Venture Pulse Q4 Report 2025 in Europe

Venture capital investment in Europe reached $85.3 billion across 8,626 deals for the year, representing the third-strongest annual total by investment value over the past decade. However, this strength in capital deployed contrasted sharply with deal activity, as annual deal volume fell to the second-lowest level seen in ten years. This divergence underscores a market increasingly defined by investor selectivity, with capital concentrated on fewer, larger transactions and a heightened emphasis on scale, profitability, and resilience.

Quarterly activity in Q4 reflected these dynamics. European VC investment totaled $20.7 billion across 1,651 deals, remaining solid by historical standards but notably below the record highs reached in Q3. Deal volume declined for the third consecutive quarter, reinforcing the trend of cautious capital deployment amid ongoing macroeconomic uncertainty, geopolitical tensions, and continued scrutiny of valuation and business fundamentals. Despite these headwinds, investors continued to support high-quality companies, particularly those with clear paths to profitability and defensible market positions.

Simon Vinberg Andersen

Partner, Audit

KPMG in Denmark

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Globally, capital has returned, but it is more selective and increasingly focused on scale and substance. In Denmark, we see many strong scale-ups, yet a cautious growth capital market - prompting more companies to look internationally earlier.

Simon Vinberg Andersen

Partner, Audit

Venture Pulse Q4’25

Explore the latest deals and venture capital trends through the fourth quarter of 2025

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Q4'25 highlights for Europe

VC investment rises slightly reaching $21.1 billion across 1,652 deals
Deal sizes continue to climb across all stages
Fundraising by VCs remains sluggish
Exit value edges past 2025 levels
UK sees strongest second half in years
Top 10 deals spread among 7 countries

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Diversity is a major asset for VC market in Europe

Europe’s venture capital market continues to benefit from its geographic and sectoral diversity, with investment activity well distributed across countries and industries. On a country basis, the UK led investment in Q4’25 with $6.8 billion deployed, followed by Germany ($2.4 billion), France ($2.3 billion), and Israel ($1.5 billion), underscoring the depth of the region’s innovation ecosystem beyond any single market.

This breadth was further reflected in Q4’25 megadeal activity, as a wide range of countries accounted for the largest transactions of the quarter. Six different jurisdictions represented the six largest VC deals, including the UK (Revolut, $3 billion), Finland (Oura, $907.7 million), France (Brevo, $578 million), the Netherlands (Picnic, $498.1 million), Germany (Tubulis, $360.9 million), and Greece (Spotawheel, $348 million).

Sector diversity was equally pronounced, with $100 million-plus rounds spanning fintech, healthtech, defense tech, cleantech, and robotics. Across many of these deals, AI served as a foundational enabler, underpinning product innovation and scalability regardless of sector. Together, this geographic and thematic dispersion highlights the resilience and breadth of the European VC market, positioning it well for sustained investment activity despite ongoing macroeconomic uncertainty.

European companies focused on AI application layer see increasing interest in Q4’25

AI was a big ticket for VC investors in Europe in 2025. While LLMs and AI infrastructure attracted attention earlier in the year, Q4’25 saw VC investors increasingly focusing on application layer solutions. During the quarter, France-based AI-enabled digital marketing platform Brevo raised $578 million, Germany-based image and video generative AI firm Black Forest Labs raised $300 million and workflow automation company n8n raised $180 million, and UK-based text-to-video company Synthesia raised $200 million.

VC investors continue to see opportunities in defense tech

Global geopolitical tensions and conflicts kept defense tech high on the radar of VC investors throughout 2025, with investments in the space growing considerably year-over-year. While drones attracted a large share of capital during the year, Q4’25 saw VC investors interested in a broader array of defense tech capabilities, including dual-use capabilities, cybersecurity, and solutions focused on enhancing the defensibility of critical infrastructure. Regional governments and defense alliances are expected to spur investment in defense tech in 2026, with both the NATO Innovation Fund and European Defense Fund (EDF) actively supporting innovation. For 2025, the EU has committed $1.1 billion to the EDF.¹

VC investment in Nordics sees nine-quarter high in Q4’25, including Finland’s largest VC raise ever

During Q4’25, venture capital investment in the Nordics built on the positive momentum established in Q3’25, rising to a nine-quarter high. The quarter was highlighted by a $907 million raise by health monitoring wearables company Oura, marking the largest VC funding round ever completed in Finland. The region also recorded several additional $100 million-plus financings, including rounds for Denmark-based fintech Flatpay ($168 million), biotech company Hemab ($157 million) and Sweden-based AI firms Lovable ($330 million) and Legora ($150 million). Across the region, VC investors concentrated capital on emerging category leaders spanning healthtech, fintech, and legaltech, with AI serving as a common enabling theme across many of the companies attracting funding. This pattern reflects continued investor conviction in scalable, technology-driven platforms with defensible market positions and clear long-term growth potential.

Beyond these core sectors, defense tech, spacetech, and companies focused on dual-use technologies also attracted meaningful interest in the Nordics. In particular, firms applying AI to defense-related use cases gained traction, including NestAI, which raised $115 million in Q4’25 to support the development of AI-powered defense tech solutions and new space company Iceye ($232 million). Looking ahead, investor sentiment across the Nordics remains constructive. The strong finish to 2025 has reinforced expectations that VC investment momentum will carry into 2026, while improving market conditions and growing confidence in exit pathways are expected to support increased M&A activity as investors seek liquidity opportunities.

Trends to watch for in Q1’26

Heading into Q1’26, investors in Europe are expected to remain focused on high-quality investments — putting more money into startups with proven fundamentals, clear unit economics, and realistic paths to scale. AI and defense tech are expected to be very hot sectors for investment in 2026, while fintech, healthtech, and cleantech will likely continue to attract interest. Quantum computing is also expected to see an increasing level of VC investment over the next year.

The exit environment in Europe will be a key area to watch headed into 2026. Should the exit environment show noticeable improvement in Q1’26 and Q2’26, deal volume will likely also start to improve-although any improvement is expected to occur gradually over subsequent quarters.