A snapshot of entrepreneurship in Europe: between sustained growth and the search for capital

Europe is strengthening its position as a global hub for entrepreneurship, driven by expanding tech clusters and an annual investment growth rate of 13% over the past decade. But the region’s ecosystem still faces challenges ahead in 2026, including regulatory fragmentation and a shortage of late-stage capital.

Over the last ten years, the European start-up landscape has strengthened its position across three core pillars: ambition, talent and investment. According to Atomico’s ‘State of European Tech 2025’ report, during this period there has been exponential growth, with the size of the ecosystem increasing fivefold compared to 2015, reaching more than 40,000 startups and 400 unicorns in 2025. This evolution is also reflected in employment: the European tech workforce is growing faster than that of the United States, with more than 4.6 million jobs in tech companies.

“Europe is rich in creativity and talent.” This is how Donatella Callegaris, Head of Venture & Growth Lending at BBVA Europe, addressed Europe’s strengths during the BBVA Spark Summit 2025, while also acknowledging that “we continue to encounter other barriers that separate us from the US ecosystem.” Among these, regulatory fragmentation and a lack of capital in advanced stages are factors that limit the ecosystem’s growth rate. Currently, Europe is the third largest entrepreneurial ecosystem in terms of total investment, with $33 billion invested in the first nine months of 2025. The United States leads the ranking with an investment of £177 billion, followed by Asia with £44 billion, according to the Atomico report.

Even so, the achievements recorded in the region over the last five years make Europe the ecosystem with the highest compound annual growth rate in new business value creation (7%), surpassing any other market, according to Atomico.

Europe is a very heterogeneous ecosystem where some countries stand out for their investment in venture capital, talent recruitment or the development of new technologies. The United Kingdom, meanwhile, is the country that attracted the most venture capital investment in the first half of 2025 with $8 billion, a figure that exceeds that of Germany and France combined, with $4.4 billion and $3.2 billion raised respectively, according to the ‘Europe Tech Update’ report by Dealroom. Spain ranks fourth in Europe in this classification with $2 billion.

In Germany, the second European hub in terms of investment, the cities of Berlin and Munich stand out, both in the top 10 European cities with the most venture capital investment: “Ten years ago, Berlin was already positioned as an international and cosmopolitan city that attracted a lot of talent,” said Christian Saller, partner at European investment fund HV Capital, about Germany’s largest hub. “Munich, on the other hand, has always been more traditional, stronger in engineering,” he added.

Although the United Kingdom remains the leading European benchmark in the technology industry, in terms of talent, it is the Nordic and Baltic countries that stand out for their density and specialisation. According to Atomico’s State of European Tech 2025 report, Estonia, Finland and Sweden are among the ecosystems with the highest concentration of technology employment in relation to their population, with between 50% and 65% of jobs in the sector linked to venture capital-backed companies. Overall, tech employment in Europe has grown by 27% since 2019, consolidating the north of the continent as one of the most dynamic and competitive talent hubs in the world.

The strength of northern Europe is not limited to talent. According to Dealroom’s Nordics Innovation Report, the Nordic countries (Finland, Sweden, Norway, Iceland and Denmark) had a total of 82 unicorns as of September 2024, representing 22.9% of the European total, despite accounting for only 6% of the continent’s population. This data reflects how small but highly specialised ecosystems have become key drivers of innovation and growth. In this context, Donatella Callegaris warned: “There is a recurring theme of selling companies too early in Europe,” which may be limiting the number of unicorns on the continent.

The European technology ecosystem has made remarkable progress in the last decade, but barriers still exist that limit its ability to scale companies. “Although there is supposed to be only one Europe, in reality the regulation of each market is different,” explained Víktor Trokoudes, co-founder of Plum, on regulatory fragmentation in Europe. Other challenges facing the region include a lack of investment in advanced stages of growth and a lack of public incentives and institutional coordination in the region: “Europe needs European capital in the growth phases and taxes that do not penalise entrepreneurs. We need our governments to work more closely together,” said Callegaris during the latest edition of the BBVA Spark Summit.

“Compared to the United States, the European market lacks long-term capital,” acknowledged Simone Riva, partner at the Partech investment fund. This is evident in Atómico’s report, ‘State of European Tech 2025’, which points out that more than 30% of experienced European founders move their headquarters outside the continent when they reach Series C or later stages. This move is not due to a lack of ambition, but rather to the absence of deep capital markets that allow for scaling without leaving Europe.

According to the report, Europe has greater sectoral and geographical diversity among European technology companies reaching advanced stages of growth. However, despite the growth experienced in recent years, according to Christian Saller of HV Capital, European start-ups still need to be able to grow and consolidate within the ecosystem: “Tech hubs in Europe need to leverage their strengths and find a unique position that allows them to be leaders.”

Saller also warns of Europe’s duty to “break down borders between countries” and insists that “governments must boost the ecosystem by reducing bureaucracy and facilitating access to capital”.

“We are immersed in a new wave of innovation ranging from artificial intelligence to hardware and defence,” says Simone Riva of Partech, highlighting the breadth of sectors that will shape the technological future. In this race to lead the way in technology, the Atomico report warns that Europe must redouble its commitment to strategic areas such as sustainability and AI. In 2025, 18% of venture capital in the region went to climate and energy innovation.

In addition, Europe’s commitment to artificial intelligence remains strong: 31% of all funding in Europe in 2025 went to companies developing AI solutions. This momentum reflects how AI has become the linchpin of technological innovation in the region, with companies competing globally in areas ranging from models for application development to specialised AI services.

In fact, this strategic commitment to new technologies was strongly reflected in investment in 2024, where generative artificial intelligence, industrial technology and electric mobility accounted for nearly 29% of venture capital invested in the region, according to the Dealroom report.

The European ecosystem does not follow a centralised model, but rather a network of specialised hubs that offer different advantages. This heterogeneity is both a defining feature and a challenge for the region, especially when it comes to harmonising laws or mobilising capital to grow companies. Europe is moving towards an increasingly competitive market in which ecosystem experts such as Saller, Riva and Callegaris are calling for a more integrated system that encourages the creation of new companies and uses diversity as a strategic advantage over competitors.

A space where the different players in the entrepreneurial ecosystem find BBVA to be a strategic partner: “We want to grow in the region, making ourselves known as a partner capable of accompanying entrepreneurs in their projects with a solid and tailored financing offer,” says Miguel Ángel Alcalá, head of BBVA Spark in Europe.