Equity fundraising for startups rose to €12.8bn in Europe in Q1 — up 13% on Q4 and 5% on Q1 last year, according to Sifted data.
The growth was driven by healthtech startups, which raised five of the 10 biggest rounds in Q1. The single biggest equity deal was the $600m raised by London-based AI drug discovery company Isomorphic Labs, which spun out of Google DeepMind in 2021.
Investors also flocked to AI agent startups in Q1 — 61 of them raised money, making it the second buzziest category for deals after medtech (67).
Debt funding rose slightly in Q1 — reaching €4bn — though this was a long way off the €14.3bn debt raised by European startups in Q1 2024. The biggest debt deal in Q1 2025 was the €1bn raised by Finn, the car subscription startup which topped Sifted’s leaderboard of the fastest-growing startups in Germany last year.
Four new European unicorns (companies valued at $1bn+) were created in Q1. These were: Dublin cybersecurity automation company Tines, Spotify founder Daniel Ek’s body scanning startup Neko Health, French-American spacetech Loft Orbital and Swiss crypto banking group Sygnum.
Fewer deals, bigger rounds
While investment was up in Europe for the second quarter in a row, overall deal count fell in Q1. There were 1,235 announced rounds in the first three months of this year, 15% down on Q1 last year. This was the third consecutive quarter with fewer than 1,250 rounds in Europe (though a reporting time lag could see this figure rise).
The data highlights a growing capital concentration in Europe, with fewer companies raising bigger rounds. The median equity deal size in Q1 2025 was €3m, an increase of 36% on the median of €2.2m in Q1 last year. Average cheque sizes were up 21% from £10.4m to £12.6m.
The figures support what VCs are telling Sifted: rounds are increasingly competitive and there’s a ‘flight to quality’ across the ecosystem. For example, VC firms HV Capital, Creandum and General Catalyst made ten, eight and seven investments respectively in Q1 — considerably more activity than the first three months of 2024. Another factor is the increased capital requirements of AI companies, with many needing to purchase special chips to boost compute performance.
The fewer-but-larger-deals trend has also been spotted in the US. Chris O’Brien, who runs The French Tech Journal, recently observed that big rounds for AI companies “obscure the reality that the overall number of startups raising VC funding in the US is also plummeting.”
The volume of bigger deals (in the €50m+ and €100m+ range) has marginally increased in Europe, while deals of €10m-25m have grown 12% compared to Q1 last year. Overall, the number of deals hitting the €10m mark has increased by 5%.
The average Series A round was €16m in Q1 — €4.7m higher (42%) than in Q1 2024. There were also rises in the €2m-3m, €3m-4m and €4m-5m funding brackets, at the expense of a big drop in activity in smaller €0-1m (-35%) and €1m-2m deals (-32%).
Healthtech hustles, climate fails to capture VCs
Healthtech fundraising surged to €3.7bn in Q1, which is almost as much as the sector raised in the first six months of 2024 (€4.3bn) and the second six months of the year (€4bn).
Five of the 10 biggest equity rounds were in healthtech, with drug discovery startups scoring three of these, led by Isomorphic Labs’s mammoth raise. The London company — which has been poaching AI talent from rivals — aims to halve the time it takes to find new medicines and hopes to have its first AI-designed drug in human trials by the end of 2025.
Another London-based startup, Verdiva Bio, secured Europe’s second largest ever Series A round — behind Paris AI startup Mistral’s €385m in 2023 — to develop a weight loss drug to rival Ozempic.
Climate dealmaking, meanwhile, is taking a smaller piece of the pie: the best-funded sector in Europe in 2023 and 2024 was only the fourth biggest for equity funding in Q1. Germany-based Green Flexibility, which develops large-scale battery storage systems, scored climate tech’s biggest Q1 round (€400m).
Deeptech funding has risen as a percentage of overall deals over the last year, while fintech and consumer-focused startups have seen small declines.
Hot deals: AI agents, data centres
Europe saw a flood of AI agent deals in Q1: 61 startups raised a combined €827m. The market for these agents, which promise to autonomously handle complex tasks, is expanding rapidly, though it’s not only new entrants hoovering up money — 61% of Q1 deals were raised by startups that launched before 2024.
Another big investment theme this year is data centres to service the AI boom. Tech’s spend on data centres is set to be extravagant, with just four companies — Amazon, Meta, Microsoft and Google — promising to spend a combined $300bn on AI infrastructure this year alone.
European startups in this industry raised €608m in Q1. The biggest deal was $140m (roughly €128m) in February for UK-based Ori, which partners with data centres to rent cloud-based services.
The data also reflects crypto’s resurgence. Crypto startups raised €385m in Q1. The small, renegade industry — which was given a big boost by crypto backer Donald Trump’s return to the White House — is back on VC minds, with deals in 2025 including a handful of stablecoin businesses.
Ireland soars
UK startups raised the biggest chunk (€3.76bn) of Europe’s equity fundraising in Q1, nearly double Germany’s haul for this period (€1.96bn). Germany narrows the gap once debt funding is factored in (see chart).
Irish startups soared in Q1, raising €600m in equity, which comes close to the country’s entire fundraising haul for 2024 (€730m). Ireland’s biggest Q1 round was Tines’s €120m Series C led by Goldman Sachs, which gave Ireland its ninth unicorn.
France falters, Spain surges
France has lost ground with the UK and Germany. In Q1, 123 French startups raised a VC round, a fall of 30% in a year and a sharp drop from the 545 peak in Q1 2022, per Dealroom figures. But while there are fewer French deals, the median round size in France has jumped — it now has the highest value for countries with 5+ deals in Europe — reflecting VCs’ appetite for bigger punts on promising companies.
France’s deal count was on par with Spain’s in Q1 — only six deals separate the two countries. After a strong Q3 and Q4 of fundraising last year, the early evidence suggests Spain has overtaken Sweden, Switzerland and the Netherlands to become the fourth top tech scene in Europe (after the UK, France and Germany).
Meanwhile, the Dutch slide continues: dealmaking fell 11% on Q1 of last year.
Read the orginal article: https://sifted.eu/articles/q1-2025-analysis/
