The European venture capital landscape in 2025 demonstrated a blend of growth and contraction, according to PitchBook‘s latest report. Overall deal value climbed modestly to €66.2 billion, marking a 5.1% increase from the previous year, even as the number of deals plummeted by over 20% to 10,206. This disparity highlights a shift toward fewer but larger investments, particularly in later-stage funding rounds, where Series D and beyond surged by 45.2%.
Artificial intelligence emerged as the dominant force, capturing 35.5% of total deal value at €23.5 billion—a 32.6% year-over-year jump.
Without AI, the market would have shrunk by 5.7% to €42.7 billion, underscoring the sector’s heavy reliance on tech innovation.
Sector trends revealed fintech‘s strong rebound, with investments reaching €13.4 billion, up 29.3% and propelled by massive rounds like Revolut’s €2.6 billion funding, which included a significant secondary component.
Life sciences and clean tech, however, faced declines, dropping to €8.4 billion and lower rankings, respectively.
AI and machine learning topped verticals, followed by software-as-a-service and mobile technologies.
Regionally, the UK and Ireland held steady at €22.7 billion, while Southern Europe achieved a record 10% market share at €6.6 billion, fueled by deals in Greece and elsewhere.
Israel saw the sharpest growth to €5.8 billion, half of which was AI-related, as peripheral areas gained ground over traditional hubs like France and Germany.
Venture debt provided a stable counterpoint, totaling €19.2 billion despite a 35.8% drop in deal volume to 506.
Larger loans in growth stages, such as United Petfood’s €1.4 billion facility, reflected maturing companies seeking non-dilutive capital amid economic pressures.
Exit activity remained robust, with values holding at €67.8 billion, comparable to 2024 levels, thanks to blockbuster deals like Klarna and eToro’s combined €16.2 billion.
Acquisitions and buyouts dominated, comprising over 74% of exits, while IPOs hit a low of just 19 venture-backed listings.
Europe’s public markets favored profitable companies, with 89.6% of IPOs in the black, a trend expected to continue.
Secondary markets gained traction as an alternative liquidity source, with estimates projecting a €47.5 billion European direct secondaries market.
Fundraising hit historic lows, closing at €12 billion across 148 funds, as investors grappled with subdued returns—0% in the first quarter—and limited distributions.
Emerging managers claimed a larger slice at 44.7% of capital, but mega-funds were absent, with the largest at €650 million.
The report anticipates AI commanding up to 50% of deal value, though concerns linger over valuation sustainability and a potential bubble.
An expanded IPO window in the first half could boost listings, supported by anticipated rate cuts from the ECB and Bank of England.
However, geopolitical tensions and possible rate hikes pose risks, testing the market’s depth beyond AI. The PitchBook report concluded that peripheral regions may continue to rise, and secondaries could evolve into a key liquidity tool, fostering cautious optimism for European VC‘s recovery.