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| The Daily Pitch: Europe |
| Your edge on global private capital markets |
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| Hot or not: Where European VC funding grew in 2025 |
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By Leah Hodgson, Senior VC Reporter
VC funding for European startups has begun its recovery after three consecutive years of decline.
According to PitchBook data, VC investment in Europe is projected to reach €66 billion. This would mark a 7% bump over 2024. The number of funding rounds continues to decline, signaling that capital is increasingly concentrated among top performers.
AI is naturally capturing an ever larger share of capital, with rounds worth several billion dollars closing for startups such as LLM developer Mistral AI.
While overall capital has increased, it has not been dispersed equally across all countries. Most European nations did see increases in funding, but some regions have recovered at a faster pace. |
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The UK's performance is emblematic of Europe's funding dynamics more broadly, with an estimated 7.8% increase in VC deal value. AI was a key theme for the year, as several leading tech companies, including Nvidia and Microsoft, pledged billions of pounds to bolster the country's AI infrastructure. This led to outsized deals, including data center startup Nscale's $1.1 billion Series B in September.
However, its closest European peers, France and Germany, did not fare as well. Both countries are on track for a decline in deal value from 2024 by 11.7% and 2.6%, respectively. Political turbulence in France and a lack of growth capital have hindered progress.
Defense tech was a bright spot for Germany, with rounds such as Helsing's €600 million Series D. By 2029, German defense spending is projected to hit €153 billion annually, presenting a key opportunity for the country’s startups.
Among all the continent's regions, Southern Europe has outperformed the rest. Overall, the region’s annual total is expected to land 26.3% higher than in 2024. National entrepreneurship programs and government-backed initiatives have helped strengthen Southern Europe’s startup ecosystems and lured more talent. |
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Take a look at some of the most-read articles from PitchBook's London-based news team over the past year:
• Can AI rollups really deliver venture-scale returns? VCs are importing PE-style rollups and layering in AI, but shaky ownership math, leverage and exit assumptions suggest the economics may not add up. Read our analysis
• PE firms are hoovering up sports media rights in Europe, with buyer appetite driven less by the glamour of club ownership and more by steady media rights cash flows. Find out more
• Defense tech funding and valuations are soaring, but structural demand suggests substance beneath the hype. While the surge has some pointing to the appearance of a growing bubble, other industry experts say it is well justified. See our charts
Is ‘private equity’ still a useful label? Converging public-private products, open-ended structures and an influx of retail capital are turning PE into a broader alternatives platform that demands new guardrails and greater investor education. Read our commentary
• While continuation funds are a well-established PE instrument, continuation funds on continuation funds, otherwise called “CV-squared,” are a more recent proposition—and the idea is gaining traction. Read more
• Should China’s 996 work culture be the new normal for startup founders? A heated debate over hustle culture is raising questions over the sustainability of founders being always on duty. Read our commentary
• As investment in energy infrastructure continues to grow, PE firms are turning to large-scale battery storage to solve the issue of storing intermittent energy sources. Read more |
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Here's a look at some of the best research from PitchBook Institutional Research Group's EMEA analysts:
• Private markets across EMEA are evolving amid choppy public markets, frothy AI valuations, and shifting geopolitics. And PE continues to expand its dominance in Europe. Read our 2026 EMEA Private Capital Outlook report
• Europe’s institutional VC direct secondaries market could hit $77.2 billion. Here’s how the asset class is reshaping VC liquidity. Read our Q3 2025 Analyst Note: Sizing the Institutional VC Direct Secondaries Market
• There's a new world map of VC innovation. While the US continues to dominate, emerging players such as Saudi Arabia, Switzerland, and the United Arab Emirates are climbing the ranks. See our Q4 2025 PitchBook Analyst Note: Global VC Ecosystem Rankings
• European football continues to attract private capital as deal activity remains high since the 2022 peak. Key developments have challenged the investment case. Read our Q3 2025 PitchBook Analyst Note: Private Capital in European Football: Part III
• Dealmaking in Southern Europe has remained resilient despite weaker exit and fundraising conditions. Our inaugural report on the region expands regional research coverage to highlight key trends. See our 2025 Southern Europe Private Capital Breakdown report |
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| Since yesterday, the PitchBook Platform added: |
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426
Deals
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1575
People
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853
Companies
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14
Funds
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| How UK pensions are making a private markets pivot |
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By Andrew Woodman, London Bureau Chief
For the past two years, the UK government has been rewriting the rules governing the flow of British retirement savings through the economy, with the potential to unlock billions of pounds for private markets.
What started in 2023 with the Mansion House Compact, a pledge to boost private market allocations from defined-contribution (DC) pensions, has evolved into a coordinated effort to steer an additional £74 billion of long-term capital into private assets by 2030.
The shift comes as public markets show clear signs of strain. According to our latest analyst note, the UK now has 10 times more PE- and VC-backed companies than listed ones—a dramatic reversal from a year ago.
With more corporate growth occurring outside the stock market, policymakers view DC pensions, which currently allocate less than 1% of their funds to private assets, as the missing link between savers and the broader economy. |
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The urgency is amplified by the shift from defined-benefit pensions, which were historically the UK’s main source of long-term, patient capital, to DC. While the former's assets have declined 12% year-over-year to £1.7 trillion in 2024, the latter's have increased to £650 billion, up 40% since 2019, although much of this is locked up in public markets.
There have already been a raft of regulatory changes aimed at increasing DC exposure to alternatives.
Long-term asset funds have provided DC schemes with a compliant vehicle to hold illiquid assets. Meanwhile, charge cap reforms mean that private funds' performance fees are no longer subject to a 0.75% annual fee cap—effectively removing a long-standing barrier to PE and VC investment.
Looking ahead, the Value for Money framework—a forthcoming UK regulatory regime—will require DC pensions to assess fund performance on a broader set of metrics, allowing the focus to shift from low fees to net returns.
Consolidation efforts, which include the push toward pension "mega-funds" similar to those in Australia and Canada, are also expected to reinforce the scale needed to invest meaningfully in alternative assets. |
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