European venture markets this year continue to tell two very different stories and contrasting narratives, according to a report from PitchBook. On one hand, artificial intelligence appears to have cemented itself as the dominant force, making up almost 40% of deal value YTD and delivering some of the year’s most sizable funding rounds, including those by Mistral AI and Nscale.
PitchBook also noted in its latest update that on the other hand, exits remain somewhat uneven, highlighted by BNPL Fintech firm Klarna’s recent initial public offering (IPO), which has significantly buoyed overall exit figures but largely left underlying activity lagging.
Meanwhile, the research report pointed out that emerging managers are reshaping the fundraising ecosystem, with relatively smaller, first-time funds steadily gaining market share, and venture debt activity has slowed down considerably after a very solid 2024.
In addition to these updates, the latest European Venture Report from PitchBook, sponsored by J.P. Morgan, analyzes several key shifts, from regional resilience in Israel and Southern Europe to the sectors that are said to be losing ground as investor capital crowds into AI.
For founders, investors, and LPs, these latest trends reflect a market that is seemingly recalibrating following years of “exuberance”—one that is a lot leaner, seemingly more selective, and increasingly being transformed by the unprecedented rise of AI.
Meanwhile, in other key developments, PitchBook noted in another update that European PE is showing real momentum. Q3 saw dealmaking accelerate considerably, with megadeals and US sponsors driving Europe’s expanding role as a global private equity hub.
Exit activity has also rebounded considerably, with major continuation vehicle transactions and middle-market deals offering much-needed liquidity as LPs begin to push for distributions.
However, it is worth noting that fundraising still remains quite challenging at the top end, with megafunds under consistent pressure. Nevertheless, the PitchBook report pointed out that middle market is doing reasonably well—especially in the United Kingdom, which appears to have cemented its status as Europe’s leading fundraising hub.
