In this PERSPECTIVES Viewpoint Alternatives, we explore how Europe’s venture capital ecosystem is evolving, particularly as innovation and strategic investment themes gain momentum.

 

Despite heightened global uncertainty, European funding conditions are improving, and investment activity remains resilient. We assess Europe’s growing position in the global venture capital market, the emergence of key investment themes such as deep technologies, and the factors that could support the sector’s long-term development.

Key takeaways

  • The European venture capital (VC) industry continues to expand, with investment activity remaining relatively strong despite geopolitical and macroeconomic uncertainty. Moreover, firms’ access to funding across their lifecycle is improving thanks to increased interest from both institutional and private sources of capital, and further support from EU and domestic fiscal initiatives.
  • Europe’s role is expanding on the global stage. Europe has emerged as a significant innovation hub, with European start-ups now accounting for roughly 20% of global venture capital activity, up from approximately 5% two decades ago, making it the second-largest VC market globally after the US.
  • Innovation in strategic themes is a key driver. Investment is currently flowing into two strategic themes, namely Deep Technologies and Defence Technologies. Sub-segments of Deep Technologies include Quantum Computing, Physical AI, Technologies and Biotechnologies. The Defence Technologies theme includes cybersecurity and drones. Development of these innovative technologies is supported by Europe’s broad, existing industrial base, as well as leading research and development capabilities.

The PERSPECTIVES Viewpoint is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

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