Europe’s PE and VC held firm in the first half of 2025

Fundraising steady but subdued; investments and divestments decline
Increased activity expected as defence tops target sectors, and AI leads industry focus

Brussels, Belgium, 6 November 2025, 1100 AM - Europe’s private equity and venture capital industry held firm in the first half of 2025 despite tariff shocks and geopolitical volatility, according to Investing in Europe: Private Equity Activity H1 2025 from Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors. Fundraising remained both stable and subdued while investments and exits dipped. In collaboration with global management consultancy Arthur D. Little, Invest Europe also released The Insight: State of the European Private Equity Industry which highlights a recovery in confidence and a decisive pivot in priorities: defence has become the top sector for expected investment growth, while AI is now the leading operational focus across firms.

Private equity (PE) and venture capital (VC) fundraising reached €54 billion in H1 2025 – down 19% from the revised H1 2024 figures but in line with H2 2024 figures - led by a 30% rise in buyout funds to €38 billion compared to the second half of 2024. The data indicates ongoing concentration of fundraising in larger vehicles with 342 funds reaching final closing during the period, a 28% decrease compared to the same period in 2024.
While total investment came in at €49 billion, down 12% compared to the same period in 2024, venture capital investment grew to €10 billion, representing an 8% year-on-year increase, its strongest performance since early 2022, fuelled by activity in the ICT sector.
PE and VC exits totalled €13 billion, down 42% compared to the same period in 2024, amid continued market uncertainty impacting divestment processes.

Yet confidence is rebounding fast:

28% of LPs plan to increase commitments over the next year, while two-thirds expect to maintain current levels. Some 40% of LPs believe European fund commitments will benefit from the continent’s stability and predictability, while a similar number have lower appetite for US funds due to uncertainty stemming from the new administration.
GPs are more bullish about fundraising, with 45% expecting higher levels of activity, particularly as democratisation gathers pace. More than half of GPs are interested in marketing funds to mass-affluent investors with wealth up to $500,000, while almost a quarter are interested in accessing the broader retail market.
Defence is now the leading sector for growth expectations, cited by 74% of GPs, overtaking deep tech and AI. Almost half of GPs are open to investing in dual-use technologies, and nearly a third of LPs are now comfortable with purely military applications, up from just 7% in 2022.
At the same time, AI dominates daily operations and due diligence: 94% of GPs see AI-supported work practices as the most significant driver of change in the next year, with geopolitical risk close behind.
ESG remains important but has shifted from expansion to maintenance, reflecting well-entrenched standards.

Eric de Montgolfier, CEO of Invest Europe, commented:

“Despite trade tensions, private equity and venture capital are showing resilience and renewed optimism. Europe’s stable environment, combined with strong interest in defence and AI, positions the industry to drive competitiveness and sovereignty, backed by €414 billion in dry powder.”

Jonas Fagerlund, Partner at Arthur D. Little, said:

“Fund managers and investors are adapting fast to emerging technologies and global risks. Defence and AI are at the forefront, but proven value-creation strategies like buy-and-build and organic growth remain key.”

The findings echo the Venture Capital Survey 2025, released in October with the European Investment Fund, which showed a sharp rebound in expectations for fundraising, exits, and deal flow.

Read Investing in Europe: Private Equity Activity H1 2025 and The Insight: State of the European Private Equity Industry.