European climate tech funding sunk to five-year low in Q1 — here’s why

Europe’s climate tech startups saw a $2.3bn funding dip in Q1 2025, marking the lowest since Q3 2020. The slowdown stems from a mix of market maturity, investor focus shifts toward AI, regulatory challenges, and strategic repositioning by firms to align with rising defense tech spending and Europe’s push for tech sovereignty. Despite this decline, experts predict that_disciplined founders and VCs will prevail_, suggesting potential upside in the coming year as some deals may go unannounced. This follows a decade of growth, with 2023 reaching unprecedented highs but still not matching US levels due to broader funding challenges.