Europe continues to lead through its commitment to climate tech investments, but falls behind when it comes to access to growth capital and risk culture. This is shown in Atomico's State of European Tech report released on Wednesday.
According to the report, 18 percent of all venture capital investments in Europe in 2025 went to impact companies. This is a decline from the peak year of 2023 when the share was 32 percent, but still more than both the US and China.
The report highlights three sustainability areas that are growing in Europe and are among the ten attracting the most funding:
- E-mobility
- Circular economy
- Green buildings
"We can expect sustainability to continue to attract investment as it moves from the experimental phase to large-scale implementation," writes Atomico in the report.
Fusion and hydrogen on the rise
Ambition levels in European sustainability are on the rise, according to the report. Especially in fusion, clean energy, batteries, and carbon capture.
Sweden's Paebbl, which is developing a method to convert carbon dioxide into building materials, comments in the report, highlighting Europe's advantages as a market.
"We have more and more talent that is world-class in Industry 4.0 and building technology. And we have qualities in the European ecosystem that make it a very stable environment to build in. So this was definitely our first choice," says Marta Sjögren, co-founder and CEO of Paebbl, in the report.
Too little public procurement goes to innovation
But there are also structural obstacles, particularly in the public procurement of innovation. In 2014, the EU set a target for 20 percent of all public procurement to go to innovative solutions, but the figure has stalled at 9 percent a decade later. The United States and South Korea perform significantly better.
The report also shows that only 20 percent of European companies actively collaborate with startups, compared to 50 percent in the United States.
In the survey that forms the basis of the report, founders call for faster decisions, greater openness to pilot projects, and simpler contracts.
"The next chapter will be written by those who can move quickly and think long-term. Europe is perfectly positioned to lead – if we choose to do so. That choice requires speed, unity, and boldness," the report states.