In 2025, investors flocked to the tune of €43.7 billion ($52.3 billion) to European startups. That incredible funding was over 7,743 total deals by Q3, as per new data from PitchBook. The European Union’s startup ecosystem just invested a lot in itself. It hasn’t completely returned to form since the global venture capital reset that decimated much of the market in 2022 and 2023. New indicators point to the promising possibility that a major reversal is finally on its way.
Klarna, one of the most visible actors in this hot sector of the fintech economy, just flamed out. This step has galvanized hype among speculators and market watchers. Klarna’s exit, apparently a runaway success, has filled the European pipeline with fresh capital. This action likely helped build morale during a rapidly changing exit landscape. This change is important. In the first half of 2023, U.S. investors led just 19% of European venture deals, down sharply from previous years. That said, the share of European startup deals with U.S. investors is starting to climb again.
Navina Rajan, a senior analyst at PitchBook, commented on the current trend of fundraising in Europe. “Fundraising, LP to GP, is definitely the weakest area within Europe,” she stated. Despite these challenges, there are positive signs with respect to the overall investment landscape stabilizing. European startup investment is on track to match last year’s numbers. However, the budgetary investments for 2024 are due to equal the €62.3 billion of 2023 and €62.3 billion of the year before.
Victor Englesson, a senior partner at EQT, underscored the firm’s focus on European investments during the firm’s knitting. “For EQT, we’ve invested $120 billion in Europe over the last five years,” he noted. Englesson further emphasized their ambitious plans, stating, “We’re going to invest $250 billion over the next five years in Europe. So we are extremely committed to Europe.” His comments reveal a developing confidence among investors for the European startup opportunity.
The opportunity is enormous, and individual companies in the region are doing greatly impressive things. Their work is tremendously influencing the direction of entrepreneurship in Europe. Spending French AI research lab Mistral has had an outsized influence on the U.S. firm’s AI research and development. In September, it raised an astonishing €1.7 billion in a Series C funding round, with participation from heavyweights such as Andreessen Horowitz, Nvidia and Lightspeed.
Lovable, a Swedish vibe-coding startup that powers emoji features in dating apps, just completed a $330 million Series B. A number of U.S.-based venture capitalists led this historic investment. Charismatic entrepreneurs from all over Europe are inspired by the many successful exits. Their inspiration comes from bigger players, from companies like Spotify and Revolut. Englesson observed this trend, stating, “Ambitious founders have seen what great looks like in companies like Spotify, Klarna, Revolut and are now starting companies with that type of ambition.”
As per PitchBook’s recent outlook, U.S. venture deal volume for 2025 has already surpassed the all-in totals for 2022, 2023, and 2024. That milestone was reached by the end of Q3. This resurgence is a sign that U.S. investors are returning in earnest after a hibernation period, exhibiting new interest in the European market. It may strengthen collaboration between American and European venture ecosystems.
Despite the challenges facing fundraising and investor participation, Rajan noted optimism among market players: “They seem pretty optimistic on the European market.” That’s the right kind of sentiment to have. At least, it should accelerate further investments and foster a stronger startup ecosystem in the years ahead.