Europe

The strong geographic diversity of VC investments in Europe was on display in Q2’25, with companies from five different jurisdictions attracting the largest deals in the region during the quarter, including Germany-based Helsing ($683 million), Portugal-based Tekever ($500 million), Netherlands based ATS Holding ($444 million), Israel-based Cato Networks ($359 million) and UK-based Believ ($339 million). Several other jurisdictions in the Europe and Middle East also saw $100 million+ funding rounds, including Spain, Ireland, Iceland, the UAE, Switzerland, and Latvia.

The AI space continued to be a very attractive sector for VC investment in Europe during Q2’25. While startups focused on developing AI models and AI infrastructure attracted sizeable funding rounds — including Israel-based AI21 Labs, which raised $300 million — the hottest segment of  AI investment in Europe was the intersection of AI and defencetech.

The robust deal sizes reflect the keen interest of VC investors in the application of AI to defence technologies, particularly given shifting norms around investing in defence companies, growing concerns related to geopolitical tensions and conflicts, and the rapid maturation of AI-powered startups in the space. 

In recent quarters, Europe has seen both regional and jurisdictional governments make substantial moves to support critical technology development capabilities in order to enhance technology sovereignty in the region and decouple ecosystems from the US and China. Following on its Q1’25 announcement of a $206 billion InvestAI program, the European Commission launched a new EU Startup and Scaleup Strategy in Q2’25 to encourage companies to start and scale in the region in order to boost technology independence and sovereignty.¹ To support this strategy the Commission announced a new public-private partnership investment fund valued at a minimum of €10 billion to support the growth and expansion of EU-based technology companies in areas like AI, cybersecurity, and cleantech in order to narrow the innovation gap between the EU and the US and China.²

VC investment in the Nordics region fell to $899 million in Q2’25 — a low not seen since Q3’19 — driven primarily by regional and global challenge and uncertainties, including evolving US tariff policies, the tensions in Middle East, and a stagnating exit market. Large deals were generally absent in the region during Q2’25, with some later stage companies avoiding the need for raises by adjusting their operating models or finding non-dilutive funding options — including venture debt. At a sector level, VC investors in the region continued to show robust interest in defence tech and dual-use solutions. AI and deep tech also continued to see traction; during the quarter, Legora — which provides a collaborative AI platform for Lawyers — raised $80 million.³