Despite heaps of excitement around some high-profile Parisian startups like AI champion Mistral, tech companies in the French capital are facing a serious funding lull.
For the first six months of 2025, Sifted data shows Paris-based startups — which in that period received 62% of all funding in France — raised just under €2bn in equity, a 33% drop compared to the same time last year (€2.92bn).
A number of megarounds helped boost numbers in the first half of 2024, including Mistral’s €468m Series B and EV-charging company Electra’s €304m Series B. “Part of the downturn is amplified by the absence of mega-deals that compare to those seen in 2024,” says Marie Ferri, investor at Paris-based early-stage VC Daphni.
Deal count was down too in the French capital, according to Sifted’s data, with 142 equity rounds in H1 2025 compared to 159 in H1 2024.
The trend is visible outside Paris. The data shows funding for H1 2025 was down in a number of European tech hubs: in London, equity funding decreased 18% year-on-year to reach €4.8bn, while Stockholm saw a 24% drop on the same period, hitting €789m.
Why is funding decreasing in Paris?
The decline is largely the continuation of a ‘readjustment period’ following the funding peaks reached in 2021-22. The lull was already visible at the end of 2024 across France, with startups in the country securing €8.8bn throughout the year compared to €13.3bn in 2022, according to Pitchbook data.
Benoit Fosseprez, general partner at growth fund AVP, says many startups in the capital are now delaying fundraising.
“Since many companies raised capital on very high multiples in 2021 and early 2022, they need to grow to compensate for the drop in multiples in order to avoid a downround,” says Fosseprez. “Hence many companies are electing to avoid raising capital and work on their profitability.”
“We are observing a more defensive phase, shaped by the market correction post-2022, to which is added persistent geopolitical tensions and a general sense of uncertainty,” adds Ferri.
Last year France was rocked by deep political uncertainty following a snap election called by president Emmanuel Macron, which resulted in a government freeze. Donald Trump’s return to the White House didn’t help, with the US president threatening to impose waves of tariffs likely to significantly impact the tech sector.
“The Paris ecosystem has probably been affected by the country’s overall poor growth prospects and continued political uncertainty,” says Anais Monlong, venture principal at early-stage VC Iris. “Startups do not operate in a vacuum.”
A flight to quality
While overall investment and the number of startups raising capital in Paris is falling, those that do secure deals are getting more. The median Series A over the past 12 months in the capital is up 20%, from €12.5m to €15m.
“At least for the coming year, the market will remain skewed towards a small set of companies with winning potential,” says Julien-David Nitlech, managing partner at Iris.
Fosseprez says there is more “selectivity” from VC funds, with a focus on “visible business models” like subscription models and multi-year contracts rather than companies focusing on business-to-consumer (B2C).
And not every sector has been impacted equally by the fundraising drought. “Unsurprisingly, AI is still where most of the attention and capital are going,” says Ferri.
AI agents accounted for the most deal counts (17) and funding (€279m) in the French capital in H1 2025, which included medtech Nabla’s $70m Series C. Paris also ranked third in Europe for the proportion of AI-native funding rounds (12.8%) behind Berlin (17.4%) and Amsterdam (16.7%).
Ferri says other hot sectors include deeptech and defence tech, while robotics are also gaining traction.
“We expect mega rounds to continue at the early-stage in France, evidenced by outlier talent raising large financing in new areas like robotics,” says Alexandre Momeni, partner at General Catalyst.
In July, Paris-based Genesis Robotics, which generates data to train AI models for robots, closed a $105m seed round comprising both debt and equity.
On the other hand, climate tech is getting much less attention. “Part of that shift may be explained by the strong backlash around ESG in the US, which has pushed climate further down the agenda in favor of industrial policy and national security,” says Ferri.
Is Paris losing its shine?
A report recently published by data platform Dealroom stated Paris has overtaken London as Europe’s top startup hub for the first time. Although the UK capital is still a bigger hub overall, said the report, tech businesses in the French capital are growing at a faster pace.
Yet while Parisian startups see funding levels decline, other European tech hubs seem to be emerging. In Munich, the past six months saw equity funding shoot up by 115% year-on-year, reaching €1.6bn; equity funding also increased by 122% in Barcelona and 130% in Madrid, hitting €747m and €710m.
“Paris is losing its shine in certain specific verticals like defence tech, for which Munich is the new star city,” says Fosseprez.
“But in general, we do not see a down trend in Paris: engineers remain excellent […] and the efforts of the Macron government in the space have created a stable ecosystem.”
Read the orginal article: https://sifted.eu/articles/paris-h1-data-analysis/
