
Fact of the Week: GDPR Reduced EU Venture Capital Investment in Technology by 26 Percent Relative to the United States
Source: Luis Garciano, et al., “The Constitution of Innovation: A New European Renaissance,” (London School of Economics, MIT, European University Institute, November 10, 2025).
Commentary: The European Union (EU) passed the General Data Protection Regulation (GDPR) in 2018, continuing a pattern of heightened regulation in the technology sector. The law sets strict rules on how technology firms can handle their customers’ personal data, with the intent of protecting users’ privacy and security. But these regulations also impose significant compliance costs to firms—costs that are most affordable to large tech firms, while small start-ups are unable to bear the burden.
Since the GDPR was enacted, venture capital (VC) investment in European technology firms has fallen by 26 percent relative to the United States, widening an already substantial transatlantic gap in VC funding. Between 2015 and 2024, the cumulative VC investment gap came to $1.21 trillion.
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November 19, 2018
