EU private equity investment in local AI companies soars to $6.8B in 2025

Private equity and venture capital firms based in EU member states increased their investment in local AI companies by 83.3% year over year to $6.8 billion in 2025.

However, the number of deals was down to 392 in 2025 from 438 in 2024, according to S&P Global Market Intelligence.

The divergence reflects larger average deal sizes, driven by a maturing EU AI market that is producing bigger and more valuable companies, said Jonas Fagerlund, partner and global private equity lead at consulting firm Arthur D. Little.

Europe-based private equity and venture capital investment in local AI companies outpaced outbound investments to the US in value and deal volume. EU investment into the US AI market totaled $6.21 billion across 201 deals in 2025.

EU's AI sovereignty push

The European Commission has adopted measures to strengthen Europe's digital autonomy, including AI initiatives to expand domestic infrastructure and enhance conditions for AI innovation and investment.

This push for sovereignty can also drive greater investment in domestic AI companies and infrastructure, but not at the expense of outbound investment in US-based AI companies, said Jed Constantino, principal for private markets at Meketa Investment Group Inc.

The US will continue to attract a significant share of AI investment from European firms, given the market's depth, maturity, broad pool of AI companies and access to capital to fund growth through exits, Constantino said.

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EU's AI leaders

The gap between Europe and the US in available capital is also beginning to close, said Pavel Ermoline, head of venture capital and direct investing at investment platform Moonfare GmbH.

Ermoline pointed to the European Commission's €5 billion Scaleup Europe Fund, managed by EQT and designed to deploy growth capital from the series B stage onward. "This could help more European companies scale without relying as heavily on US capital," Ermoline said.

European investors often lack sufficiently large late-stage funds for major follow-on rounds, so some European AI winners still seek US investment. In some cases, EU players relocate closer to the US ecosystem, Ermoline said.

The need for deeper domestic growth funding is even more stark, given that the EU has already produced AI companies with US-like scale potential and technical differentiation, Ermoline added, citing France-based Mistral AI SAS and Germany-based Helsing GmbH.

A series C round that raised $1.99 billion for Mistral AI SAS was the largest deal for EU-based AI companies in 2025. Helsing's $695.3 million series D round was the second-largest.

The largest EU outbound AI investment into the US was Groq Inc.'s $750 million series D round, which included participation from Germany-based investor Digital Transformation Capital Partners GmbH.

Private equity's role

Private equity firms can also spur investment in local AI providers by funding AI startups directly and creating demand when their portfolio companies adopt AI to improve operations.

"The private equity industry is at an inflection point where they need to shift value creation from financial engineering and multiple expansion toward value creation in companies, which will be heavily driven by AI," said Gardar Björnsson Rova, who leads QuantumBlack, the AI consulting arm of Mckinsey & Co. Inc.

It is not only European private equity firms that are in a "catching up" phase on operational value creation, according to Rova. Most private equity firms globally are building senior AI leadership, forming partnerships and reshaping value creation plans to incorporate AI.

"As this happens, we do see a divergence where the large US-based houses have formed partnerships or even joint ventures with OpenAI and Anthropic, where European firms have not been included — with some notable exceptions," Rova said.

Private equity firms that can "shape and execute on ambitious tech and AI agendas" will have the real advantage, Rova said.