Q2’24 Venture Pulse Report - Europe

AI remained a very hot area of investment in Europe during Q2’24; in addition to UK-based Wayve and France-based Mistral AI, Germany-based AI language translation company DeepL raised $300 million and France based AI automation company H Company raised $220 million. VC investment in AI remained quite broad in Europe, with investments going to both companies focused on developing core AI technologies and those focused on leveraging AI to help companies improve different aspects of their business models, such as the customer experience or product development.

Alternative energy and cleantech also attracted sizeable funding rounds in Europe during Q2’24, including a $381.9 million raise by UK-based energy storage company Highview Power, a $168 million raise by Estonia-based hydrogen-focused company Elcogen, and a $152 million raise by Netherlands-based hydrogen-focused startup Tree Energy Solutions. Given the EU’s Carbon Sustainability Reporting Directive (CSRD) — which requires larger companies to report on their sustainability metrics — and other evolving sustainability regulations and climate change commitments in the region, regtechs focused on the sustainability space have also been of interest to investors. 

Across Europe, there was growing optimism that the IPO window could reopen slightly in Q3’24 should economic conditions remain stable, with a growing number of companies beginning to consider and prepare for the possibility of a future IPO. During Q2’24, the London Stock Exchange saw some positive activity, with budget computer company Raspberry Pi raising $211 million in its June IPO; the company’s stocks continued to perform well in post-IPO trading.²

The LSE, in particular, has also undertaken efforts to support startups earlier in their lifecycle; it recently partnered with Floww to create connections between investors and Early-stage businesses.³ It is also undertaking a consultation process on the implementation of a Private Intermittent Securities and Capital Exchange System (PISCES) that would allow for the intermittent trading of shares in private companies.⁴

VC investment in the Nordic region remained very subdued in Q2’24, falling to $1.3 billion — the lowest level since Q2’20. Despite this decline, early-stage funding continued to be very healthy in the region. Energy, cleantech and deeptech solutions continued to be key area of interest for VC investors. While a number of growth companies in the Nordic region have struggled in recent quarter given the extended economic challenges, there are many others that are well positioned  to attract money moving forward. If the economy continues to stabilize, the region could see some companies looking to hold IPO exits towards the tail end of 2024 and into 2025.

While positivity is growing in Europe, a number of uncertainties are expected to keep VC investors cautious heading into Q3’24, including the UK general election held at the beginning of July and the US presidential election slated for November. AI will likely remain a very hot area of investment in the region, in addition to energy and cleantech. Despite these uncertainties, there is some optimism that the IPO market in Europe could see some fresh activity heading into Q3’24.

As of January 17, 2025, financial institutions in the EU will be required to comply with the Digital Operational Resilience Act (DORA). Given the complexities associated with compliance, there will likely be growing interest in regtechs focused on helping companies comply.