Three key steps to achieving a breakthrough in AI in Germany

Artificial intelligence (AI), cybersecurity, and their methodological breakthroughs are major drivers of innovation and economic growth in the 21st century. This recognition has sparked coordinated global initiatives, such as the US Stargate Project, which involves investments of up to $500 billion.

Global IT companies in the US and, increasingly, in China are leading the way – some even pulling far ahead. According to the OECD, the US invested around $54.8 billion in AI startups in 2023, compared to 18.3 billion in China and just 2.2 billion in Germany. Germany faces an acute risk of losing this crucial part of value creation in the long term.

Safeguarding and sustainably growing prosperity in Germany and Europe hinges on our ability to close the innovation gap in these critical fields and take on a leading role globally. This poses a major challenge for the new German government, both at the federal and European levels.

A key to staying competitive will be achieving breakthrough advances in how we securely process information – and turning those advances into practical, cutting-edge applications. It is precisely these kinds of advances that have been revolutionizing our lives for years and generating exponential impact. Such advances culminate in a “winner takes all” dynamic: conceptual breakthroughs in AI lead to dramatic improvements in functionality, performance, and cost – enabling the rapid emergence of applications once thought unrealistic – as well as entirely new markets. Many existing approaches are rendered nearly obsolete almost overnight.

The leap from horse-drawn carriages to automobiles offers a striking parallel. Germany’s prevailing approach – championed by policymakers and focused on mere technology transfer – fails to recognize that conceptual breakthroughs are the true drivers of long-term innovation success. Instead of envisioning and engineering the automobile, this approach settles for faster horses. Germany and Europe must find the courage to participate at the forefront of AI and cybersecurity research and to translate these breakthroughs into new value creation.

The new federal government must act on several fronts.

First, scientific funding must center on deep, foundational research – not just respond to immediate needs. This demands the courage to cut through bureaucracy and discontinue support for initiatives that fall short of international standards of excellence. What’s needed is not a scattershot approach, but a focus on excellence. The key lies not in quick transfers of existing ideas, but in bold, conceptual innovation that creates lasting value.

Second, the framework conditions for venture capital must be strengthened. Startups in these technology sectors require capital that is willing to take risks – and capable of assessing them. Capital that is quickly and easily accessible – without delays or bureaucratic red tape. We propose a risk fund modeled on the European Research Council (ERC), providing startups with disruptive approaches and strong teams with at least €20 million each, following a rigorous but swift selection process – subject only to a final reporting requirement.

Moreover, Germany has sufficient private capital that could, in part, be redirected into these areas. The WIN initiative, with additional commitments totaling €12 billion by 2030, is an important first step in this direction. Bolder and broader steps must follow. To match international standards in venture capital investment, Germany would need to allocate €15 billion annually.

Third, we need new flagship initiatives that span disciplines. We need to create and showcase examples of how top-tier research can be transformed into real economic value. Researchers of the highest international caliber should be the driving force behind a continuously evolving system – one that works closely with ambitious, tech-oriented entrepreneurs and investors.

In this spirit, the new partnership between CISPA and ESMT Berlin exemplifies this ambition: to build a leading European ecosystem that creates real technological breakthroughs and translates them efficiently into economic value.

Originally published in German as a guest commentary in Handelsblatt under the title “Drei entscheidende Schritte, wie der KI-Durchbruch in Deutschland gelingen kann” on February 19, 2025.