Multiple AI and defense tech rounds highlight over €66B VC funding in 2025

European venture capital investment topped €66 billion in 2025, buoyed by multiple AI and defense tech funding rounds, according to the Financial Times. Investors focused on these sectors as strategic areas for innovation and growth, highlighting both commercial potential and national security implications.

VC funding surges with defense tech and AI startups leading the way

Venture capital activity in Europe remained robust throughout 2025, with investors channeling capital into emerging technologies. AI startups, from foundational models to enterprise applications, secured large financing rounds, reflecting continued confidence in artificial intelligence as a transformative force across industries.

Notable funding rounds included AI companies focused on machine learning infrastructure, autonomous systems, and specialized enterprise AI. Investors cited strong market demand, scalable business models, and differentiating technical capabilities as key reasons for their commitments.

In parallel, defense tech ventures drew significant VC support, a trend underpinned by heightened geopolitical tensions and increased government procurement in security and defense capabilities. Firms developing next‑generation defense technologies closed major funding rounds.

These investments indicate that venture capitalists are not only backing commercial AI but also technologies with strategic defense implications. The overlap of AI and defense innovation further demonstrates how dual‑use technologies are influencing investment priorities.

Investors drive multiple funding rounds in strategic technology sectors

Beyond standout AI and defense tech deals, Europe’s VC ecosystem saw deal‑flow across fintech, climate tech, health tech, and deep tech sectors. Fintech companies continued to attract investment, particularly in payments integration and regulatory‑tech solutions. Climate tech rounds targeted decarbonization, renewable energy, and sustainable materials.

Healthcare startups also benefitted from venture funding, particularly in digital health platforms, AI‑assisted diagnostics, and next‑generation therapeutics. Across these sectors, several unicorn valuations were attained, and many early‑stage companies successfully advanced to later rounds.

According to industry analysts, the cumulative €66 billion plus in VC funding for 2025 marked one of the strongest years on record for European venture capital. While a portion of this investment was driven by megadeals in technology platforms and biotech, the repeated presence of AI and defense‑related financing underscored how strategic innovation themes are shaping capital flows.

Investors pointed to several drivers for the strong funding environment: increasing adoption of AI technologies, national defense modernization programs, and a vibrant startup ecosystem supported by European public and private initiatives. The combination of private capital and government incentives helped to sustain investor interest across multiple technology verticals.

Venture capital investment focuses on AI startups and defense innovations

The prominence of AI and defense tech rounds within the broader VC funding year reflects a broader global trend. Artificial intelligence continues to permeate sectors from logistics to life sciences, with investors seeking to back companies capable of deploying AI at scale and solving complex problems.

Defense tech, traditionally funded by government contracts and strategic procurement, is increasingly appealing to venture capital due to the infusion of commercial innovation into national security use cases. Venture investors are partnering with defense‑oriented startups, often in collaboration with public funding programs, to accelerate technology development and market entry.

Regional ecosystems in major European capitals served as hubs for talent and funding activity, fostering cross‑border deal‑making. These ecosystems benefit from a growing base of serial founders, supportive regulatory environments, and stronger connections to institutional investors.

Europe’s venture capital landscape in 2025 was defined by a blend of substantial funding activity and strategic investment themes. With total funding exceeding €66 billion, multiple AI and defense tech rounds highlighted the sectors that resonated most strongly with investors. As artificial intelligence continues to evolve and defense technologies become more integrated with commercial innovations, venture capital is likely to maintain its role as a catalyst for transformative technologies across the region