Hot or not: Where European VC funding grew in 2025

Dec. 24, 2025 - PitchBook Research

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While dealmaking has picked up overall, activity has slowed down in some of the continent’s biggest economies.

After three consecutive years of decline, VC funding for European startups is in recovery, but the rebound is uneven across the continent.

According to PitchBook data, VC investment in Europe is projected to reach €66 billion (about $78 billion) this year, up 6.5% from 2024. However, the number of rounds has continued to decline for the fourth consecutive year, as late-stage rounds have become increasingly dominant. 

PitchBook’s Q3 2025 European Venture Report reveals that venture growth rounds account for about two-thirds of all deal value, marking the largest share since 2017.

The same report also shows AI startups account for a record 39.1% of capital raised, with the year’s largest deal being ASML‘s €1.3 billion investment in French LLM developer Mistral AI at a €11.7 billion valuation.

Country highlights include:

United Kingdom:

The UK, Europe’s most active VC market, is projected to see a 7.8% increase in deal value, with activity rebounding to its highest level since 2022 despite a slow start to the year. AI has driven many of the largest rounds, including Nscale’s $1.1 billion Series B and Isomorphic Labs’ $600 million raise, supported by multibillion-pound commitments from global tech giants to the UK’s AI ecosystem.

Ireland:

Ireland is on track to reach its second-highest annual VC deal value at €1.57 billion, marking a 55% increase after three years of decline. Strong late-stage rounds, such as Wayflyer’s expanded $185 million Series B and Tines’ $125 million Series C, highlight renewed momentum across fintech and AI-driven enterprise software.

France:

France’s VC market struggled amid political turbulence, cuts to innovation budgets, and reduced tax incentives, contributing to an expected 11.7% decline in deal value. Despite fewer mega-deals, Mistral AI’s €1.7 billion Series C stood out as Europe’s largest VC round of the year, underscoring continued strength in AI.

Benelux:

VC funding in Belgium fell sharply, with deal value on track to decline 26.3% year over year, reflecting broader weakness in the market. In contrast, the Netherlands and Luxembourg are set for double-digit growth, although gains are largely driven by a small number of sizable rounds rather than broad-based activity.

Germany:

Germany’s VC market lost momentum in the second half of the year, with deal value expected to fall below 2024 levels as activity shifted toward earlier-stage rounds and growth capital remained scarce. Defense tech emerged as a bright spot, supported by major raises such as Helsing’s €600 million Series D and new government initiatives, including a €1 billion fund-of-funds to address the growth-stage funding gap.

Austria and Switzerland:

Austria and Switzerland saw sharper declines in overall VC funding compared to Germany, reflecting softer investor appetite across smaller DACH markets. Switzerland was a notable exception in biotech, where record deal value was driven by large rounds such as GlycoEra’s $130 million Series B.

Nordics:

VC investment diverged across the Nordics, with smaller markets posting strong growth while established hubs such as Sweden and Denmark saw declines. Finland led the region with record funding driven by mega-rounds including Oura’s $875 million Series E, alongside major deep-tech deals at IQM and Iceye, while Iceland rebounded sharply toward triple-digit growth.

Southern Europe:

Southern Europe is set to deliver the fastest VC growth on the continent, with total deal value projected to rise 26.3% year over year, supported by national entrepreneurship programs and government-backed initiatives. Spain leads the region in funding, highlighted by Multiverse Computing’s $215 million Series B, while Greece stands out as Europe’s fastest-growing market following Spotawheel’s €300 million round.

Central and Eastern Europe:

VC funding across CEE declined again this year, with limited large-scale deal activity and much of the region’s capital concentrated in one or two standout rounds per country. While countries such as Latvia, Hungary, and Romania saw isolated uplifts, growing momentum in defense tech—particularly in Ukraine, supported by initiatives like Brave1 and EU-backed funding—points to a potential rebound from 2026 onward.

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