The third quarter delivered European startups their strongest venture funding performance in four years, with total capital reaching $25bn. This represented a 77% jump from the $14bn raised during the same period in 2025. Across the Atlantic, North American funding contracted sharply to $92bn, a 35% decline from the previous quarter, largely because neither OpenAI nor Anthropic announced fresh mega-rounds comparable to their earlier investments this year.

Artificial intelligence companies captured an unprecedented share of European capital, claiming $18.8bn or 75% of all funding raised. Despite the overall slowdown in North America, that region still deployed roughly two-thirds of its $92bn total into AI ventures, totalling $61bn.

Four deals reshape the funding landscape

Just four European companies accounted for nearly 40% of the continent's quarterly funding. Mistral's €3bn Series D round—valued at approximately $3.5bn by Crunchbase—set a new record as the largest venture financing ever secured by a European startup. Infrastructure provider Nscale closed a $3.36bn convertible note, while defence-focused firms Helsing and Quantum Systems respectively raised $1.8bn and $1.2bn.

Geographic distribution showed the United Kingdom leading with $7.5bn, followed by Germany at $5bn and France at $4.8bn. Both Germany and France achieved their strongest quarters since 2021 and early 2022 respectively. Sweden contributed $1.5bn, with the Netherlands and Spain rounding out the top performers at $1.4bn and $1.2bn.

North America's pullback reflects mega-round timing

The North American decline stemmed primarily from the absence of blockbuster funding announcements for leading AI labs. OpenAI had secured $110bn during the first quarter, while Anthropic raised $65bn in the second. Despite the third-quarter contraction, funding remained 50% above year-ago levels.

The largest North American rounds went to data analytics firm Databricks ($5bn), energy-focused Crusoe ($3.9bn), The Boring Company ($3bn), and AI coding platform Cognition ($2bn). Consolidation activity proved substantial, with 11 acquisitions of North American startups valued at $1bn or above. Nvidia's purchase of Hugging Face for $12.93bn topped the list, followed by AMD's acquisition of World Labs at approximately $8.2bn and Stripe's reported $7.5bn deal for OpenRouter. Seventeen venture-backed companies completed initial public offerings, collectively raising just under $4bn.

AI sector consolidation accelerates

Venture-backed artificial intelligence companies have pursued an aggressive acquisition strategy, purchasing 195 AI startups through 29 September. This tally surpasses the entire 2025 total by 14%, even as the number of acquiring companies grew by only 2%. Just 12 of these 195 transactions carried publicly disclosed valuations.

OpenAI led acquisition activity with 10 deals, while Anthropic and Stockholm-based legal AI company Legora each completed five. Harvey executed four acquisitions including Guardrails AI in September, with Sierra and Cursor making three deals apiece and Cohere closing two transactions.

M&A is explicitly part of how we accelerate what we're building

David Eckstein, chief financial officer of Legora, in a LinkedIn post

Source: The Next Web