Europe’s venture-capital market shows renewed optimism

Oct 8, 2025 - 09:00

Market sentiment in the European Union for financing innovative companies improved in the third quarter of 2025, rebounding from heightened unease earlier in the year triggered by US policy shifts and global uncertainties, according to a new survey.

The expectations of venture capital (VC) fund managers in the EU improved significantly in the July-September period, says the survey

by the European Investment Fund (EIF). Four times more respondents expect the fundraising environment to improve and six times more are optimistic about the exit environment in the months ahead including the prospects for selling their stakes to achieve a return on investment, attracting new investors or arranging a stock-market listing.

“We are delighted that the market environment for innovative startups is brightening,” EIF Chief Executive Marjut Falkstedt said. “As innovative companies in Europe seek to scale up and internationalise, our goal is to help them along this path, with financial backing in the right volumes, in the right form and at the right time.”

The EIF, part of the European Investment Bank (EIB) Group, is the biggest VC provider in the EU and manages the European Tech Champions Initiative (ETCI) to support scaleups. The EIF conducts its equity survey on a quarterly basis with the support of Invest Europe, an association representing Europe’s private equity, venture capital and infrastructure sectors.

While the latest EIF equity survey marks a shift towards optimism, the current perception of market conditions is still below levels before the 2022 Russian invasion of Ukraine. The number of respondents who regarded the current fundraising environment as being difficult is 46 percentage points higher than those who viewed it as favourable.

The ETCI, launched in 2023 by six EU Member States and the EIB Group, mobilised more than €20 billion for European tech pioneers. It has so far supported the growth of nine[i] European unicorns by allocating capital of €3.9 billion via the participating countries and the EIB Group.

Building on the ETCI, the EIB Group launched the TechEU initiative this past summer to mobilise at least €250 billion of financing for innovation by 2027. Under the TechEU umbrella, the EIF is currently drafting an “ETCI 2.0” with Member States and private investors to be launched in early 2026.

As in earlier surveys, VC fund managers in the most recent survey attested to the following specific EU strengths:

a strong innovation and technology ecosystem
a large talent pool and attractive investment opportunities
strong startup founders’ ambitions

At the same time, tax regimes and the exit environment are considered weaknesses in the venture capital and private equity market in Europe. Managers of VC funds based in the US also highlight regulatory fragmentation in Europe as a significant challenge. Scale-up financing for portfolio companies is perceived as challenging for venture capital and private equity providers as well.

The latest EIF equity survey was answered by a record-high number of respondents – more than 1,200 venture capital and private equity managers contributed. For the first time, the survey provides a comparison between the market environment in Europe and in the US and other regions of the world.

According to the survey, investments by US-based funds are one of the factors that influence European companies’ decisions to relocate or reduce their focus on Europe. This is largely caused by more attractive market and exit opportunities in the US, notably for companies aiming to go public.

Background information

The European Investment Fund (EIF) is part of the European Investment Bank Group (EIB Group). Its central mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them to access ﬁnance. The EIF designs and develops venture and growth capital, guarantees and microﬁnance instruments which speciﬁcally target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

The EIB Group’s flagship TechEU programme is the largest ever financing initiative for innovation in Europe. Over the 2025-2027 period, the EIB Group will commit €70 billion to support high-risk projects and innovative companies throughout their investment journey, from idea to IPO, mobilising €250 billion together with financing partners in investment for disruptive technologies and enabling infrastructure. The EIB has launched a dedicated TechEU Portal as a one-stop-shop service, with an embedded “Investment Readiness Checker”, that allows European startups or scaleups working in AI, cleantech, life sciences, and defence and space technologies to find out how the EIB Group can support their ambitions.

Invest Europe is the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors. Invest Europe has over 650 members, split roughly equally between private equity, venture capital and limited partners – with some 110 associate members representing advisers to the ecosystem.

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