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

The excitement for the EEuropean startup market was hard to ignore at the annual Slush conference in Helsinki last month. But the actual data on the state of the region’s risk market shows a different reality.

The result: The European market has not yet recovered from the global venture capital reset that took place in 2022 and 2023. But there are indications that it is on the cusp of a reversal, including the recent exit of Klarna and the region’s domestic AI startups attracting the attention of local investors and beyond.

Investors poured €43.7 billion ($52.3 billion) into European startups through 7,743 deals in 2025, according to PitchBook data. That means the annual total is on track to match – and not exceed – the €62.1 billion invested in 2024 and €62.3 billion in 2023.

By comparison, the volume of U.S. venture deals in 2025 had already exceeded that of 2022, 2023 and 2024 by the end of the third quarter, according to PitchBook data.

However, deal recovery isn’t Europe’s biggest problem: it’s venture capital firms’ fundraising. In the third quarter of 2025, European venture capital firms raised just €8.3 billion ($9.7 billion), putting Europe on track for the lowest annual fundraising total in a decade.

“Fundraising, from LP to GP, is definitely the weakest area in Europe,” Navina Rajan, a senior analyst at PitchBook, told TechCrunch. « We are on track for a decline of about 50% to 60% in the first nine months of this year. Much of that is now being offset by emerging managers versus experienced companies, and the mega funds that closed last year have not repeated themselves this year. »

While Rajan doesn’t share the same fever as those present at Slush, she pointed out a few positive data points that indicate the European market is turning around.

First, the participation of American investors in European startup deals is increasing again. Rajan said this figure fell to a low in 2023, when US-based VCs participated in just 19% of European venture deals. It has steadily increased since then, she says.

“They seem quite bullish on the European market,” Rajan said. “Just from an entry point perspective, because you think about the valuations, especially within AI technology and in the US, it’s just impossible to get in now, whereas, if you’re in Europe and your multiples are lower, and you’re new as an investor, it just provides a better entry point for maybe similar technology.”

Swedish vibe-coding startup Lovable is an example of this shift. Vibe coding companies have raised a lot of venture capital money in the United States. But American investors also clearly like Lovable. The company just announced a new one $330 million Series B round which was led and participated by a range of US venture capital firms, including Salesforce Ventures, CapitalG and Menlo Ventures, among others.

French AI research lab Mistral has seen similar love from American companies. Mistral has secured a €1.7 billion Series C round in September these were Andreessen Horowitz, Nvidia and Lightspeed.

Klarna’s recent departure also suggests a turnaround is underway.

Swedish fintech giant Klarna went public in September, after raising $6.2 billion in the private market in two decades. That exit likely returned some capital to European LPs or gave them confidence in a changing exit environment.

For Victor Englesson, a partner at Swedish EQT, recent European success stories such as Klarna are starting to change the way founders in Europe approach building their businesses.

“Ambitious founders have seen what great looks like at companies like Spotify, Klarna and Revolut and are now starting companies with that kind of ambition,” Englesson told TechCrunch. They don’t start companies like, I want to win in Europe, or I want to win in Germany. They start companies with a mentality that I want to win worldwide. I don’t think we’ve seen that to the same extent before.”

That mentality has made EQT and others positive about Europe.

“For EQT we have invested $120 billion in Europe [over the] The last five years,” Englesson said. ‘We are going to invest $250 billion [over the] next five years in Europe. So we are extremely involved in Europe.”