The tech vertical taking off in Europe
1. Key Themes
Theme: Deep tech is dominating Europe's fastest-growing VC verticals, driven by sovereignty and defense
Space tech and advanced manufacturing lead deal-value growth
Space tech and advanced manufacturing are posting the biggest gains, powered by mega-rounds.
"According to PitchBook's Q3 2026 European Venture Report, space tech and advanced manufacturing posted the biggest gains in terms of deal value this year. The former is currently pacing 273.8% above last year's total, while the latter is on track to surpass 2025 by 188.7%."
"The verticals have benefited from increasingly large rounds from startups, including satellite operator Iceye, which raised €1 billion in June, and AI-driven materials discovery specialist CuspAI's $450 million Series B."
Robotics and drones are scaling on the back of defense tech
Nine-month investment already far exceeds 2025's full-year total.
"Robotics and drones also made the list of Europe's fastest-growing VC verticals, with investment reaching €8.7 billion in the first nine months of the year, compared to €5 billion in 2025's annual total. Defense tech has helped to push the vertical to new heights and led to sizeable rounds for startups such as drone maker Quantum Systems, which raised a $1.2 billion Series D in July."
Tech sovereignty is the macro tailwind
"The surge in deep tech investments coincides with Europe's push for sovereign technology to reduce its dependence on the US, particularly in areas such as semiconductors and defense."
Theme: AI data center buildout is reshaping adjacent infrastructure markets (power, connectivity, financing)
Power and energy storage for AI infrastructure is minting unicorns
"Demand for data center power just made this 'supercapacitor' startup a unicorn. Skeleton Technologies, an Estonian startup making high-power systems for AI infrastructure, was backed by Siemens to expand in the US."
"Skeleton Technologies, a developer of power systems for AI infrastructure, received an investment led by Siemens at a $1 billion valuation."
Data center connectivity and capex financing are attracting capital
"Data center connectivity chip builder Salience Labs raised a $125 million Series B led by Bullhound Capital."
"Warburg Pincus-backed data center operator Princeton Digital Group is seeking a $1.2 billion loan for its data center campus development in Malaysia, Bloomberg reported."
The macro economy is leaning on data center capex
"If America stops building data centers, it could head toward a recession, warns BlackRock's Larry Fink. 'So much of our economy is based on the buildout of this capex,' he said."
Theme: LPs and regulators are scrutinizing private valuations, with the secondary market as the check
Secondary pricing is becoming a valuation audit tool
"More LPs are using secondary-market valuations to help determine how accurately GPs mark their assets."
"If there is a consistent gap between how a manager marks its assets and what they sell for on the secondary market, it could well be a red flag."
Liquidity use of secondaries is broadening, and regulators are paying attention
"'We're seeing more LPs using secondaries as a liquidity tool, whether that's selling out of funds or GP families or even strips of commitments to right-size exposure,' said Nick Best, a managing director in Campbell Lutyens' secondary advisory team."
"At the same time, the regulatory spotlight has shifted to valuations. In late September, staff at the Securities and Exchange Commission issued a statement stating that it is insufficient for private funds to rely on GP-provided valuations."
Theme: Enterprise AI tooling and agentic software are drawing early-stage capital
Agent infrastructure and AI security rounds
"Scuba, the developer of a shared context engine for teams using AI agents, emerged from stealth with $34 million across two funding rounds: a seed round led by IVP and Accel, and a pre-seed round led by Accel."
"Pluto Security, a cybersecurity startup focused on AI tool adoption in enterprises, secured a $34 million Series A led by Jump Capital."
"AI infrastructure startup Modal secured a $750 million Series D led by Accel at a $15.75 billion valuation."
2. Contrarian Perspectives
Valuation marks may not be trustworthy, and the secondary market is the truth serum
The consensus treats GP-reported NAVs as the reference point, but this piece argues LPs are increasingly treating secondary pricing as the more honest signal, and that regulators agree.
"The price of a secondary deal reflects what a buyer is actually willing to pay for an asset as of the reference date."
"More deal flow from rising secondary activity means more comparable transactions, which should make pricing more efficient. This is particularly true for 'flow name' funds managed by the best-known managers, whose stakes trade regularly."
The implication is that less-traded funds may have valuations that are harder to verify.
The US economy's dependence on AI capex is a systemic risk, not just a sector bet
Rather than framing data center buildout as an upside story, Fink frames its slowdown as a recession trigger.
"If America stops building data centers, it could head toward a recession, warns BlackRock's Larry Fink. 'So much of our economy is based on the buildout of this capex,' he said."
Evergreen funds are growing even as traditional fundraising shrinks
"Evergreen fund net asset value has topped $650 billion, a small but growing slice of private capital even as drawdown fundraising has declined for five consecutive years."
3. Companies Identified
- Description: Estonian maker of "supercapacitor" high-power systems for AI infrastructure
- Why mentioned: Became a unicorn on data center power demand, backed by Siemens
- Quote: "Skeleton Technologies, a developer of power systems for AI infrastructure, received an investment led by Siemens at a $1 billion valuation."
- Description: Satellite operator
- Why mentioned: Mega-round illustrating European space tech momentum
- Quote: "satellite operator Iceye, which raised €1 billion in June"
- Description: AI-driven materials discovery specialist
- Why mentioned: Large round in advanced manufacturing
- Quote: "AI-driven materials discovery specialist CuspAI's $450 million Series B"
- Description: European drone maker
- Why mentioned: Case study of defense-driven robotics/drones growth
- Quote: "drone maker Quantum Systems, which raised a $1.2 billion Series D in July"
- Description: Defense tech company
- Why mentioned: Employee tender offer at a very large valuation
- Quote: "Defense tech company Anduril launched an employee tender offer at a $90 billion valuation, Bloomberg reported."
- Description: AI infrastructure startup
- Why mentioned: Large Series D led by Accel
- Quote: "AI infrastructure startup Modal secured a $750 million Series D led by Accel at a $15.75 billion valuation."
- Description: Data center connectivity chip builder
- Why mentioned: $125M Series B
- Quote: "raised a $125 million Series B led by Bullhound Capital"
- Description: Developer of a shared context engine for teams using AI agents
- Why mentioned: Emerged from stealth with top-tier backing
- Quote: "emerged from stealth with $34 million across two funding rounds"
- Description: Chemistry operating system for product R&D
- Why mentioned: $55M Series B led by TCV
- Quote: "raised a $55 million Series B led by TCV"
Harmonic Security
- Description: Workforce security platform developer
- Why mentioned: $50M Series B
- Quote: "secured a $50 million Series B led by Crosspoint Capital Partners"
Zenzap
- Description: Internal AI messaging app for companies
- Why mentioned: $33M Series A led by Bessemer and Lightspeed
- Quote: "raised a $33 million Series A led by Bessemer and Lightspeed"
Altay Therapeutics
- Description: Biotech focused on a specific type of muscular dystrophy
- Why mentioned: $37M Series A
- Quote: "raised a $37 million Series A led by Sound Bioventures and HealthCap"
Pluto Security
- Description: Cybersecurity startup focused on enterprise AI tool adoption
- Why mentioned: $34M Series A
- Quote: "secured a $34 million Series A led by Jump Capital"
Duvo
- Description: Developer of an enterprise operating system
- Why mentioned: $32M Series A led by Balderton
- Quote: "secured a $32 million Series A led by Balderton Capital"
Scimplify
- Description: India-based AI-powered chemical manufacturing platform
- Why mentioned: $25M round led by Hitachi Ventures
- Quote: "raised a $25 million round led by Hitachi Ventures"
Causa Prima
- Description: Madrid-based agent-to-agent network for finance teams
- Why mentioned: $20M seed
- Quote: "raised a $20 million seed investment led by Base10 Partners"
Qilimanjaro Quantum Tech
- Description: Barcelona-based quantum computing startup
- Why mentioned: First close of Series A
- Quote: "secured €19.6 million in the first close of its Series A led by Indra Group"
Undecimal Bio
- Description: Biotech
- Why mentioned: Seed round
- Quote: "raised an $18 million seed round led by 4BIO Capital and IQ Capital"
Confido Health
- Description: Agentic healthcare operating system developer
- Why mentioned: Series A expansion
- Quote: "raised a $12.5 million Series A expansion led by Z47"
Sonilo
- Description: Generative audio models startup
- Why mentioned: $11M round led by B Capital
- Quote: "raised an $11 million round led by B Capital"
Princeton Digital Group
- Description: Warburg Pincus-backed data center operator
- Why mentioned: Seeking a large loan for a Malaysian campus
- Quote: "is seeking a $1.2 billion loan for its data center campus development in Malaysia, Bloomberg reported"
ZO Skin Health
- Description: California skincare brand owned by Blackstone
- Why mentioned: Exit to Galderma
- Quote: "Blackstone agreed to sell California skincare brand ZO Skin Health to Swiss dermatology company Galderma for $1.5 billion"
NOTA
- Description: Hillhouse-backed operator of luxury vacation homes in Japan
- Why mentioned: Planned Tokyo IPO
- Quote: "is planning a Tokyo IPO as soon as the end of this year, Bloomberg reported"
Bending Spoons
- Description: Publicly listed tech company and acquirer
- Why mentioned: Berkshire Hathaway doubled down
- Quote: "Berkshire Hathaway invested an additional $330 million in publicly listed tech company and acquirer Bending Spoons."
Doctolib, Entalpic, Genesis AI, Pigment
- Description: French startups
- Why mentioned: Nvidia plans to invest in all four
- Quote: "Nvidia is planning to invest in four French startups: Doctolib, Entalpic, Genesis AI and Pigment."
Big Yellow
- Description: London-listed self-storage company
- Why mentioned: Activist pressure for a sale
- Quote: "Cleveland-based activist investor Ancora Holdings Group, which has a more than 4% stake in Big Yellow, has urged the London-listed self-storage company's board to explore a sale."
Pear VC
- Description: Pre-seed/seed-focused VC
- Why mentioned: Closed fifth fund
- Quote: "closed on $333 million for its fifth fund dedicated mostly to pre-seed and seed investments"
4. People Identified
Larry Fink
- Description: BlackRock leader
- Why mentioned: Warned of recession risk if data center buildout stops
- Quote: "'So much of our economy is based on the buildout of this capex,' he said."
Nick Best
- Description: Managing director, secondary advisory team at Campbell Lutyens
- Why mentioned: Expertise on LP use of secondaries
- Quote: "'We're seeing more LPs using secondaries as a liquidity tool, whether that's selling out of funds or GP families or even strips of commitments to right-size exposure,' said Nick Best"
Sachin Katti
- Description: Head of computing capacity at OpenAI
- Why mentioned: Departure noted
- Quote: "Sachin Katti is leaving his role as head of computing capacity at OpenAI."
5. Operating Insights
Use secondary-market pricing as an independent check on valuation (LPs and fund-of-funds operators)
Compare GP marks against realized secondary transaction prices, particularly for frequently traded "flow name" funds, and treat persistent gaps as a red flag.
"If there is a consistent gap between how a manager marks its assets and what they sell for on the secondary market, it could well be a red flag."
Use secondaries proactively as a portfolio-management tool
Sell strips of commitments or exit GP relationships to rebalance exposure rather than treating secondaries as distressed liquidity.
"We're seeing more LPs using secondaries as a liquidity tool, whether that's selling out of funds or GP families or even strips of commitments to right-size exposure."
Solve data scarcity creatively in robotics
Robotics startups face a data deficit far larger than language models; building proprietary training environments is emerging as a response.
"Companies are building 'robot gyms' to solve a data deficit. Training robots requires much more data than training a chat model, and robotics startups are getting creative with their solutions to the shortage."
6. Overlooked Insights
Taiwan as a non-Chinese drone supply chain partner
"US defense tech startups see Taiwan as a major opportunity to build drones without Chinese involvement in the supply chain, sparking mutually beneficial partnerships for players in both countries."
This hints at an emerging supply-chain realignment for defense hardware that could create partnership and investment opportunities.
Strategic corporates are leading rounds in AI infrastructure and sovereign-aligned deep tech
Siemens led Skeleton's round, Hitachi Ventures led Scimplify's, Indra Group led Qilimanjaro's, and Nvidia is investing in four French startups. Corporate capital appears to be a growing source of funding for infrastructure-adjacent and defense-adjacent European deep tech.
"Barcelona-based quantum computing startup Qilimanjaro Quantum Tech secured €19.6 million in the first close of its Series A led by Indra Group."