VC investment in Europe remained steady in Q3’25, totaling $17.4 billion, up from $15.2 billion in Q2, though overall deal volume continued to lag. The quarter was defined by a handful of mega-deals in the AI sector, including Mistral AI in France ($1.5 billion) and Nscale in the UK ($1.5 billion), which together accounted for a substantial share of regional activity.
Beyond AI, Europe also saw several sizable - though more modest - transactions across fintech and deep tech. These included Rapyd Financial in the UK ($500 million), crypto and cloud Infrastructure firm PS Miner in the UK ($350 million), and Finland-based IQM ($320 million), a quantum computing company.
Overall, while deal flow remained muted, the resilience of large-ticket financings in AI, fintech, and quantum computing underscores Europe’s growing strength in next-generation technologies, even as investors remain selective in deploying capital.
Venture Pulse Q3 2025
Explore the latest deals and venture capital trends through the third quarter of 2025
Q3'25 highlights for Europe
- VC investment rises slightly reaching $17.5 billion across 1,625 deals
- Late-stage valuations continue to climb
- Pre-seed ekes out higher share of deal volume
- First-time venture financings strengthen further
- Exit activity increases for 3rd consecutive quarter
Investors remain bullish on Europe, but dealmaking taking longer amid uncertainty
At a macro level, VC investors are still very bullish on Europe, but given the current macroeconomic and geopolitical environment, dealmaking in the region is taking much longer than it has in recent quarters; VC investors are conducting much stronger due-diligence, while startups themselves have continued to focus on extending their runway by cutting costs and maximizing efficiencies in order to reduce their need to go to the market for capital. Startups have also increasingly reevaluated their go-to-market strategies in light given the increasing importance of having clear pathways to profitability in order to attract investors.
Cleantech continues to see VC investment in Europe
Despite a general decline in interest globally - driven partly by shifting government priorities in the US - Europe continued to see robust interest in the cleantech space. During Q3’25, a diversity of cleantech startups raised $100 million+ funding rounds, including Iceland-based land-based sustainable aquaculture company Laxey ($183 million), Germany-based home energy management company 1KOMMAS ($175 million), Sweden-based heat pump developer Aira ($174 million), Switzerland-based carbon removal focused ClimeWorks ($162 million), and UK-based accessible solar power company Sunsave ($152 million). Alternative energy continued to be a significant driver of cleantech investment given the strategic focus on the energy transition across the region.
Quantum computing attracts significant attention in the Nordics region
After an extended drought, VC investment in the Nordics showed clear signs of recovery in Q3’25, with funding reaching $1.8 billion - a seven-quarter high. The region experienced a solid pickup in deal activity, highlighted by three $100 million-plus rounds: Finland-based IQM ($320 million) in quantum computing, Sweden-based Lovable ($200 million) in AI-driven web and app development, and Sweden-based Aira ($174 million) in alternative energy. Another notable trend in the region lately has been the increase of direct investments in growth companies by Pension Insurance companies, aiming to support innovation and long-term economic development.
The quarter also featured one of Europe’s most anticipated exits: Sweden’s Klarna raised $1.3 billion in its U.S. IPO, with shares climbing 15% on day one, signaling renewed investor appetite for Nordic scale-ups. Quantum computing has emerged as a standout theme, with Espoo, Finland increasingly viewed as a hub of innovation and investment in the space. At the same time, AI deal flow remained robust, exemplified by Workday’s announced acquisition of Sweden-based Sana, an enterprise AI solutions provider.
Trends to watch for in Q4’25
Heading into Q4’25, there is cautious optimism that VC investment will start to pick up in Europe now that a trade agreement between the EU and US has been reached and some uncertainty has been taken out of the market. While there is some concern the trade agreement won’t stick, only time will tell for certain.
While the ESG narrative might see a pullback, VC investment in cleantech - particularly in the alternative energy space is expected to remain robust in Europe given the strong commitment to the climate change action and the energy transition in the region. AI - particularly AI applications for the health care sector — and defensetech are both expected to remain dominant investment themes in Europe during Q4’25, while quantum computing and deeptech are expected to attract increasing attention.
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