Last year, Sifted’s reporters predicted that an impending Trump return to the Oval Office would encourage founders and operators to move to Europe (hmm, jury still out on that one), that Northvolt and Klarna would delay listings to 2025 (one right, one very wrong) and some once very well-funded startups would go bust (correct!)
Will our journalists-turned-clairvoyants have better luck predicting what’s to come this year?
Here’s what Sifted’s team thinks will happen to Europe’s startup and VC scene in 2025, based on hundreds of conversations, thousands of emails and a sprinkling of imagination.
Miriam Partington, DACH reporter
Switzerland may have an edge on AI
While the European Union has been rushing to regulate AI, Switzerland (which is not a member state) hasn’t yet decided what it will do with this nebulous technology. An answer could be reached in early 2025. Experts say the country is leaning towards a technology-neutral regulation (which focuses on regulating the outcomes of the use of AI rather than the technology itself), but there are some forces wanting Switzerland to align more closely with the EU AI Act. If Switzerland decides to be more lax than the EU, it may well attract AI companies to move there. Recently, OpenAI and Anthropic announced they were setting up offices in Zurich and the city is increasingly becoming known as a hub for AI talent.
Freya Pratty, climate tech reporter
Climate tech tries to rebrand itself
Climate tech had a tough 2024: funding dropped significantly in the second half of the year, and Northvolt, the best-funded and most-hyped of the current climate tech cohort in Europe, filed for bankruptcy in November.
It’s not the first major wobble the sector has had. Between 2006 and 2013, investors backed a host of green technologies, most of which failed, in what’s now known as the ‘cleantech bubble’. Since Northvolt’s collapse, there have been early murmurings of a third rebrand. Investors talk about using new labels like ‘growth tech’ or ‘dynamic resilience tech’. The hope is to instil a sense that companies don’t just need to be green, they also need to be financially viable; and cheaper and better performing than the less-green alternatives in their categories.
Will 2025 usher in a third wave of sustainability startups? Will they be markedly different from the companies we’ve seen so far? We’ll have to wait and see.
Amy Lewin, editor
Europe will get its first superapp
Revolut, Bolt and Wolt are all well on their way to becoming ‘everything apps’. London-based fintech giant Revolut, which has now hit 50m customers — and threw a rather expensive bash with popstar Charli XCX to celebrate the milestone — rolls out a new product seemingly every other week. It’s surely only a matter of time before it’s doing more than just fintech.
Helsinki-based Wolt, meanwhile, hasn’t been shy about its ambitions to move beyond food and grocery delivery into fintech and logistics. “We always thought that we would evolve to become more like a bank,” CEO Miki Kuusi told Sifted earlier this year. The company, which has over 40m active monthly users, introduced a revenue-based financing product in 2024 — and said it wouldn’t write off applying for a full banking licence in the future.
And then there’s Tallinn-based Bolt, the Uber competitor which operates in 600 cities in over 50 countries. Its services already span ride-hailing, micromobility, car rental and grocery delivery — and it’s expecting big things from the arrival of self-driving cars, CEO Markus Villig told Sifted in December. Why not throw an ecommerce store, or a payments network, into the mix?
Kai Nicol-Schwarz, UK tech and healthtech reporter
Quantum startups in Europe will raise record funding
2024 has been a record year for quantum startups. They’ve picked up $2.4bn globally, according to Dealroom, way ahead of the previous high of $1.7bn raised in 2023, as investors responded to tech breakthroughs and increasing government support for the tech.
European quantum startups raised a more modest $669m over the past 12 months, falling from a high of $793m the previous year — but I expect funding in the region to top both of those figures in 2025.
While quantum computing has been studied by academics for decades, investment in the tech has sharply risen in recent years. That’s led to an increasingly well-funded crop of European startups working to make the theoretical tech, which promises to unleash groundbreaking computational power once fully developed, a reality. A number of big tech companies also have quantum teams and governments across Europe and the US have committed billions of euros in financial packages to support the sector.
It’s a hype curve that’s showing no signs of turning down. But as more resources are funnelled into the sector, expect to see talent battles play out as startups try to stop big tech poaching the best engineers and scientists for themselves.
Daphné Leprince Ringuet, French tech reporter
More industrial startups will struggle
Startups are a key component of France’s re-industrialisation policy: public bank Bpifrance counts 2,500 industrial startups in the country, most of which rely in part on public money. But 2024 saw one of French tech’s most emblematic industrial startups, insect protein scaleup Ÿnsect, facing significant financial difficulties as it struggled to close its next funding round. The company, which has raised over $600m to date, told Sifted that part of the issue came from the lack of private investments in industrial startups — and 2025 will likely see more companies facing the same challenge.
Mistral AI will contemplate M&A offers
In just a year and a half, Mistral AI has become one of France’s most prized companies — and with a €5.8bn valuation, Europe’s most highly valued AI startup. The company is now on the radar of a number of US tech giants, having secured distribution deals with Microsoft’s Azure (which also invested in Mistral), AWS and Google Cloud. As the race to build the best-performing GenAI tools intensifies, some deep-pocketed companies will no doubt have their eyes on the French startup’s top team of scientists and engineers. Whether Mistral will be open to negotiating M&A offers or not remains to be seen.
The startup nation will grow up
President Emmanuel Macron’s surprise snap election last June kickstarted a period of deep political uncertainty with no end in sight. After years of strong government support for startups, founders and VCs are coming to terms with the fact that they might now be on their own. And while many are confident that the foundations of the ‘startup nation’ are robust, it will be up to them to demonstrate that the sector is now mature enough to survive even without an interventionist government.
Tom Matsuda, fintech reporter
Could 2025 be the year of blockbuster fintech M&A deals?
2024 was meant to be the year of consolidation in fintech. While there were some big deals, such as US trading app Robinhood’s acquisition of crypto exchange Bitstamp for £200m, most of the deals didn’t grab as many headlines. While this year saw a record 160 exits from acquisitions and buyouts, according to Dealroom, the total value of those deals only amounted to $2.1bn — lower than last year’s $2.9bn across 135 deals. Those figures indicate that the year was punctuated by lots of smaller deals at discount prices.
But now that Europe’s name-brand neobanks such as Monzo, Revolut and Starling are profitable and all eying growth, blockbuster deals could be on the table again. In November, Revolut was hiring for a finance manager to beef up its M&A team and hunt for acquisition targets. And according to conversations I’ve had with bankers in recent months, buyers and sellers have waited until the latter half of this year to begin initial conversations on such transactions. While it’s possible that these could peter out, this means we could start to see 2025 kick off with some banner deals in fintech M&A.
Klarna’s IPO will test fintech’s readiness for public markets
Swedish fintech Klarna rounded out 2024 by confirming its plans to go public — and the buy now, pay later giant is choosing the US over Europe. The long-anticipated listing is set to be a litmus test for the fintech sector’s readiness for the public markets after a gruelling few years.
If the Swedish fintech’s listing goes off without a hitch and it can list at a higher valuation than its current $14.6bn price tag, it could open up the pipeline for other fintechs to seek a public listing. And if it doesn’t go well, fellow fintechs may choose to stay private for longer.
Anne Sraders, VC and deeptech reporter
More VC shakeups
Expect to see more consolidation and leadership shakeups within VC firms this year. The business of venture capital has gotten harder; the lack of exits has meant LPs are desperate for distributions and it’s made fundraising trickier for those that aren’t the best-of-the-best, or are newer to the game. We’ve seen several partner departures this year, while other firms, like Speedinvest, have revamped their management teams altogether. Plus, I expect we’ll see some VCs calling it quits or opting for a merger or sale to another investor.
Defence tech M&A on the rise
I believe there will be more M&A within defence tech in 2025; deep-pocketed startups like Helsing, Quantum Systems, ARX Robotics or The Exploration Company will likely be on the lookout for targets to beef up (some of those startups have even told Sifted as much).
Mimi Billing, Europe editor
Climate tech bankruptcies pile up
In 2024, Europe witnessed several high-profile bankruptcies, many involving well-funded climate tech companies. While some might argue that this wave represents the worst of it and that fewer climate tech startups will go under next year, I believe the opposite is true.
With climate tech VCs, pension funds and investment banks heavily invested in these failed companies, enthusiasm for funding large, impact-driven projects has waned. Similar to the burst clean tech bubble 15 years ago, more climate tech startups will have the rug pulled out from under them in 2025.
The one ring to rule all IPOs in the US
Finnish smart ring scaleup Oura will go public in the US in 2025. It’s profitable, has sold over 3m rings (many of them in the US) and recently completed two fundraises: a $75m round in November, which valued the company at $5bn, and a $125m round just two weeks ago.
Earlier this autumn, I spoke to an early angel investor in Oura who mentioned plans to sell some of their shares ahead of an IPO that they suggested may be on the horizon. Its recent large funding rounds, combined with being profitable, lead me to the same conclusion.
Tom Nugent, newsletter editor
A lot of money is being raised for UK spinouts — but it won’t all be closed
Last year the UK spinout ecosystem felt defined in part by the launch of a number of new investment vehicles to back academic founders, with hundreds of millions of pounds in the works to invest in places like the north east and south west of England.
The new vehicles join Northern Gritstone — which has £312m to invest in spinouts from the universities of Sheffield, Manchester and Leeds — and Midlands Mindforge, which is hoping to raise £250m to invest in eight universities in the midlands.
Raising all this money is a good thing for the ecosystem, but it does feel a little like putting the cart before the horse; data from Beauhurst and spinout investor Parkwalk Advisors shows there’s been a decline in the number of first-time equity deals for spinouts in the UK recently. Closing that money also won’t be straightforward — and a number of spinout investors in the UK have told me that they don’t think there’s enough dealflow in some of the regions the money is targeting to justify such large pots of capital.
But with investors eyeing up deals coming out of Europe’s universities it makes sense that the money is trying to follow. I just wouldn’t be surprised if we saw some of the investment companies announced last year struggle to hit a first close, or reduce the amount they’re trying to raise.
Read the orginal article: https://sifted.eu/articles/sifted-reporter-predictions-2025/
