Europe

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.

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.

UK VC investment picked up in Q3’25 after a weak second quarter, totaling $6.2 billion. While deal volume remained low, the quarter marked a relative rebound as investors cautiously re-engaged despite persistent headwinds ranging from geopolitical conflicts and trade concerns to slower-than-expected economic growth.

The longer-term outlook for UK VC remained constructive, underpinned by the market’s attractiveness to U.S.-based investors. Many see UK startups as a cost-efficient entry point into globally scalable companies, making the UK a strategic hub for cross-border capital flows.

Fintech continued to be the strongest magnet for investment, with several high-profile raises: Rapyd Financial ($500 million), offering payments, mobile wallets, money transfers, card issuing, and fraud protection; PS Miner ($350 million), Xelix an AI-driven cloud mining company; and an AI-powered accounts payable software developer ($160 million). Beyond fintech, energy, defensetech, and health/biotech also drew investor attention, though at more modest levels.

Germany’s VC market slowed sharply in Q3’25, attracting only $1.3 billion in investment — an eight-quarter low. The period reflected an ongoing consolidation of the venture ecosystem, as investors concentrated on mid- to late-stage deals and companies with proven management teams, clear market traction, and strong alignment with current economic priorities.

This shift away from early-stage financings has created headwinds for startups that raised seed or pre-seed rounds two to three years ago, many of which are now struggling to secure follow-on capital to support growth.

The quarter’s largest deal in Germany was a $175 million raise by insurtech firm Wefox, underscoring continued investor appetite for established players with differentiated offerings, even as overall activity softened.

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 provider¹.

After two relatively robust quarters, VC investment in Ireland took a bit of a breather in Q3’25 as investors took a pause in the face of slower than expected growth, continued geopolitical tensions, and concerns about tariffs. There was some hope that in the wake of an EU-US trade agreement that investment in Ireland will pick up again before the end of the year. Despite the Q3’25 slowdown in investment, Ireland has continued to see strong interest in fintech — most recently in areas related to the customer experience — and in AI.