Europe’s haves and have-nots
For European AI and defence start-ups, venture capital funding is coming fast and furious.
Last year total European VC investment rose 5 per cent to €66bn, a post-pandemic high, according to PitchBook.
And several companies in those sectors are in talks to raise fresh funding at sharply higher valuations, the FT reports.
Among them are Swedish legal AI start-up Legora, which is in talks to raise funding at about a $4bn valuation, more than doubling its $1.8bn valuation reached last October, said people familiar with the matter.
In the defence tech sector, Munich-based satellite launcher Isar Aerospace, which is valued at $1bn, is discussing raising significant new funds.
While defence deals are rapidly on the rise, AI has been the main driver of activity.
AI-related deals last year accounted for more than 35 per cent of all European venture capital transactions, worth €23.5bn. That marked an increase from €17.7bn for such deals in 2024.
“The market has clearly decided that AI is the future,” said Matt Miller, the founder and managing partner of Evantic Capital. “Companies that are doing the playbook from 10 years ago are just not interesting.”
Defence and AI groups are benefitting from a push by European officials to increase their tech and security independence.
European start-ups focused on defence and related technologies had investment soar 55 per cent year on year to a record $8.7bn in 2025, according to the Nato Innovation Fund and research group Dealroom.
“The sovereignty tailwind is not to be underestimated,” said Siraj Khaliq, a senior adviser at the €1bn European deep-tech fund Kembara.