According to PitchBook data, European venture grew in 2025, and 2026 will see modest dealmaking growth. Digging into the 2025 venture report and 2026 predictions, key takeaways for the market include:
European venture grows in value in 2025 as AI concentration deepens
European venture markets delivered a mixed performance in 2025, with deal value showing resilience despite continued pressure on volumes and liquidity. Total VC deal value reached EUR 66.2 billion, up year on year, even as deal counts declined sharply. Activity remained concentrated on fewer, larger transactions, particularly at later stages, while early-stage investment stayed restrained.
Value-over-volume remains the defining feature
Deal value growth was driven by late-stage rounds as cheque sizes increased, while seed and early-stage investment continued to decrease. Several large financings underpinned activity throughout the year, with the total deal value reaching 5.1 % above 2024, whilst rounds decreased 20.6 %, reinforcing the market’s reliance on a narrow set of high-conviction transactions as investor selectivity intensified.
AI underpins market resilience
Artificial intelligence remained the dominant force in European venture, accounting for 35.5 % of deal value. Continued investment in the sector supported headline figures despite tighter financing conditions elsewhere. Excluding AI, underlying VC investment decreased 5.7 % year-over-year, highlighting the ecosystem’s growing dependence on the sector.
Performance outside AI was uneven. Fintech recovered through the year with 29.3 % more capital invested year-over-year, while life sciences and climate-focused sectors lost momentum, leaving the market increasingly sensitive to shifts in AI valuations.
Regional dispersion increases
Regional dynamics shifted further in 2025. Southern Europe reached a record share of deal value, supported by a small number of large transactions, while Israel recorded strong growth driven largely by AI. Core hubs delivered mixed results, with the UK and Ireland broadly flat and France & Benelux and DACH lagging relative to peripheral regions.
Liquidity improves at the top end only
Exit value remained broadly stable year-on-year at EUR 67.8 billion against EUR 65.5 billion in 2024, supported by a handful of large IPOs and M&A transactions. Beneath the headline figures, exit volumes stayed low and VC-backed IPO counts remained near historic lows, signaling continued liquidity constraints. Venture debt and secondaries continued to gain relevance as alternative exit routes.
Fundraising remains under pressure
Fundraising was the weakest part of the ecosystem in 2025, with capital raised falling to record low EUR 12 billion against EUR 23.5% in 2024, and median fund size having decreased 16.3 % from 2024. While emerging managers gained share, overall activity remained subdued as LP allocations stayed constrained.
2026 Outlook: Cautious, selective expansion
- AI remains central, but investors expect a correction and is increasing scrutiny, with greater focus on defensible IP, revenue quality, and valuation discipline.
- Sector diversification may accelerate, particularly in defence tech and applied deep tech, supported by geopolitical and industrial tailwinds.
- Exits likely to improve modestly, led primarily by M&A rather than a broad IPO recovery.
- Fundraising conditions remain challenging, with a recovery dependent on improved distributions and sustained liquidity.
Overall, European venture enters 2026 cautiously positioned – resilient at the top end, but increasingly shaped by selectivity, capital discipline, and a narrow set of structural growth drivers.
