European AI Investment Boom in H1 2025 Hits €3.04 Billion
European AI-native startups attracted €3.04bn in investments in H1 2025, a 61% increase from 2024, with AI agents and sovereignty emerging as key trends.
Excitement around AI shows no signs of slowing down in 2025. According to Sifted data, investments in AI-native startups in Europe reached €3.04bn in the first half of the year—a 61% increase from the same period in 2024 (€1.89bn). The number of investors backing AI startups in Q2 2025 (342) nearly tripled compared to Q1 2024 (128).
The AI Boom: Applications Take Center Stage
Investors are shifting focus from foundational models to real-world applications, particularly AI agents—systems that automate tasks without human intervention. This sector saw deal counts surge 226% year-on-year, with funding hitting €1.7bn. Notable players include:
- Synthesia (UK): Raised $180m Series D at a $2.1bn valuation and secured additional funding from Adobe.
- Lovable (Sweden): Raised $15m pre-Series A and is now eyeing a $1.8bn valuation.
- Isomorphic Labs (UK): Raised $600m in one of Europe’s largest AI rounds.
However, the boom comes with warnings of a bubble, as some startups face challenges:
- 11x (UK): High churn due to product issues.
- H Company (France): CEO stepped down amid leadership concerns.
- Builder.ai (UK): Entered insolvency after reports of faked business dealings.
AI for Sovereignty: Europe’s Push for Competitiveness
With US protectionist policies and Chinese AI firms gaining traction, Europe is doubling down on homegrown AI. Key developments:
- France: Announced €109bn in AI investments over five years.
- Mistral: Plans to launch cloud services powered by its own infrastructure.
- UK: Committed £14bn to AI infrastructure, including £2bn from Nscale.
Investors are taking note. Eurazeo and Cathay Innovation closed billion-euro funds focused on AI, while US investors increased activity in Europe (20.4% of deals in H1 2025 vs. 19.1% in 2024).
The Road Ahead
As Laura McGinnis of Balderton Capital notes, Europe’s AI founders match US peers in ambition but benefit from more rational valuations. With Silicon Valley’s allure fading, Europe is poised to become a key challenger in the global AI race.
Read the original article: H1 2025 European AI Investment Boom
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Alex Thompson
AI Technology Editor
Senior technology editor specializing in AI and machine learning content creation for 8 years. Former technical editor at AI Magazine, now provides technical documentation and content strategy services for multiple AI companies. Excels at transforming complex AI technical concepts into accessible content.