The buzz around the European startup scene was palpable at last month’s Slush conference in Helsinki. However, the actual data tells a more complex story about the region’s venture market.
In short, the European market is still grappling with the global venture capital reset that kicked off in 2022 and continued into 2023. Yet, there’s reason for optimism as indicators suggest a potential rebound, highlighted by Klarna’s recent public offering and increased attention toward the region’s homegrown AI startups.
According to PitchBook, investors poured €43.7 billion ($52.3 billion) into European startups in 2025 across 7,743 deals by the end of the third quarter. This puts the yearly total on track to align closely with the €62.1 billion invested in 2024 and €62.3 billion in 2023.
In contrast, U.S. venture deal volume in 2025 had already exceeded the totals from 2022, 2023, and 2024 by the end of Q3.
But the recovery in deal volume isn’t Europe’s main challenge. It’s fundraising for VC firms that’s in a tough spot. Through Q3 2025, European VC firms raised only €8.3 billion ($9.7 billion), signaling a potential yearly low in fundraising not seen in the past decade.
“Fundraising from LPs to GPs is definitely the weak spot for Europe,” Navina Rajan, a senior analyst at PitchBook, shared with TechCrunch. “We’re on track to see a 50% to 60% decline in the first nine months of this year. Much of the activity is coming from new managers rather than established firms, and mega funds that closed last year haven’t replicated that success this year.”
While Rajan doesn’t share the enthusiasm visible among Slush attendees, she did highlight some encouraging data that suggests a shift in the European market.
U.S. investor participation in European startup deals is on the rise again. After dipping to just 19% of deals in 2023, that number has been steadily increasing.
“They seem pretty optimistic about the European market,” Rajan noted. “For new investors, the lower valuations in Europe, especially within AI tech, make it a more attractive entry point compared to the U.S.”
One example of this trend is Lovable, a Swedish vibe-coding startup that has caught the attention of U.S. investors. The company recently announced a $330 million Series B round, which attracted participation from prominent U.S.-based VCs like Salesforce Ventures, CapitalG, and Menlo Ventures.
Similarly, French AI research lab Mistral secured huge backing from U.S. firms, landing a €1.7 billion Series C round in September that included investment from heavyweights like Andreessen Horowitz, Nvidia, and Lightspeed.
Klarna’s recent public listing also signals a potential turnaround. The Swedish fintech giant went public in September after raising $6.2 billion over two decades in the private market, a move that could help boost confidence among European limited partners about future exits.
Victor Englesson, a partner at Swedish EQT, believes that Europe’s recent success stories, like Klarna, are reshaping how founders conceptualize their companies.
“Ambitious founders are now aspiring to build companies like Spotify, Klarna, or Revolut with a global mindset, rather than focusing solely on Europe or Germany,” Englesson told TechCrunch.
This evolving mentality has EQT and other investors optimistic about Europe’s prospects.
“Over the last five years, we’ve invested $120 billion in Europe,” Englesson noted. “We plan to invest $250 billion in the next five years. Our commitment to Europe is strong.”
