European health tech and AI companies maintained strong appeal among global venture capital investors, raising $13.9 billion in Q1 2025, according to Dealroom data. This represents a 2% year-over-year increase, matching investment levels from the previous quarter.
But what’s next for health and AI in Q2? Spoiler: the trend shows no signs of slowing.
European startups draw unprecedented global interest
International investors accounted for more than 40% of the funding, indicating a revitalised global interest in European startups. This represents the most robust first quarter for U.S. investment in Europe since 2021. Cross-border investments in Europe have climbed to 28%, marking the highest quarterly figure since 2011. This increase bolsters a new wave of European entrepreneurs, emphasising the region’s dedication to enhancing startup financing and improving competitiveness in the wake of the 2024 Draghi Report.
AI startups in Europe captured 25% of all venture capital in Q1 2025, up from just 7% a decade ago. European AI startups raised $3.4 billion, a 55% increase from the previous year, as the influence of AI spreads across various industries. Muj Choudhury, CEO of RocketPhone, explained: “In 2025, AI will be woven deeply into business software, offering practical solutions to users. Striking the right balance between governance and innovation will be key to ensuring AI’s potential is fully realised.”
Without AI investments, overall European investment would have fallen by 10%, highlighting AI’s substantial impact both regionally and globally.
Health tech dominates investment charts
Healthtech led the way with $4.3 billion in funding, a 65% year-over-year increase, marking its fourth consecutive quarter at the top of the investment charts. Major deals included Isomorphic Labs’ $600 million investment in AI-driven drug discovery, Verdiva Bio’s $411 million investment in obesity biotech, and Neko Health’s $260 million investment in preventative healthcare.
Annick Verween, head of biotope by VIB, pointed out: “AI-driven startups are transforming the biotech industry by processing complex biological data faster and more efficiently than ever before. This acceleration in biotech development is drawing greater investor attention, but they will demand more rigorous evaluations of technology’s added value before committing funds.”
During the World AI Cannes Festival, Jean-Philippe Vert, Ph.D., co-founder of Bioptimus, shared his vision for 2025 with TFN: “We’ll see foundation models enabling us to ask new ‘what-if’ questions. For instance, AI could predict what happens to a cancer cell when we perturb it, enabling personalised medicine.” He also discussed the concept of a “digital twin,” which could simulate patient and cell behaviour to optimise treatments. AI’s ability to simulate complex biological processes could revolutionise healthcare in unprecedented ways.
The AI-driven drug discovery segment secured $949 million in Q1, while industrial technology attracted $669.3 million. Gary Coffey, CTO of Spectrum.Life, added: “AI will continue to play a pivotal role in health tech, from improving diagnostic accuracy to automating routine tasks. These technologies will alleviate pressures on healthcare systems, enabling earlier interventions and better outcomes.”
AI remains central to health tech innovation. Julia Hawkins, General Partner at LocalGlobe, noted: “The rise of European health tech is no fluke. It’s the result of sustained investment in visionary founders creating impactful solutions. As health challenges like mental health and ageing populations continue to rise, the need for these solutions has never been more urgent.”
The UK leads, followed by Germany, France, and Spain
The UK continues to hold its status as Europe’s technology hub, attracting $4.2 billion, an 8% increase. London contributed $3.2 billion to this total, reflecting a 26% rise. Both Cambridge and Oxford experienced notable growth, with Oxford’s funding increasing by 200% to $280 million compared to the first quarter of 2024.
Ireland also saw remarkable progress, with investments soaring 542% to $538.4 million, driven by XOCEAN’s $128 million investment and Tines’ $125 million investment. Furthermore, Dublin has entered Europe’s top 10 most financed cities, witnessing a staggering 824% increase in investments to $330 million.
Christine Hockley, Managing Director and Co-Head of Funds at British Business Bank, told TFN: “Despite challenges, the UK’s innovation ecosystem remains robust, offering opportunities in deep tech and life sciences. We expect specialised investment approaches to grow, particularly in advanced fields like stem cell therapies and climate tech.”
Germany, France, and Spain each raised over $1 billion. Spain’s travel tech sector flourished, with AuroTravel securing $246 million and TravelPerk raising $200 million — a 175% year-over-year increase. Malta recorded the quarter’s largest single deal: VistaJet, a private-jet-as-a-service company, raised $600 million, driving Malta’s investments up 1,230% compared to the same period in 2024.
The European startup ecosystem is showing remarkable growth, particularly in health tech and AI, marking a promising start to 2025. With global investments continuing to flow in, Europe appears set for another strong quarter.
