Report on the European Technology Sector: First Half of 2025
Over the past three years (2023-2025), the European tech ecosystem has witnessed a significant shift in funding patterns, with a focus on strategic autonomy and specialization. This transformation has been driven by heightened geopolitical concerns and a desire to reduce dependency on non-European technology suppliers.
Key trends in this period include massive public-private investments in semiconductor and chip production, expansion and diversification of AI applications, strong growth in emerging quantum computing sectors, and continued concentration in the fintech sector.
The EU Chips Act, enacted in 2023, mobilized around €43 billion to boost Europe’s chip design and manufacturing. This initiative aims to increase Europe's share in global chip production from about 9% to 20% by 2030. Major players like Intel and TSMC are investing heavily in European fabs, supported by government subsidies, especially in Germany and Ireland.
European businesses have also seen an expansion and diversification of AI applications, particularly in marketing, sales, and service functions, alongside growing adoption of generative AI tools. This reflects a broader European push to integrate AI into multiple sectors, typified by increased AI use forecasts through 2025.
The quantum computing sector has also seen substantial funding rounds in 2024 and 2025 for startups such as SandboxAQ, Quantum Machines, and IQM Quantum Computers. This points to investor confidence in Europe's potential to develop next-generation tech through diversified quantum technologies.
Fintech concentration remains highest in the UK, hosting the largest number of fintech companies. This signals ongoing investment focus in financial technology hubs.
The reasons for this shift in investor behavior include geopolitical and supply chain security concerns, technological breakthroughs and commercial viability of frontier technologies, growing recognition of AI’s role in digital transformation across sectors, and government policies and subsidies encouraging investments in critical tech sectors.
In the three-year period ending H1 2023, the number of deals was the highest. However, despite this, the capital invested was the lowest. In H1 2024, funding peaked at €50.1 billion, but in H1 2025, the total capital dropped by over 30% year-on-year. This suggests a more cautious and selective funding environment.
The implications of these trends and milestones in the three-year period ending H1 2023 are being considered, as well as the implications of the more cautious and selective funding environment in H1 2025. Despite a slight increase in deal count, H1 2024 marked a significant increase in funding compared to the three-year period ending H1 2023. It appears that the review of the three-year period ending H1 2023 and the trends identified in that period have influenced the funding environment in H1 2025.
In the first half of 2023, there were over 2,300 deals in the European tech ecosystem. However, in H1 2025, the total capital invested was less than in the three-year period ending H1 2023. This indicates a shift in investor behavior towards more strategic, large-scale investments.
In conclusion, European tech funding from 2023 to 2025 has been characterized by targeted, large-scale funding rounds and public-private partnerships focusing on semiconductors, AI, quantum computing, and fintech sectors, driven by strategic aims for autonomy and technology leadership as well as by fast-evolving technological landscapes.
Finance is a key focus area in Europe's tech ecosystem, with significant investments made in the fintech sector to achieve strategic autonomy and technology leadership. Moreover, tech-savvy investors are increasingly focusing on strategic, large-scale investments in the areas of semiconductor, AI, quantum computing, and fintech, driven by a desire to reduce dependency on non-European technology suppliers and capitalize on technological breakthroughs and commercial viability of frontier technologies.
