The wave of investor interest in European startups is unprecedented, specifically in artificial intelligence, fintech and defense technology. Venture capital firms are scurrying to buy into some of the hottest companies on the continent, driving valuations to all-time highs and bringing a new vitality to the technology scene in Europe.
A case in point is the ElevenLabs AI voice startup, which is negotiating a secondary sale of staff stock valuing the company over $6 billion. That would mean doubling the value of its position since January, a manifestation of the pace with which investor enthusiasm is transforming the market.
Mistral, a French-based AI company, is another notable one, having raised almost half a billion dollars that could potentially place it at a valuation of approximately ten billion dollars. Dutch semiconductor supplier ASML is reportedly a part of the deal as an investor. Mistral would almost be priced higher than it was last year, indicating the competition in the market.
The German n8n, a software automation company, has experienced a significant increase in its value as well. It increased to over $2 billion in its latest round of funding led by Accel compared to earlier this year at €300 million. Likewise, investors have approached Swedish-based coding startup Lovable in a transaction that would value the company at over $4 billion, just weeks after its previous financing round. Framer, a no-code site builder based in Amsterdam, also closed new funding at a valuation of $2 billion funded by Meritech and Atomico.
Artificial intelligence investment boom is going global
This European wave is a bigger global trend. Global artificial intelligence firms are getting more funding than ever. OpenAI in the United States is discussing a deal with investors such as SoftBank to raise a whopping 40 billion dollars, valuing the company at approximately 300 billion dollars. Anthropic, a competitor firm, has recently raised a larger round of up to 13 billion dollars which valued the company at one hundred and seventy billion dollars.
The velocity of deals shows what a lot of venture capitalists call fear of missing out. Alex Lim, a general partner at IVP, says that the sudden resurgence of large growth rounds in Europe is a sign of dramatic change in the buttoned-up environment of the last few years.
Dealroom data suggests this opinion. It indicates that the investment in European venture capital may increase by three to four percent in 2025, to approximately $57 billion. This would compare with 2023 and represent a solid recovery following three years of decline, not including the record levels of funding in 2021 and 2022.
In addition to AI: Fintech and Defense are on the rise
As much as AI is the star of the show, there are other sectors that are also gaining considerable attention. Recently, UK-based fintech giant Revolut enabled the staff to sell the shares at a valuation of 75 billion. The value, almost twice that of the year before, confirms the increasing interest in fintech.
Defense technology stands out as another hotspot of investment as European governments invest more to tackle the security issue. Quantum Systems, a German manufacturer of drones, is in negotiations to raise up to 3 billion euros. At the same time, Cambridge Aerospace, a UK-based company, raised $100 million in new financing and is now valued at approximately $400 million.
This revived interest in defense can be seen as an attempt on the part of Europe to increase its capacity as the United States unleashes its strategic interest on the continent.
Europe still behind the United States
Nonetheless, Europe has fallen behind the United States in terms of available funding capacity and commercial influence. OpenAI, in particular, is looking at a secondary sale of shares that would value it at up to $500 billion, considerably higher than any of the European equivalents.
Despite this, the European venture capital leaders think the gap is closing. Jeannette zu Fürstenberg, who leads Europe at General Catalyst, said that Europe has lagged, but now the region is identifying solutions to gain the productivity benefits that accompany AI and similar technologies.
A new age of European startups
To most observers the period of valuation increase and new momentum is a long-term change more than a trend. London-based Balderton Capital partner James Wise labelled it as one of the seismic technological transformations and Europe’s capability to take a leading role in defining the future of innovation.
Along with companies like ElevenLabs, Mistral, n8n, Lovable and Framer, Europe has been in one of its most vibrant venture capital cycles in recent years. Now the question is can these startups produce the growth and breakthroughs that are worth their sky-rocketing valuations?
