The European startup market’s data doesn’t match its energy — yet

The recent Slush conference in Helsinki showcased the palpable excitement surrounding the European startup scene. However, the latest data reveals a more subdued reality for the region's venture capital landscape. Despite the buzz, it appears that Europe has yet to fully rebound from the global venture capital reset that took place in 2022 and 2023. According to PitchBook, investors contributed €43.7 billion ($52.3 billion) to European startups in 2025 across 7,743 deals by the third quarter. This puts the yearly total on track to match, but not surpass, the €62.1 billion invested in 2024 and €62.3 billion in 2023. In stark contrast, U.S. venture deal volume for 2025 had already eclipsed the totals for the previous three years by the end of Q3. The most pressing issue for Europe, however, is not the volume of deals but rather the fundraising efforts of VC firms. As of Q3 2025, European VC firms raised only €8.3 billion ($9.7 billion), marking a potential low for annual fundraising in a decade. Navina Rajan, a senior analyst at PitchBook, noted, "Fundraising, LP to GP, is definitely the weakest area within Europe," indicating a staggering predicted decline of 50% to 60% in the first three quarters of the year. Despite this, Rajan highlighted several encouraging signs that suggest a potential turnaround for the European market. Notably, U.S. investor participation in European startup deals is on the rise after hitting a low in 2023, when only 19% of European venture deals included U.S.-based VCs. Rajan remarked, "They seem pretty optimistic on the European market," particularly due to favorable valuations in the AI sector compared to the U.S., offering a more accessible entry point for new investors. One shining example of this trend is Lovable, a Swedish startup specializing in vibe-coding, which recently secured a $330 million Series B funding round led by prominent U.S. investors including Salesforce Ventures and Menlo Ventures. Similarly, French AI research lab Mistral successfully raised €1.7 billion in a Series C round in September, attracting major firms such as Andreessen Horowitz and Nvidia. Additionally, the recent public offering of Swedish fintech leader Klarna—after raising $6.2 billion over 20 years—suggests a revitalizing environment for exits, potentially boosting confidence among European limited partners. Victor Englesson, a partner at EQT, noted that successful European companies are inspiring a new generation of ambitious founders who aim for global impact rather than focusing solely on regional success. "Founders are now starting companies with a mindset that I want to win globally," he stated. Englesson expressed strong faith in the European market, revealing EQT's plans to invest $250 billion in Europe over the next five years, building upon the $120 billion invested in the past five years.