In the first quarter of 2025, European Startups, health tech and AI companies raised an impressive $13.9 billion, a 2% year-over-year increase, reflecting sustained investor interest. This follows strong investment levels from the previous quarter, and the trend shows no signs of slowing down.
A Global Surge in Interest for European Startups
Global investors made up over 40% of the funding in Q1 2025, signaling a renewed interest in European startups. This marks the most significant first-quarter influx of U.S. investments into Europe since 2021. Cross-border investment has surged to 28%, the highest quarterly figure since 2011, showcasing Europe’s growing appeal. This surge follows the 2024 Draghi Report, which highlighted efforts to boost startup financing and improve competitiveness in the region.
AI startups continue to lead the investment surge, capturing 25% of all venture capital in Q1 2025, up from just 7% a decade ago. These companies raised $3.4 billion, a 55% increase from the previous year, underlining the widespread influence of AI across industries. Muj Choudhury, CEO of RocketPhone, stated, “In 2025, AI will be deeply embedded into business software, offering practical solutions. Striking the right balance between innovation and governance will be essential for realizing AI’s full potential.”
Without AI, European investments would have fallen by 10%, highlighting AI’s critical role in driving the region’s venture capital growth.
Health Tech Remains a Key Focus amongst European Startups
Health tech continues to dominate the investment charts, with $4.3 billion raised in Q1 2025, marking a 65% increase year-over-year. This is the fourth consecutive quarter that health tech has topped the investment charts. Notable deals included Isomorphic Labs, which raised $600 million for AI-driven drug discovery, Verdiva Bio, which secured $411 million for obesity biotech, and Neko Health, which raised $260 million for preventative healthcare.
Annick Verween, head of biotope by VIB, explained that AI-driven startups are revolutionizing the biotech industry by processing complex biological data more efficiently than ever, which is capturing increasing investor attention. However, she cautioned that investors will require more rigorous evaluations of the technology’s added value before committing funds.
At the World AI Cannes Festival, Jean-Philippe Vert, Ph.D., co-founder of Bioptimus, shared his vision for AI’s role in healthcare, predicting that AI could simulate complex biological processes, such as predicting cancer cell behavior, leading to personalized medicine solutions. This innovative use of AI could transform healthcare in ways previously unimaginable.
AI-Driven Drug Discovery and Industrial Technology
The AI-driven drug discovery sector secured $949 million in Q1 2025, while industrial technology attracted $669.3 million. Gary Coffey, CTO of Spectrum.Life, noted, “AI will continue to play a pivotal role in health tech, from improving diagnostic accuracy to automating routine tasks. These advancements will relieve pressure on healthcare systems and enable earlier interventions for better patient outcomes.”
Julia Hawkins, General Partner at LocalGlobe, added that Europe’s rise in health tech is no coincidence, driven by sustained investments in visionary founders creating impactful solutions. With rising health challenges like mental health and aging populations, these innovations are becoming more urgent than ever.
Leading Countries: UK, Germany, France, and Spain
The UK remains Europe’s tech hub, attracting $4.2 billion in Q1 2025, an 8% increase from the previous year. London alone accounted for $3.2 billion, reflecting a 26% rise. Cambridge and Oxford also saw significant growth, with Oxford’s funding increasing by 200% to $280 million compared to Q1 2024.
Ireland recorded a remarkable 542% increase in investments, reaching $538.4 million, driven by investments in companies like XOCEAN ($128 million) and Tines ($125 million). Dublin also entered the top 10 most financed cities in Europe, with investments soaring 824% to $330 million.
Christine Hockley, Managing Director at British Patient Capital, commented that despite challenges, the UK’s innovation ecosystem remains strong, particularly in deep tech and life sciences, with a focus on specialized investment areas like stem cell therapies and climate tech.
Germany, France, and Spain Follow Close Behind
Germany, France, and Spain each raised over $1 billion in Q1 2025, continuing the trend of European growth. Spain’s travel tech sector thrived, with AuroTravel raising $246 million and TravelPerk securing $200 million, marking a 175% increase year-over-year.
Malta saw the largest single deal in Q1, with VistaJet, a private-jet-as-a-service company, raising $600 million, driving Malta’s investments up a staggering 1,230% compared to Q1 2024.
The European startup ecosystem is flourishing, particularly in health tech and AI. With global investment continuing to flow in, Europe is poised for another strong quarter in 2025.
