London, UK – Venture capital (VC) investments in Europe declined significantly in 2024, according to PitchBook’s annual report, but signs of recovery and notable exits offer hope for a brighter 2025.
The total number of deals dropped from 11,408 in 2023 to 9,600 in 2024, leading to a lower overall investment level despite an increase in the average deal size. PitchBook characterized the mood as one of “cautious optimism,” pointing to improving market conditions.
Economic Trends and AI Dominance
While eurozone GDP growth remained subdued, the European Central Bank (ECB) cut interest rates four times in response to easing inflation. A further reduction in borrowing costs is anticipated in 2025, although economic expansion is expected to remain modest. Similarly, the UK’s Bank of England implemented two rate cuts last year, easing fiscal conditions.
The tech sector, particularly artificial intelligence (AI), emerged as a beacon of growth. UK-based GreenScale secured the largest European deal in 2024, closing a €1.198 billion investment in Q4. France’s Poolside and the UK’s Lighthouse followed, with deals worth €450 million and €344.7 million, respectively.
“Six of the top 10 deals in Europe last year came from AI companies,” PitchBook noted. “The rise of AI mirrors the tech industry’s focus during the internet boom.”
AI investments totaled €14.6 billion in 2024, accounting for a quarter of Europe’s total deal value. The UK led in AI-focused VC activity, with France and Germany trailing. Other growing sectors included life sciences, oncology, mobility tech, and foodtech.
However, cleantech and fintech saw declines of 26.5% and 19.8% in deal value year-on-year, despite remaining among the top five verticals by total value.
Fundraising and Venture Debt
European VC fundraising in 2024 remained steady at €20.5 billion, supported by larger fund sizes despite a drop in individual closes. The median fund size reached a record €71.3 million. Major fundraisers included the UK’s Index Ventures Growth VII (€1.4 billion) and the Netherlands’ Forbion Ventures Fund VII (€890 million).
Venture debt also gained traction, with annual deal value rising 27.3% year-on-year to €17.2 billion. This trend saw greater adoption among mature growth-stage companies, though PitchBook predicts a more muted outlook for 2025 due to the absence of 2024’s megadeals.
Exit Momentum Sparks Hope
One of the year’s highlights was the resurgence in exits through IPOs and acquisitions, signaling renewed investor confidence. Notable IPOs included Spanish firm Puig and the UK’s EyeBio, with activity peaking in Q2 and Q3.
“2024 was the year of the exit comeback,” PitchBook stated, noting that robust exit activity creates opportunities for reinvestment and strengthens market dynamics.
As 2025 begins, analysts anticipate continued challenges in VC investment but remain optimistic about the potential for growth in key sectors like AI and life sciences.
