European venture capital experienced a decisive shift this spring, pivoting from broad, hype-driven investments toward infrastructure, deeptech, and niche B2B applications. Key funds, such as Volution, Lunar Ventures, and EIF, moved toward highly targeted rounds, prioritizing precision and substance over expansive visions.
This analysis, based on Zubr Capital’s comprehensive review of venture activities, captures the evolving logic behind capital allocation in Europe, highlighting the emergence of narrower, defensible bets and a renewed emphasis on deep technical expertise.
Solving One Problem Well: What LPs Want This Spring
European investors this spring clearly favored startups solving highly specific problems over broad, consumer-facing platforms:
Cathay Innovation (France) launched a $1B fund specifically targeting vertical AI applications in healthcare, fintech, consumer, and energy sectors—rejecting generalist AI approaches.
Cherry Ventures ($500M) reinforced its early-stage commitment, particularly in Berlin, London, and Stockholm, emphasizing narrow technological solutions.
Smartfin (€250M), Brussels-based, positioned itself strictly as a scale-up specialist for B2B infrastructure.
Notable investment rounds further illustrated this trend:
Reneo secured €600M growth capital, signaling strong market confidence despite undisclosed specifics.
Isomorphic Labs raised €556M for AI-driven drug discovery, underscoring investor interest in substantial IP and sector-specific solutions.
Rapyd attracted €474M by leveraging specialization in tightly regulated niche payment markets.
Investors increasingly seek category mastery rather than category ownership—being indispensable within clearly defined markets.
Real Engineering Over Quick Fixes
VCs sharply turned toward startups with substantial engineering and proprietary technology, rejecting quick-to-market wrappers and superficial interfaces:
Isomorphic Labs (UK, DeepMind spinout) raised €556M for its AI-first drug discovery platform, building original algorithms, proprietary data pipelines, and a domain-specific tech stack rooted in biology and chemistry—unlike startups layering on public models.
Neko Health (Sweden) raised $260M to expand its preventive diagnostics platform—integrating proprietary hardware, sensors, and software—fully built from scratch, not a dashboard, redefining early diagnostics.
Loft Orbital (France/US), now a unicorn, is valued for its engineering infrastructure: modular satellite buses, custom mission software, and client-specific payload integration. Funding is for scaling proven systems, not just vision.
Synthesia (UK) secured $180M to advance its AI video platform by developing proprietary architecture for avatar generation, voice synthesis, and contextual editing, rather than layering UX on open models—marking a return to serious IP.
Quantum Motion (UK), though without a major spring round, exemplifies deeptech: building silicon-compatible quantum processors through deliberate engineering grounded in physics, not hype—the kind of work now again attracting investors.
Investors are now firmly backing startups with technical depth and proprietary technology stacks, signaling a lasting shift toward robust engineering.
Thesis-Driven Funds Gain Prominence
This spring marked the ascendancy of thesis-driven funds, moving away from generalist strategies toward focused investment portfolios:
Keen Venture Partners launched a European Defence and Security Tech Fund, raising €40M from EIF (May 2025) to invest exclusively in startups building modern defense and national security infrastructure—portfolio: EclecticIQ (cyber intelligence), Perciv.AI (AI for defense), Avalor AI (risk decisioning), Rescale (HPC for simulation).
7percent Ventures doubled down on aerospace, defense, dual-use AI, and moonshot innovation, betting on founders solving real global problems, not just layering platforms. Recent investments: Aralia Systems (satcom), Unseen (AI for cybersecurity), Tether (aerospace telemetry)—all deep engineering with vertical focus.
Chalmers Ventures expanded its structured lab-to-market model, partnering with scientific teams to commercialize real innovations—deep tech as pipeline, not buzzword.
Creator Fund stuck to backing only PhD-led startups in AI, life sciences, and frontier engineering—supporting domain experts turning academic research into hard tech companies.
Deeptech Labs continued as a seed-stage launchpad for deep tech, funding IP-rich, technically defensible startups and supporting them from prototype to product.
These funds exemplify a broader market shift toward clarity and deep industry expertise, demonstrating that targeted capital increasingly signals strong investor conviction.
Geography No Longer Defines Credibility
Investment rounds this spring highlighted the diminished relevance of geographic bias, prioritizing operational substance and strategic clarity over location:
Reneo (€600M, France/Spain): One of Q1 2025’s largest European rounds, Reneo’s cross-border presence shows that VC now follows product readiness and strategic clarity over headquarters location.
Hotiday (€12M Series A, Italy): Milan-based travel tech Hotiday raised from Lakestar, United Ventures, and Primo Ventures; its niche focus and market traction overcame Italy’s rarity for high-profile deals, signaling diminishing regional bias.
Regional and specialized funds are actively reshaping investment dynamics:
Soulmates Ventures (Prague) closed a €50M impact fund in Q1 2025 to invest in sustainability-focused startups across Central and Eastern Europe, reflecting rising investor interest in regional specialization and ESG.
4Founders Capital (Barcelona) launched a €44M early-stage fund supporting Spanish and Southern European founders, emphasizing proximity, local insight, and long-term regional commitment.
Defiant (Lisbon & London) announced a $30M fund for B2B SaaS and fintech, intentionally targeting underrepresented geographies and bridging Western Europe with peripheral markets through its dual-location setup.
Voima Ventures (Finland) closed a €100M Fund III to invest in deeptech and science-based startups across the Nordics and Baltics, showing hard-tech capital expanding beyond central hubs.
Benelux, DACH, SEE: Multiple new funds and deals this spring highlight growing investor interest in Southeast Europe, Austria, and Benelux—previously secondary regions now gaining strategic relevance.
Investors now evaluate startups by execution strength and market potential, regardless of their headquarters.
Strategic Infrastructure Takes Center Stage
In spring 2025, infrastructure—from AI chips and sovereign cloud to automation and cybersecurity—became Europe’s top priority for both governments and VCs, shifting focus from growth to control, resilience, and autonomy. Early in the year, the EU launched InvestAI (€200B for foundational AI infrastructure, including giga-factories); France added €109B for AI leadership. By spring, the European Technological Competitiveness Initiative began deploying €10B+ to chips, cybersecurity, and cloud via fund-of-funds.
Private capital mirrored this, with increased investment into sovereign infrastructure—data pipelines, chip design, and next-gen autonomy. Legacy players like Graphcore (UK) symbolized Europe’s ambitions in silicon, while new stealth startups in AI chips and compute raised large, undisclosed rounds.
Industrial infrastructure also surged, with funding for automation and industrial platforms seen as vital to economic resilience. FLOW X (Romania) embodied this: deeply integrated industrial analytics and automation, not just dashboards. Investments spread to digital twin platforms, industrial IoT, and process automation, cementing deeptech as infrastructure-first.
Cybersecurity became a sovereign necessity: funding focused on architecture for national and industrial security. Unseen (UK) led with an AI-native approach to protecting infrastructure—shifting the focus from firewalls to inference. Startups in zero-trust, sovereign cloud, and industrial security quietly attracted capital, often state-backed.
Infrastructure is now central—on the cap table and policy agenda—not just for performance, but for sovereignty.
The Road Ahead
This spring marked a reset for European venture capital—shifting toward targeted, deep engineering, thesis-driven investments. The market is likely to remain quieter and more strategic, emphasizing durability, precision, and real technical depth. This evolution suggests not a slowdown, but a maturation of Europe’s tech ecosystem.