Europe's dealmaking quarter: defence unicorns, a fusion megaround, and a deep-tech funding wave

The signals we surfaced across Europe over the last three months, and what they tell you about where capital is moving. Three themes stood out: defence and dual-use going mainstream, deep tech and energy absorbing the largest cheques, and a broad mid-market funding wave that most league tables miss.

Step back from any single headline and the last three months tell one story. Capital is concentrating in European sovereignty plays, defence, energy independence and compute, while a deep mid-market keeps funding under the radar of the big rankings. Those mid-market rounds are exactly where the next advisory mandate forms, and they rarely make the headline league tables.

And the map of where the deals are is unambiguous. The UK is the centre of gravity for European growth capital, but the mid-market tail runs right across the continent, from Paris and Munich to Milan, Stockholm and Vilnius.

Deep tech and energy took the biggest cheques

The largest rounds of the quarter went to hard technology and energy independence, the areas where Europe is deliberately trying to build sovereign capability.

• Proxima Fusion raised €411M, Europe's largest private fusion round to date, led by Google and RWE to build its stellarator demonstration plant (Germany).
• QuantumDiamonds raised €91M to scale quantum-based semiconductor inspection (Munich).
• Axle Energy raised €21M to run virtual power plants across 300,000 devices (London).
• e-peas raised €19.2M for ultra-low-power energy harvesting (Belgium), and Toulouse's Bohr Energie took €10M for AI-powered renewable aggregation.

Defence and dual-use went mainstream

The clearest structural shift of the quarter: defence and dual-use moved from the fringe to the centre of European venture and growth capital.

• Kraken Technology Group became Europe's newest maritime-defence unicorn on a €152.9M Series B, building uncrewed surface vessels (London).
• Expeditions closed a €197M, BAE-backed Fund II to back around 40 European defence-tech startups (Poland), a signal of multi-year pipeline, not a one-off.
• THEON International entered exclusive talks to acquire HGH Infrared Systems from Carlyle (defence optics).

A mid-market and fintech funding wave

Beneath the megarounds, the real density sat in the €5M–€200M mid-market, across fintech, health tech, robotics and industrial AI.

• Oxylabs ended its bootstrapped run with €113.6M at a €3.1B valuation, a new Lithuanian unicorn, while Paris's Skello secured €200M for AI frontline-workforce management.
• Spain's Factorial raised €129M to reach a €2.1B valuation, and Lisbon's BIZAY took a €48.7M Series D as it pushes to profitability.
• Alchemab Therapeutics secured €29.3M, the British Business Bank's largest life-sciences investment yet (London), and UK simulation-AI company PhysicsX raised a ~€225M ($300M) Series C led by Temasek.
• Fleek (€22M), Aria (€7M plus a €240M debt facility), Panora ($5M), CurifyLabs (€12M), Pixel-Flo (€6.1M), HIVE ($15M), Luffy AI (£8.1M) and Worldmodeldata (€8M) rounded out a busy quarter.

Selected M&A

The strategic and sponsor-led side of the market kept pace with the funding wave.

• CVC acquired Irca from Advent International (food ingredients).
• Korn Ferry acquired AMS to build a global talent-consulting platform.
• ICOP launched a share exchange offer for Trevi, creating a combined group worth more than €1B (Italian construction).

The mega-deals make the headlines. The density of mandates sits in the mid-market, where serial acquirers and newly-funded scale-ups form advisory demand weeks before any RFP.

The outlook: three things to watch into Q3

1. Defence pipeline, not defence moment. A BAE-backed fund closing €197M to seed 40 companies is a forward order book. Expect a steady stream of follow-on rounds, buy-side interest and dual-use carve-outs, and the strategy and integration mandates that trail them.

2. Sovereignty capital re-platforms whole sectors. Fusion, quantum, semiconductors, sovereign compute and energy flexibility are drawing the biggest cheques. This is capital-intensive, integration-heavy work, exactly the profile that converts into multi-year advisory programmes.

3. The mid-market is the engine. The volume is not in the megarounds, it is in the €5M–€200M band across the UK, France and Germany. Each Series B and C is a company about to hire, acquire or restructure, and a mandate forming before the brief exists.

How we see it first

None of this arrives as an RFP. It arrives as a funding announcement, a fund close, a filing, a hire, a clearance. StrategyAI sequences those fragments across thousands of European and Middle Eastern companies into a ranked, evidence-backed feed, so a partner sees the mandate forming, in their sectors, before the brief exists. Not more data. The next move, with the evidence and a warm route to the buyer attached.