European VC Funding Recovery in 2025 Driven by AI Investments Amid Mixed Growth Across Markets
Venture capital funding in Europe is expected to rise to €66 billion in 2025, driven largely by a surge in AI investments, which accounted for 39.1% of the total capital raised. While the UK and Ireland are set to experience significant growth, France and Belgium are projected to face declines in their VC markets. Overall, despite mixed trends across different countries, smaller Nordic nations and Southern Europe, particularly Greece, are showing promising increases in funding activity.
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Venture capital funding in Europe is projected to reach €66 billion ($78 billion) in 2025, marking a 6.5% increase from 2024 despite a decline in the number of funding rounds for the fourth consecutive year. AI startups captured a record 39.1% of capital raised, with Mistral AI's €1.3 billion deal being the largest.
The UK, Europe's most active market, shows similar growth trends, reporting its highest VC deal value since 2022. Ireland is also set for a 55% increase in deal value to €1.57 billion. However, France is expected to see an 11.7% decline, falling behind Germany as the second-largest VC hub, while Belgium anticipates a 26.3% drop.
Germany's market faces stagnation despite strong defense tech investments. Smaller Nordic countries and Southern Europe are experiencing notable increases, with Greece leading in growth. Israel has seen a sharp rebound in funding, particularly in cybersecurity and AI.
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