European VC Valuations Hit Multi-Year Highs Amid Mixed Signals, PitchBook Analysis Shows

What's New

According to PitchBook's Q2 2025 European VC Valuations Report, median venture capital valuations across Europe continued climbing in the first half of 2025, with Series E+ companies reaching €1.2 billion for the first time since 2022. The value-over-volume dynamic persisted as deal counts remained flat while median deal sizes and valuations grew across most funding series, though volatility in financial markets and geopolitical tensions created uncertainty for the second half of the year.

Why It Matters

European venture valuations are defying broader economic headwinds, suggesting underlying strength in the startup ecosystem despite reduced deal activity. However, the disconnect between rising private valuations and challenging public market conditions—evidenced by continued down-round IPOs—highlights a growing valuation gap that could impact exit strategies and future funding rounds.

Big Picture Drivers

• Market maturation: New methodology grouping by series rather than stage reveals higher-quality data pool and more representative median values across European venture markets

• AI dominance: Artificial intelligence companies captured one-third of top unicorn deals, though nearly 25% of down rounds involved AI startups, showing sector volatility

• Geographic concentration: UK & Ireland leads valuation growth with Series C-D medians doubling to €314.1 million, driven by unicorn rounds from Synthesia and Marshmallow

• Exit constraints: Acquisition exit values on pace for lowest levels since 2021, driving increased interest in alternative liquidity solutions like direct secondaries

• Corporate participation: Deal value with corporate venture capital involvement declined to 44.9% from 47.3%, while asset managers gained market share

By The Numbers

• €5.2 million: Median pre-seed/seed valuation in H1 2025, up 5.8% from 2024

• €32.4 million: Series A-B median valuation, representing 15.7% year-over-year growth

• 15.1%: Proportion of down rounds in H1 2025, down from 16.7% in 2024

• €10.6 billion: Exit value pacing 33.2% below 2024 levels, excluding major outliers

• €47.5 billion: Estimated size of European institutional VC direct secondaries market

Key Trends to Watch

• Valuation compression risk as over 50% of European unicorns maintain stale valuations from 2021-2022 peak levels, creating potential for significant markdowns.

• Alternative liquidity growth through direct secondaries and venture debt as traditional exit routes remain constrained by challenging IPO and acquisition markets.

• Sector rotation acceleration with fintech reclaiming valuation leadership in Series A-B rounds while AI shows increasing volatility despite continued investor interest.

• Regional divergence patterns emerge as UK valuations surge while France & Benelux show mixed signals, potentially reshaping European venture geography.

The Wrap

European venture markets are navigating a complex environment where rising valuations mask underlying structural challenges. While the value-over-volume trend suggests quality deal-making, the growing gap between private and public market valuations, combined with limited exit opportunities, may force a reckoning in the coming quarters. Investors and entrepreneurs must prepare for alternative liquidity strategies while monitoring geopolitical and economic factors that could rapidly shift market dynamics.