During the first three quarters of 2025, Europe’s business technology sector raised a total of EUR 3.4 billion through 443 transactions, according to Finch Capital, a growth investor specializing in business and fintech innovation.

These figures mark a year-over-year (YoY) decline of 4% in total funding value, and a 32% YoY decline in deal volume from 654 deals in 2024.

Despite this overall slowdown, artificial intelligence (AI) emerged as the primary growth driver, accounting for the majority of deals and funding, particularly within the IT and data vertical.

AI dominates business tech funding

AI accounted for 50% of all business tech funding rounds in Q1-Q3 2025. In value terms, AI-linked ventures secured a total of EUR 2.4 billion, representing 67% of total business tech funding for the period.

Surging AI funding activity propelled the IT and data vertical to become the largest and fastest-growing business tech vertical. 61% of deal volume in IT and data during Q1-Q3 2025 was linked to AI, reflecting rising enterprise demand for cloud, and productivity AI tools.

Total funding to IT and data startups reached EUR 1.7 billion during Q1-Q3 2025, marking a 19% YoY increase and giving the vertical a 50% share of total European business tech funding for the period. However, deal volume in IT and data fell 37% YoY to 157 transactions. This suggests that capital has been concentrated around AI leaders, particularly those specializing in infrastructure and data modernization.

Exits in IT and data also surged, reaching EUR 3.1 billion in Q1-Q3 2025 and growing more than ninefold from EUR 320 million in 2024.

IT and data was the only vertical in business tech to record a YoY increase in funding activity, a growth that was driven by AI tools that are enhancing collaborations and which are delivering productivity gains. These solutions are supporting the advent of “Business 4.0”, an era where companies are redesigning operations around AI as a core capability rather than an experimental add-on, Finch Capital says. The technology is increasingly viewed as a strategic growth driver, powering efficiency, decision-making, and competitiveness.

France leads business tech funding

France led European business tech funding by value, accounting for 49% of the market in Q1-Q3 2025. The country is maintaining its leadership for the second consecutive year, driven by landmark rounds raised by Mistral AI.

In September 2025, Mistral AI secured EUR 1.7 billion in a Series C round led by semiconductor equipment manufacturer ASML with participation from existing investors DST Global, Andreessen Horowitz, Bpifrance, General Catalyst, Index Ventures, Lightspeed and NVIDIA. The round gave Mistral AI a EUR 11.7 billion post-money valuation and will support the startup’s scientific research to tackle sophisticated technological challenges faced by strategic industries. It came after months of rumors of a takeover by Apple.

Founded in 2023, Mistral AI is a pioneer company in generative AI (genAI), providing high-performance, optimized, and cutting-edge open-source models, products and solutions as well as end-to-end infrastructure.

Mistral AI’s key offerings include Le Chat, a large language model (LLM) chatbot and AI assistant; Mistral Code, an AI-powered coding assistant for enterprises; and Mistral Compute, a purpose-built cloud infrastructure service for AI development.

The startup is headquartered in France, with a global presence in the US, UK and Singapore. It achieved EUR 30 million in annual recurring revenues last year, according to Sifted.

Valuations surges; mid-market buyouts rise

Median pre-money valuations have surged across both AI-led and traditional business tech companies over the past seven years, climbing 264% since 2018 and now surpassing 2021-2022 peaks after a brief 2023 correction. This represents a 72 points increase from 2024, driven by the AI momentum triggered by the release of OpenAI ChatGPT.

In Q1-Q3 2025, a total of 160 exits occurred in Europe’s business tech industry, up from 131 in 2024. The landscape was dominated by mid-market buyouts, with about 40 transactions totaling about EUR 2 billion in value.

Europe’s median business tech exit value reached EUR 49 million in 2025, up 65% from last year’s EUR 18 million, further highlighting the strength of the mid-market segment.

Main Capital Partners, a Dutch software investor managing investment funds active in Europe and the US, was the most active buyer with four deals. Marlin Equity Partners, a global investment firm from the US; Adelie, a multi-stage tech fund based in Paris and London; Securex, a Belgian human resources (HR) services group; and Fullcast, an AI-powered sales performance management solution, followed, each with two transactions.

Though buyouts led in exit value, strategic mergers and acquisitions (M&A) dominated in deal count, recording about 80 transactions. However, these deals generated a much more modest ~EUR 500 million in total value.

Finance and operational takes second place

After IT and data, finance and operations was the second-largest category in European business tech funding, securing a total of EUR 686 million through 107 deals. The UK and German led the charge, jointly accounting for 42% of deals.

Deal activity was driven by digital procurement leaders, as executives seek improved performances, transparency, and regulatory compliance through digital transformation.

Europe’s finance and operations vertical is expected to end the year at more than EUR 900 million.

Notable transactions in finance and operations in Q1-Q3 2025, according to Finch Capital, included Finom’s combined EUR 208 million rounds; IFS’s EUR 124 million round; and Joblogic’s EUR 93 million round.

Finom is a Dutch financial platform serving small and medium-sized enterprises (SMEs) across Europe that combines banking, invoicing, and a growing range of features, including AI-enabled accounting. IFS provides cloud enterprise software and industrial AI applications across aerospace and defense, engineering and construction, energy and utilities, manufacturing, telco and service. Finally, Joblogic is a field service management software provider from the UK, serving over 100,000 users across industries including HVAC, plumbing, electrical maintenance, facilities management, building fabric maintenance, and other skilled trades, helping contractors cut admin hours, invoice faster, and reduce wasted engineer travel.

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