Europe’s VC market got off to a good start this year despite increasingly volatile macroeconomics.
Deal value reached its highest quarterly figure in over a year in Q1, although the dwindling number of rounds suggests that investors are still prioritizing quality over quantity.
Here are five charts from PitchBook’s Q1 2025 European Venture Report highlighting key trends across dealmaking, exits and fundraising.
Deal value in Q1 reached almost €17 billion, up 4.9% from the previous quarter. At the current pace, 2025 is expected to see a 13.1% year-over-year increase.
The number of rounds, on the other hand, dipped slightly to 2,433 in Q1, with the year pacing to land below 2024 in terms of deal count.
Following three consecutive years of decline, a greater percentage of European VC investments are going to first-time rounds. In Q1, 28% of the total deal count was for first-time fundraises, compared to 26.6% in 2024. Interest rate cuts and more buoyant public markets toward the end of last year and in 2025’s initial months led to more optimism for European VC.
However, with volatility taking center stage for global stock markets as a result of tariffs, investors may become more cautious going forward, leading to a drop in first-time rounds.
Q1 saw deal value shift toward venture growth, accounting for 28.1% of the total raised by European startups. Last year, the segment claimed about 19% of overall deal value.
Over a third of venture growth funding in Q1 was attributable to Malta-based crypto exchange platform Binance‘s €1.9 billion fundraise from UAE VC firm MGX—the quarter’s largest European VC round.
A return of mega-deals—worth over €100 million—also contributed to venture growth’s growing share of deal value. The stage saw 11 such rounds in Q1, almost half of 2024’s annual total. Across all stages, Europe saw 30 mega-deals in Q1 worth a combined €8.1 billion—both figures hovering around 40% of last year’s total.
Pre-seed and seed activity has been slower, and the stage is currently tracking to see the largest YoY decline in full-year deal value at 18%.
AI and machine learning surpassed SaaS for the first time in terms of deal value, taking second place as Europe’s most funded vertical this year.
In Q1, the segment raised €4.6 billion in VC funding, equivalent to 27.5% of total deal value. Deals included a $600 million investment in London-based AI-driven drug discovery company Isomorphic Labs and a $260 million Series B for body scanning startup Neko Health.
Fintech claimed the top spot for deal value in Q1, a significant rebound from recent years. Deal value for the sector reached €4.8 billion—over half of last year’s total. Among notable deals was a $500 million fundraise for payments company Rapyd.
Climate and cleantech investments, on the other hand, are pulling in less funding than in previous years. However, with appetite for the sectors waning in the US with the arrival of the Trump administration, European startups could see an influx of capital from investors looking for a more conducive environment for investments.
Exit activity for European VC-backed companies has yet to recover, with the year off to a slow start. An estimated 250 exits worth a combined €11.8 billion took place in Q1, implying that 2025’s total exit value will be 23.4% lower YoY.
The IPO window, which was expected to open this year, has remained shut for the most part due to the tariff-related turmoil in the public markets. Only two public listings worth around €100 million closed in Q1. Anticipated IPOs, including for Klarna and eToro, have been delayed in major setbacks to VC-backed listings.
Acquisitions are by far the most common route to exit for VC-backed companies, but buyouts are gaining ground, accounting for a quarter of exit counts. Q1’s largest exit was the €1.4 billion buyout of AI content creation company Metaphysic by Brahma.
VC fundraising is on track for its third consecutive year of decline, with only 24 vehicles closing worth a total €2.3 billion.
A lack of liquidity from low levels of exits has held back fundraising in recent years, and current macroeconomic conditions have further prevented exit activity. In times of volatility, LPs tend to seek safe asset classes for their capital, causing them to lean away from VC.
The majority of fund closes in Q1 were for vehicles smaller than €50 million, although the quarter saw an increase in funds between €100 million and €250 million.
Emerging managers—those with fewer than four funds—saw their shares of fund count dip to 66.7% in Q1 from 68.4% last year but still raised more capital than experienced firms.
The largest fundraise of the year was Munich-based Hitachi Ventures’ $400 million fifth fund, which closed in February. Other notable funds included IAGi Ventures’ €200 million capital pool announced in March.
Featured image by Jacek Kadaj/Getty Images
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