Market Overview
The global venture capital market has entered a new phase of division, defined sharply by the dominance of AI investments while most other sectors lag behind. Europe reflects this global trend but with regional nuance: deal activity is holding up, AI and fintech are outperforming, and exits and fundraising remain sensitive to volatility.
Looking into the newest number from Pitchbook’s data on VC and PE deals, key takeaways include:
AI drives global VC, including in Europe
Globally, AI captured 57.9% of all VC capital in Q1, driven by OpenAI’s record-setting USD 40B round—the largest private tech raise ever. Of eight USD 1B+ VC deals worldwide, seven were AI-related, showing extreme capital concentration in the space.
In Europe, AI and machine learning surpassed SaaS for the first time in deal value rankings, totaling EUR 4.6B and representing 27.5% of all European VC deal value in Q1.
European VC deal value outpaces 2024
Despite macroeconomic caution, Q1 2025 European VC deal value reached EUR 16.7B, on pace for a 10.8% YoY increase. Venture growth rounds were particularly strong, with companies like Reneo (EUR 600M), Isomorphic Labs (EUR 556M), and Rapyd (EUR 474M) among the top raises.
Fintech led all sectors at EUR 4.8B in deal value, with AI & ML and life sciences following closely. Pre-seed/seed stage deal activity declined by 18% YoY.
Regional disparities in Europe
France & Benelux underperformed with a 26.3% YoY decline in Q1 deal value, while the UK & Ireland are trending 12.4% higher. The DACH region is marginally down by 5.2% YoY.
Exit Market Faces Headwinds
Globally, liquidity remains scarce, with just one IPO—CoreWeave—accounting for 26% of all Q1 exit value.
In Europe, exits totaled EUR 11.8B in Q1, meaning a 23.4% YoY drop. Acquisitions comprised 62% of exit value. Notable exits included Metaphysic (EUR 1.4B) and Navig8 (EUR 961M). While IPO conditions remain technically viable, Klarna and Ebury, have both delayed listings due to market volatility.
Fundraising for funds starts soft, but hope remains
European VC fundraising reached only EUR 2.3B in Q1 across 24 funds, suggesting a slower year ahead. Still, sector-specific momentum in biotech (e.g., Sofinnova Partners’ EUR 1.2B raise) and cleantech shows promise. The median fund size has increased, and emerging managers made up 70% of fund closes.
Female founders and decision-makers
Female-founded companies raised EUR 10.5B in 2024, but deal counts are falling. Female representation among decision-makers remains low (12.3–15.7%) and exits involving female CEOs show shorter post-deal tenure compared to men. Less than 10% of VC-backed startups have a solely female CEO.
The spring outlook
While Europe remains more resilient than the U.S. in terms of deal activity and public equity market stability, 2025 will test the market’s endurance amid heightened geopolitical volatility and uncertain monetary policy. AI, fintech, and life sciences are clear bright spots. However, liquidity and fundraising will remain challenging unless the IPO window meaningfully opens.
Investors should prepare for continued polarization in performance across sectors and regions, while monitoring developments in EU regulation (e.g., AI Act) and global trade policy.
