European investors are investing billions of euros in start-ups in the fields of artificial intelligence and defense technology. These companies are regarded as key forces supporting Europe's economic competitiveness and security capabilities. According to PitchBook data, total European venture capital investment will increase by 5% in 2025, reaching 66 billion euros, setting a new high since the epidemic. This growth is mainly driven by large-scale financing transactions by top AI and defense companies. A number of companies in the above-mentioned tracks are currently discussing a new round of financing at a price that significantly increases their valuation.
Among them, Legora, a legal AI startup from Sweden, is negotiating a new round of financing. Its valuation target is approximately US$4 billion, more than double its valuation of US$1.8 billion in October last year; the company did not comment on this. Recently, Synthesia, an AI avatar company headquartered in London, completed US$200 million in financing, corresponding to a valuation of US$4 billion, while audio AI company ElevenLabs raised its valuation to US$11 billion after raising US$500 million in financing led by Sequoia Capital. In the field of defense technology, Isar Aerospace, a satellite launch company headquartered in Munich and valued at approximately US$1 billion, is also negotiating for a new round of major financing. The company also declined to comment on external news. The talks come on the heels of German drone companies Helsing and Quantum-Systems raising a combined close to €1 billion in large funding rounds last year.
Aaron Archer, a partner at the law firm Cooley, pointed out that defense and AI are two of the hottest fields at the moment, so it is not surprising that they have attracted a large number of "huge financing rounds." Transatlantic investment is expanding rapidly on both sides of the Atlantic, he said, and he expects this trend to accelerate further. PitchBook statistics show that venture capital institutions and companies are also taking advantage of the rising market sentiment to speed up reductions in holdings or cash out when startups are sold, and so-called "exit" cases have increased significantly. In 2025, AI-related transactions accounted for more than 35% of all European venture capital transactions, amounting to 23.5 billion euros, up from 17.7 billion euros in 2024.
The rising valuations show a similar trend to that of the U.S. market, raising concerns that the high valuations of some unlisted technology companies are out of touch with their true business fundamentals. Demis Hassabis, head of Google DeepMind, warned that the enthusiasm shown in some areas of the AI industry is increasingly characterized by a "bubble". In addition to AI, European start-ups focusing on defense and related technologies are also experiencing a surge in capital. According to data from the NATO Innovation Fund and research institution Dealroom, investment in such companies will increase by 55% year-on-year in 2025, reaching a record high of US$8.7 billion. Driving this wave are large late-stage financing rounds in areas such as quantum computing and space.
Sander Verbrugge, partner of the NATO Innovation Fund, said that the fund has raised 1 billion euros and focuses on investing in defense and "deep technology" startups, and that the "significant growth" in this area shows that the entire ecosystem is maturing. Relevant data further confirms that since the outbreak of the war in Ukraine nearly four years ago, investor interest in European defense, security and resilience-related start-ups has increased. The study comes as the Munich Security Conference is about to take place, where the rearmament of Europe will be one of the core topics.
According to Siraj Khaliq, senior advisor at European deep technology fund Kembara (1 billion euros), AI and defense-related companies are also benefiting from the efforts of officials from various countries to promote technology and security independence. He pointed out that European governments now attach great importance to building their own technology "stacks". The tailwind created by this sovereignty drive should not be underestimated.