Last year, venture capital funding for Europe-based startups increased only slightly, by about 9% year-over-year, to $58 billion, with AI becoming the top sector of investment in startups in the region for the first time, according to an analysis of Crunchbase data.
Although venture capital investment in Europe has not increased significantly year-over-year, the region has seen a shift towards deep tech funding in 2025. Investment in startups has also remained well above pre-COVID-19 levels over the past three years.
However, Europe has not experienced the same growth in AI as North America. Venture capital investment in North America-based companies soared last year 46% year over yearwith mega-rounds on AI-related companies leading the way.
Table of contents
Quarterly increase
European venture capital funding gained momentum in the fourth quarter, reaching $16.6 billion – up 20% quarter-over-quarter and 27% year-over-year – according to data from Crunchbase.
The largest fundraising rounds in the fourth quarter were made by the London-based energy software provider. Krakensmart ring based in Finland Ouracustomer engagement platform based in Paris BrevoDutch online grocer Picnicand London cloud GPU provider Nescale.
Directed AI for the first time
Last year, artificial intelligence became the leading sector of venture capital investment in Europe for the first time, with around $17.5 billion in AI funding in 2025, up from just over $10 billion in 2024.
Border laboratory based in Paris Mistral AI raised the largest fundraising round of the year, nearly $2 billion, led by the Dutch chip machine maker ASML. Other major European fundraising rounds last year in the AI space were by Nscale and Brevo, as well as a Munich-based defense manufacturer. HelsingLondon-based AI drug discovery Isomorphic laboratoriesand the Image Frontier Lab based in Freiburg, Germany Black Forest Laboratories.
In 2025, the second largest sector in terms of startup investment was healthcare and biotechnology, with companies in this sector raising approximately $13.4 billion.
The third largest sector was computer hardware, with approximately $10.8 billion invested. This total demonstrates Europe’s renewed interest in deep technologies, including investing in data centers, wearables, defense, quantum, aerospace, robotics and energy.
Financial services, once the leading venture capital sector in Europe, was only the fourth largest funding sector in 2025, with around $7.4 billion invested.
The UK is in the lead but other countries are gaining
The United Kingdom, the largest country in Europe, raised around $17 billion. This represents around 29% of total European venture capital funding in 2025, compared to a third of all funding in 2024.
Startups based in France raised $8.5 billion and companies based in Germany came in third with $8.4 billion. Startups from each country accounted for around 15% of the continent’s funding last year.
Switzerland was the fourth European country for venture capital investment in 2025, with $3.6 billion invested in its startups last year. The Netherlands comes in fifth with $3.4 billion, followed by Spain ($2.9 billion) and Finland ($2.2 billion).
With the exception of the United Kingdom, each of these countries raised more venture capital funds in 2025 than in 2024.
Advanced stage increased in fourth quarter
Late-stage financing in the fourth quarter reached the highest amount in two years. In total, $9.2 billion was invested in 87 deals, an increase of 65% in terms of amounts year-over-year.
Seed funding reached $5.3 billion in the fourth quarter across more than 250 funding rounds, down 4% year-over-year.
Seed funding reached $2 billion in the fourth quarter across more than 750 deals, matching the year-over-year total.
Leading Investors
Investors who led or co-led the largest funding rounds in the region’s startups last year were dominated by Europe-based venture capital and private equity firms. Companies that led or co-led outside Europe included a mix of venture capital or private equity firms from the United States or Asia.
Above pre-COVID funding
Funding in Europe did not increase significantly year-over-year in 2025, but was well above pre-COVID-19 funding levels and increased in deep tech and AI. With a renewed interest in science, funding has also shifted to European cities with leading research institutes.
Methodology
The data in this report comes directly from Crunchbase and is based on reported data. Data is from January 4, 2026.
It is worth noting that data lags are more pronounced in the early stages of VC activity, with seed funding amounts increasing significantly after the end of a quarter/year.
Please note that all financing values are quoted in US dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date financing rounds, acquisitions, IPOs and other financial events are reported. Even though these events were added to Crunchbase long after the event was announced, currency transactions are converted at the historical spot price.
Glossary of financing terms
Seeds and Angels consist of rounds of seeds, pre-seeds and angels. Crunchbase also includes seed rounds, equity crowdfunding, and convertible notes in amounts of $3 million (USD or converted USD equivalent) or less.
The early stage includes Series A and B rounds, as well as other types of rounds. Crunchbase includes seed rounds, venture projects and other rounds over $3 million, as well as those under $15 million.
Advanced phases include Series C, D, E and subsequent venture capital series of letters following the naming convention “Series (Letter)”. Also included are unknown series rounds, corporate projects and other rounds above $15 million. Corporate financing rounds are only included if a company has raised early-stage equity financing through a serial venture financing round.
Tech Growth is a private equity round raised by a company that has already raised a venture round. (So basically any round of the previously defined steps.)
Illustration: Dom Guzman
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