Europe’s business technology sector saw a dip in funding during the first nine months of 2025, but artificial intelligence stepped up as the main force pushing growth forward. According to a fresh report from Finch Capital, total funding hit 3.4 billion euros across 443 deals, down from last year, yet AI tools drove big gains in key areas like IT and data.
Overall Funding Trends Show a Slowdown
Business tech funding in Europe fell 4 percent in value and 32 percent in deal numbers compared to 2024. This comes as companies focus more on profits over rapid growth, leading to tighter investments.
The shift highlights how economic pressures are reshaping the landscape. Investors are picking winners carefully, especially in areas that promise quick returns. Despite the drop, the sector remains active with new startups emerging.
Many experts point to global events, like rising interest rates and market uncertainty, as reasons for the caution. Still, the total funding amount shows Europe holds strong in tech innovation.
AI Emerges as the Top Growth Driver
AI grabbed half of all funding rounds in the period, pulling in 2.4 billion euros. This made up 67 percent of the total business tech cash flow.
The rise comes from strong demand for AI tools that boost productivity and handle data better. Companies are using these to cut costs and make smarter decisions.
- AI funding focused on cloud services and automation.
- Ventures in infrastructure saw the biggest boosts.
- Productivity tools led in deal numbers.
This surge ties into broader trends, such as AI’s role in everyday business operations. Recent events, like major AI conferences in Paris, have spotlighted Europe’s push to compete globally.
IT and Data Vertical Leads the Pack
The IT and data area was the only one to grow year-over-year, up 19 percent to 1.7 billion euros. AI made up 61 percent of its deals.
This growth stems from needs for better data handling and cloud tech. Startups in this space are modernizing old systems with AI.
Deal counts dropped 37 percent, showing money flows to top players. Exits jumped nine times to 3.1 billion euros, a sign of maturing companies.
| Category | Funding (EUR Billion) | YoY Change | Deal Volume |
|---|---|---|---|
| IT and Data | 1.7 | +19% | 157 |
| Overall Business Tech | 3.4 | -4% | 443 |
| AI-Linked | 2.4 | N/A | N/A |
These numbers reveal how AI is transforming support roles in businesses, from cost centers to profit drivers.
Impact on Other Business Tech Areas
Other verticals felt the pinch, with funding spread thin outside AI. For example, fintech and operations saw fewer deals as focus shifted.
This concentration on AI could widen gaps between leaders and smaller players. Analysts predict more mergers as companies team up for AI edge.
Looking ahead, Europe’s AI investments align with global patterns, like massive data center builds. Recent funding rounds in startups like those in automation show the trend gaining speed.
What This Means for Businesses and Investors
The report signals a new era where AI drives efficiency and growth. Companies adopting AI early stand to gain, while others risk falling behind.
For investors, the data points to hot spots in IT and data. With AI capturing most funds, betting on these areas could yield high returns.
Experts advise watching for policy changes, like EU grants for AI, which could boost the sector further. This ties into recent announcements of billions in AI infrastructure spending across Europe.
As these trends unfold, staying informed helps businesses navigate the changes. Share your thoughts on how AI is shaping tech funding—comment below or spread the word to spark discussion.
