe to actually being able to compete with US or China.
Ragnar Kruse
Startups are the speedboats of innovation.
Ragnar Kruse
Failing is not a problem, it's a learning.
Ragnar Kruse
Questions answered in this talk
Why should European AI startups prioritize the US market over expanding within Europe?
According to Ragnar Kruse at Rise of AI 2022, the US is the largest and most capital-rich market in the Western world, and European startups that stay too long in local markets risk being sidelined or acquired by faster-moving US competitors that reach scale first.
How much could AI add to Germany's economy?
Ragnar Kruse cites a PricewaterhouseCoopers study at Rise of AI 2022 estimating AI could add about 11% to German GDP this decade, roughly 400 billion dollars, compared with a projected 26% gain for China.
What is AI Hamburg?
Ragnar Kruse describes AI Hamburg, which he co-founded in 2019, as a community with more than 700 members built to connect the local AI ecosystem, part of a broader network including the AI for Germany initiative with Applied AI in Munich and a four-city German AI startup hub program.