European tech funding has reached new heights, fuelled by a surge of AI-led innovation that has seen a recovery in megarounds and an acceleration in unicorn creation, according to a new report from GP Bullhound.
The tech advisory and investment firm’s latest Titans of Tech report funding for European tech ventures has settled to nearly 50% above pre-pandemic levels, reaching around €15 billion (£12.9bn) per quarter for the last two years.
Though that is still not quite the highs seen during 2021’s funding frenzy, the report claims that the recent stabilisation of funding marks a new era of growth, with EU tech firms raising cash to power innovative new products and services built around emerging technologies.
Mostly, of course, that means AI. GP Bullhound found that European AI firms have raised nearly €20 billion (£17.2bn) in the past year, with AI infrastructure now the leading sub-sector for tech fundraising, with companies in this area grabbing 22% of total AI funding, while genAI firms have taken up another 20%.
That success in AI is built on the back of huge raises for leading lights among the EU’s startup scene, including UK-based Isomorphic Labs, which announced a £440 million investment round in March, and Paris’ Mistral AI, which Bloomberg reports is currently in talks to raise up to $1 billion (£735m) in equity from investors, including the MGX fund Abu Dhabi.
According to the report, Europe’s resurgence in megarounds is down to the commercial opportunities that are emerging with AI and other technologies, leading founders to return to the market in search of private capital.
Again, while these megarounds haven’t come close to 2021 peaks, they’ve quietly rebounded since the sharp decline seen in late 2022 to reach an average of €10 million (£8.6m) over the first quarter of this year.
Unicorn creation is also accelerating, for the first time since 2022. GP Bullhound identified seventeen new billion-dollar companies this year, across ten geographies, adding to a total of 331 European unicorns with a combined value of $1.4 trillion (£1tn).
Over the last few years, most of Europe’s tech unicorns shied away from chasing more equity funding, with many spending the downturn picking away at their cash reserves as they tried to reach profitability.
However, GP Bullhound found that this quiet spell is starting to lift, though progress is slow. In 2021, European unicorns raised over €43 billion (£37bn), but by 2023 that had plunged to just €6 billion (£5bn). But in the first five months of this year, funding has already come close to matching that figure.
Despite being on the lookout for more cash, most of Europe’s tech firms are still hesitant to pursue IPOs, despite gaining valuations that would traditionally warrant a listing. GP Bullhound found only one new European tech listing in the past twelve months.
On the other hand, M&A activity is rocketing up. The report identified over 150 acquisitions above the $100m milestone in the last twelve months, including deals made by tech giants like Alphabet, Salesforce, SAP, and Nvidia, indicating an ongoing appetite for European innovation.
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“Europe has demonstrated its ability to build every component of the AI value chain, raise megarounds for its founders, and reduce its dependence on overseas technology,” said Manish Madhvani, managing partner at GP Bullhound.
“Companies such as Mistral, Poolside, and Multiverse are securing hundreds of millions in funding to develop proprietary technologies with global scale and impact. However, challenges remain on the liquidity front.
“Venture and growth investors backing these tech businesses have struggled with distributions over the past few years, as the IPO market turned silent. And 2025 will be no better, with many founders still reluctant to pursue public listings.”
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