In my opinion, we lack two things:
a) highly qualified people, even European natives move to Silicon Valley. There is a famous photo of the OpenAI core team with 6 Polish engineers and only 5 American ones;
b) culture of calculated risk when it comes to investment. Here, bankruptcy is an albatross around your neck, both legally and culturally, and is considered a sign of you being fundamentally inept instead of maybe just a misalignment with the market or even bad luck. You'd better succeed on your first try, or your options for funding will evaporate.
Worth pointing out that DeepMind was founded in London, the HQ is still here, and so is the founder and CEO. I've lived in North London for 8 years now, there are _loads_ of current-and-former DeepMind AI people here. Now that OpenAI, Anthropic, and Mistral have offices here the talent density is just going up.
On risk, we're hardly the Valley, but a failed startup isn't a black mark at all. It's a big plus in most tech circles.
The UK is a bit different in this regard, same as Scandinavia.
But in many continental countries, bankruptcy is a serious legal stigma. You will end up on public "insolvency lists" for years, which means that no bank will touch you with a 5 m pole and few people will even be willing to rent you or your new startup office space. You may even struggle to get banal contracts such as "five SIMs with data" from mobile phone operators.
There seems to be an underlying assumption that people who go bankrupt are either fatally inept or fraudsters, and need to be kept apart from the "healthy" economy in order not to endanger it.