Europe’s Startup Momentum Is Rising — The Data Just Hasn’t Caught Up Yet

First, the participation of U.S. investors in European startup deals is increasing again. Rajan noted that this figure reached a low point in 2023, when U.S.-based venture capital firms were involved in just 19% of European venture deals. Since then, participation has steadily increased.

“They seem pretty optimistic about the European market,” Rajan said. “From an entry-point perspective, valuations — especially in AI tech in the U.S. — have become extremely high. It’s very difficult to get in now. In Europe, where multiples are lower, it provides a better entry point for investors looking at similar technologies.”

Swedish vibe-coding startup Lovable illustrates this trend. While vibe-coding companies have raised significant venture capital in the U.S., Lovable has also drawn strong interest from American investors. The company recently announced a $330 million Series B round led by several U.S.-based firms, including Salesforce Ventures, CapitalG, and Menlo Ventures.

French AI research lab Mistral has seen similar enthusiasm from U.S. investors. In September, Mistral closed a €1.7 billion Series C round that included Andreessen Horowitz, Nvidia, and Lightspeed.

Klarna’s recent exit also points to a potential shift in the European venture landscape.

The Swedish fintech giant went public in September after raising $6.2 billion over two decades as a private company. That exit likely recycled capital back to European limited partners or boosted confidence in a changing exit environment.

According to Victor Englesson, a partner at the Swedish investment firm EQT, recent European success stories, such as Klarna, are influencing how founders approach company-building.

“Ambitious founders have seen what great looks like in companies like Spotify, Klarna, and Revolut, and are now starting companies with that same level of ambition,” Englesson told TechCrunch. “They’re not thinking about winning just in Europe or Germany — they’re building with the goal of winning globally. That mindset hasn’t been as common in the past.”

That shift has made EQT and other investors increasingly bullish on Europe.

“For EQT, we’ve invested $120 billion in Europe over the last five years,” Englesson said. “We’re planning to invest $250 billion in Europe over the next five years. We are extremely committed to the region.”