StepUp Startups report: How AI is revolutionising business support processes for European SMEs

The StepUp Startups project has released a new report detailing how AI is starting to reshape everyday business support functions such as HR, finance, and customer relations. The report offers fresh data and recommendations, making it a must-read for founders, investors, and policymakers who want to stay ahead in Europe’s digital economy.

AI adoption in Europe

AI adoption in business support processes remains in its early stages. In 2024, only 13.5% of European enterprises reported using AI technologies, up from 8% in 2021. Adoption is highest among large firms – 41.2% compared with 21% of medium-sized companies and 11.2% of small ones. Regionally, Nordic countries such as Sweden and Denmark lead the way, while uptake is lowest in Eastern Europe.

Business support processes are often less complex and easier to automate, providing quick wins for companies. They offer a practical testing ground for AI, helping organisations build confidence in AI solutions and establish the necessary frameworks, skills, and governance for wider adoption across core business areas.

Benefits and challenges

According to the report, AI can help businesses improve efficiency and free up staff to focus on higher-value tasks. By automating routine activities and optimising back-office operations, companies can streamline workflows and redeploy human resources more effectively.

Despite these opportunities, barriers remain. Businesses report risks related to data accuracy, legal uncertainty, and ethical, privacy, and security concerns. Access to talent is also essential for implementing AI effectively. Other challenges include high implementation costs and internal resistance to change. These factors make many European companies cautious about making long-term, potentially high-risk AI investments without clear paths to tangible business benefits.

The role of European startups

European startups are seizing opportunities across business support services, including HR, accounting, and customer service, among other areas. However, those that use AI as a core solution remain limited, and most investment continues to flow into non-AI offerings.

Compared to the US, European AI startups face a persistent funding gap: AI startups in HR and accounting receive roughly five times less investment, and those in customer service up to eight times less. Addressing this imbalance and supporting the European startup ecosystem with deeper AI innovation will be crucial for competitiveness.

Recommendations to unlock the full potential of AI adoption

To ensure Europe unlocks the full benefits of AI in business support, the report calls for action in several areas:

• Improve conditions for greater AI uptake by providing relevant standards, scaled-up access to sandboxes, and insights on best practices.
• Strengthen Europe’s AI startup ecosystem with a dedicated AI Startup Scale-up Fund and AI Clusters in EU regions.
• Provide targeted support to SMEs for shaping AI strategies, developing skills, accessing innovation services, and securing regulatory guidance.

For those interested in exploring the full findings and insights, the StepUp Startups report is available to read in full, offering a detailed overview of AI adoption, opportunities, and challenges across European business support processes.

Download the full report here.

P.S. Stay tuned – this report is part of StepUp Startups, an EU-funded project delivering data-driven insights to accelerate the growth and impact of Europe’s startup ecosystem. More reports like this are on the way.

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