The Most VC-Funded Sectors in Europe

The Most VC-Funded Sectors in Europe

Europe’s startup ecosystem has grown rapidly over the past decade, attracting billions in venture capital (VC) from both local and global investors. While overall funding levels fluctuate with macroeconomic conditions, certain sectors consistently draw strong VC attention. From climate tech and deep tech to fintech, health innovations, and enterprise software, the continent’s innovation landscape is increasingly diverse and resilient.

Climate Tech Leads the Pack

Climate tech and energy transition startups are now Europe’s single largest VC-funded sector, accounting for approximately 27–30% of total venture capital investment in 2023 (Dealroom/Sifted). This surge reflects the EU’s ambitious carbon neutrality targets, supportive policy frameworks, and the growing appetite among investors for climate-positive solutions.

Startups tackling renewable energy, sustainable mobility, carbon capture, and circular economy solutions are driving the trend. Countries like the Netherlands, Germany, and the Nordics are at the forefront, combining strong cleantech ecosystems with dedicated climate funds.

AI & Deep Tech Keep Rising

AI and deep tech (which includes frontier technologies like advanced hardware, quantum computing, and automation) accounted for about 17% of Europe’s VC funding in 2023. The rise of generative AI and automation tools is accelerating investor interest, with large rounds for companies like Mistral AI, DeepL, and Aleph Alpha showing the strength of the ecosystem.

Key hubs for AI and deep tech include Berlin, Paris, and London, all benefiting from talent density and supportive research institutions.

Fintech Remains a Pillar

Fintech remains a major draw, attracting roughly 15–19% of total VC investment, down slightly from its peak but still firmly in the top three sectors. From digital banks to blockchain platforms and payments solutions, European fintech leaders like Revolut (UK), N26 (Germany), and Lydia (France) continue to scale, supported by consumers’ shift away from traditional banking.

London remains Europe’s fintech capital, thanks to its mature regulatory environment and deep investor pools.

Healthtech & Enterprise Software Stay Solid

While harder to split precisely, healthtech and enterprise software together continue to be pillars of European VC activity. Over the last 20 years, they have consistently accounted for a combined ~40% of total VC funding (Dealroom). Healthtech startups in telemedicine, AI diagnostics, and mental health are still seeing healthy long-term growth, while B2B SaaS and cloud solutions remain attractive bets for their scalability and recurring revenues.

Companies like Doctolib (France), Kry (Sweden), and Celonis (Germany) show how Europe’s healthtech and enterprise software scenes remain globally competitive.

Emerging Sectors to Watch

Beyond these leading sectors, several emerging areas are gaining momentum:

  • AgriTech: With food security and regenerative farming in focus, AgriTech is steadily attracting more funding.

  • Cybersecurity: Increasing digital threats are driving larger rounds for European security startups.

  • Edtech: While post-pandemic growth slowed, niches like corporate training and AI-driven learning are evolving.

  • Space Tech: Once US-dominated, Europe’s space tech sector is quietly expanding, supported by national programs and private capital.

How Does Europe Compare Globally?

According to Dealroom’s 2023 and early 2024 data, Europe’s top-funded sectors now mirror global trends in the US and East Asia. In the US, the top sectors by VC investment are:

  1. Health & Biotech

  2. Enterprise Software / AI

  3. Fintech

East Asia follows a similar pattern, with deep tech, fintech, and industrial tech attracting the biggest rounds. Notably, Europe’s climate tech stands out: its share of total VC funding is higher than in North America or Asia, thanks to EU policy incentives and investor demand for sustainable growth.

Final Thoughts

The European VC landscape is dynamic, but certain sectors continue to stand out for their scale, impact, and resilience. Climate tech, deep tech, fintech, healthtech, and enterprise software together account for the lion’s share of VC investment, while emerging verticals like AgriTech and space tech hint at the next wave of innovation.

For founders, understanding which sectors attract capital and why can shape how you position your startup. For investors, the current trends reflect where both opportunity and responsibility intersect in the next era of European innovation.