TL;DR
Despite high-profile events and optimism at conferences, European venture metrics have not yet rebounded from the 2022–23 reset. Investment activity through Q3 2025 is steady but not growing beyond 2023–24 levels, while fundraising for VC firms remains weak even as U.S. investors and notable exits offer reasons for cautious optimism.
What happened
The buzz at Slush in Helsinki contrasted with the hard data on Europe's venture market. According to PitchBook, investors committed €43.7 billion to European startups across 7,743 deals through the third quarter of 2025, putting the year on track to roughly match — rather than exceed — the roughly €62 billion invested in each of the prior two years. U.S. deal volume in 2025 had already overtaken the totals from 2022–24 by Q3. The larger issue in Europe is fundraising: European VC firms raised only €8.3 billion through Q3 2025, signaling what PitchBook analysts describe as a marked decline in LP-to-GP allocations and the likelihood of the weakest annual fundraising total in a decade. Still, several developments suggest momentum could return: U.S. participation in European rounds has been increasing since a 2023 low, homegrown AI players and large funding rounds (for example Lovable and Mistral) have drawn cross-border backing, and Klarna’s public offering in September may recycle capital back into the ecosystem.
Why it matters
- A sustained drop in VC firm fundraising reduces available follow-on capital and can constrain startup growth and exits.
- Renewed interest from U.S. investors can provide fresh liquidity and validate European tech at comparatively lower valuations.
- Large exits like Klarna’s IPO may restore LP confidence and return capital to regional investors, potentially easing the fundraising drought.
- Strong rounds for AI-focused firms indicate sectors where Europe could attract disproportionate attention and capital.
Key facts
- €43.7 billion invested into European startups through Q3 2025 across 7,743 deals (PitchBook).
- 2025 investment pace is set to match, not exceed, roughly €62.1 billion in 2024 and €62.3 billion in 2023.
- European VC firms raised €8.3 billion through Q3 2025, on track for the lowest yearly total in a decade.
- U.S. participation in European venture deals fell as low as 19% in 2023 but has been climbing since.
- Lovable announced a $330 million Series B led and joined by several U.S.-based VCs including Salesforce Ventures, CapitalG, and Menlo Ventures.
- French AI lab Mistral raised a €1.7 billion Series C in September with participation from Andreessen Horowitz, Nvidia, and Lightspeed.
- Swedish fintech Klarna went public in September after raising $6.2 billion in private markets over two decades.
- EQT partner Victor Englesson said founders are increasingly building with global ambitions; EQT reported having invested $120 billion in Europe over the past five years and intends to invest $250 billion over the next five.
What to watch next
- Year-end 2025 totals for European VC fundraising — whether Q4 activity reverses the year-to-date decline.
- Ongoing participation of U.S. investors in European rounds and which sectors (for example AI or fintech) attract the most cross-border capital.
- Frequency and size of exits (IPOs, M&A, secondary sales) that could recycle capital back to regional LPs and shift sentiment.
Quick glossary
- Venture capital (VC): Equity financing provided to early- and growth-stage private companies in exchange for ownership stakes.
- LP (limited partner): An investor in a venture fund (such as a pension fund, endowment, or wealthy individual) that provides capital to be managed by a GP.
- GP (general partner): The manager of a venture fund responsible for making investment decisions and managing portfolio companies.
- Series round: A named round of financing (Series A, B, C, etc.) representing successive stages of company growth and valuation.
- Exit: A liquidity event for investors, typically via an acquisition, IPO, or secondary share sale.
Reader FAQ
Has Europe’s startup market recovered from the 2022–23 venture reset?
Not confirmed in the source that it has recovered; PitchBook data indicate the market has not yet returned to robust growth.
How much was invested in European startups in 2025 through Q3?
€43.7 billion across 7,743 deals, per PitchBook.
Is VC firm fundraising healthy in Europe right now?
No — European VC firms raised €8.3 billion through Q3 2025, a pace that would produce the weakest annual total in about a decade.
Are U.S. investors active in European deals?
Yes — U.S. participation dipped to around 19% of deals in 2023 but has been rising since, according to PitchBook commentary.
The excitement for the European startup market was hard to ignore at the annual Slush conference in Helsinki last month. But the actual data on the state of the region’s…
Sources
- The European startup market’s data doesn’t match its energy — yet
- Europe's 2025 Startup Surge: Unicorns Grow Amid …
- Startup Investment Trends
- Europe's startup scene on the rise: more capital …
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