European governments are betting on a new approach to sovereign AI: rather than building their own clouds or AI models, they're investing in data governance infrastructure that lets them control how sensitive information flows through any computing system. New Enterprise Associates (NEA) announced a $50 million Series A investment in Valarian, a London-based startup that's positioning itself as the alternative to U.S. defense contractors like Palantir for governments and regulated industries across Europe and the Middle East.

Why Are European Governments Suddenly Worried About U.S. Cloud Providers?

The core issue is straightforward but urgent: the U.S. CLOUD Act allows the U.S. government to compel American companies like Amazon Web Services (AWS) or Palantir to hand over data, even if that data is stored outside the United States. For European defense ministries, intelligence agencies, and regulated financial institutions, this creates an existential problem. As geopolitical tensions rise, from the war in Ukraine to Middle East conflicts, European nations are rethinking decades of globalization and demanding control over their own digital infrastructure.

Palantir, the dominant player in government data analytics, has become a political lightning rod in Europe. In the United Kingdom, members of Parliament have urged the government to drop a 330 million pound contract with Palantir for the National Health Service (NHS). In France, Palantir's only major federal deal remains a temporary arrangement with the intelligence agency DGSI that began in 2015, despite more than a decade of searching for alternatives. Germany has no federal Palantir contracts, and the company has lost deal opportunities with nine agencies in Switzerland.

How Does Valarian's Technology Actually Work?

Rather than replacing cloud infrastructure entirely, Valarian's platform, called ACRA, sits between any type of computing environment and the applications running on top of it. Think of it as a security checkpoint that governs what data leaves a system and who can access it. The core building block is the "enclave," an isolated environment with its own security policies, encryption keys, and data controls.

The practical advantage is flexibility. Governments and regulated enterprises can keep their existing cloud relationships with AWS, Microsoft Azure, or other providers while Valarian's layer enforces strict rules about data movement. They can also keep legacy, on-premises systems running alongside modern cloud applications and AI workloads. Enclaves allow customers to federate data by classification level, department, nationality, or even attorney-client privilege, while maintaining full control over encryption keys and data governance.

Steps to Understanding Sovereign AI Infrastructure for Government

• Data Governance Layer: Valarian's ACRA platform acts as a policy enforcement system between compute resources and applications, ensuring sensitive data stays under government control regardless of where it's physically stored.
• Enclave Architecture: Isolated environments with independent security boundaries, key management, and data layers allow governments to compartmentalize information by sensitivity level or department without rebuilding entire infrastructure.
• Multi-Cloud Compatibility: The system integrates with existing cloud providers, on-premises systems, and edge computing environments, letting organizations adopt AI and modern tools without abandoning legacy infrastructure or renegotiating vendor relationships.
• AI Enablement: By solving the data sovereignty problem, Valarian enables governments and regulated industries to safely deploy generative AI and autonomous systems on sensitive workloads like defense communications and classified analysis.

Who's Behind Valarian, and Why Does That Matter?

The team combines deep experience in both startup scaling and selling to the world's most demanding customers. CEO Max Buchan joined the cryptocurrency asset manager CoinShares as its first employee at age 21, helping launch the first publicly listed Bitcoin exchange-traded product and growing the firm to $2 billion in assets under management before it went public.

Co-founder and Chief Operating Officer Josh McLaughlin spent 12 years at Palantir and 18 years in U.S. Special Forces, leading many of Palantir's international accounts and selling over $1 billion in Palantir contracts during his tenure. Nick Trim, co-founder and former Chief Revenue Officer of Darktrace, the British cybersecurity firm that sold to Thoma Bravo for $5.3 billion, has joined as chairman of the board. The engineering team draws heavily on Darktrace alumni.

"Valarian has the opportunity to become a Palantir-sized company by winning outside the US where Palantir has struggled due to sovereignty concerns," noted the NEA investment team.

NEA Investment Team, New Enterprise Associates

What Does This Mean for AI Adoption in Financial Services?

The sovereign AI infrastructure trend extends beyond defense and intelligence. The UK government released a Financial Services AI Adoption Plan on the same day as Valarian's funding announcement, highlighting how AI is reshaping banking and financial regulation. The plan notes that 21% of firms in the financial and real estate sectors had already adopted AI as of early 2025, above the 16% average across the broader economy.

However, adoption rates vary dramatically by firm size. Large financial institutions report AI adoption rates around 75%, significantly higher than the economy-wide average, while smaller firms lag far behind. The UK government sees AI as a strategic imperative for financial services, with potential to improve fraud detection, streamline operations, enhance risk management, and close the persistent "advice gap" where regulated financial advice reaches only about 9% of UK adults.

The challenge is that consumers are already turning to unregulated, general-purpose AI tools for financial advice because they can't access equivalent features from their own banks. According to the Financial Conduct Authority's Mills Review, about 1 in 5 UK adults are open to AI making financial decisions for them, with demand strongest in complex areas like debt advice, pensions, and investments.

What Happens Next for Sovereign AI?

Valarian is expanding its team across engineering, deployment, and go-to-market functions as it builds new products and expands into the UK, European Union, and Middle Eastern markets. The $50 million Series A will fund expansion from a controlled deployment layer with a few initial applications into a full end-to-end data platform with its own ontology and suite of AI applications.

The broader trend is clear: European governments and regulated industries are no longer willing to accept the sovereignty risks of relying on U.S. cloud providers and defense contractors for their most sensitive operations. Valarian's approach, which focuses on data governance rather than building entirely new infrastructure, may offer a more practical path forward than previous attempts at digital sovereignty. If the team executes successfully, it could reshape how governments worldwide approach AI adoption in high-security environments.