The European technology sector faces a decisive decade for its advancement. According to the report State of European Tech 2025prepared by the venture capital investor Atomicand which analyzes the evolution of the sector in 41 European markets; The continent has the talent, ambition and ideas necessary to position itself as a leader in the sector, but it has not yet managed to develop its full potential.
In a framework of optimism for the progress achieved, and with a European technology sector that has a value that is already close to 4,000 million dollars (15% of the continent’s GDP), the report highlights that Europe already has the foundations laid to advance in this field.
So he, and deep tech and the defence tech They are consolidated as the three great engines of European technological development. AI continues to attract the majority of investment, both in enterprise applications and foundational models. However, the deep tech gains weight as a basis for scientific innovation and industrial competitiveness, while defence tech emerges as a new strategic focus, driven by the need to reinforce technological autonomy and security in the region.
Currently, the continent has almost 40,000 funded technology companies, compared to the 13,000 it had in 2016. But Atomico, from the report, points out the existence of structural and regulatory barriers that could affect the growth and advancement of the European technology sector.
To solve them, the report argues that simplifying and unifying the European regulatory framework to be able to create, scale and operate companies in 48 hours under a common structure is key. Also attract and retain talent through a unique system of technological visas, and greater labor mobility within the continent.
Furthermore, also They call for the mobilization of European capitalespecially that coming from pension funds, to promote integrated and deep financial markets, and a promotion of the positive vision of entrepreneurship, with regulation that facilitates a new beginning after a failure.
The European technology sector in Southern Europe and Spain
The report states that the Southern Europe constitutes a region of high technological dynamism, with investment capture forecasts in the area of 2.9 billion dollars. It is therefore the fifth area with the highest financing on the continent. In this framework, Spain stands out for its resilience and capacity for growth.
Spain, which occupies seventh place in the European technology sector, is expected to reach 2,000 million dollars in technological investment in 2025, compared to 1,700 million in 2024, which represents a year-on-year increase of 18%.
There are already a dozen unicorns in the country, one more than last year. Among them is vLex, which combines AI with the world’s largest legal database to transform legal practice. Also noteworthy are the financing rounds of Multiverse Computing, of 208 million dollars; and Factorial, with 120 million dollars and closed last March.
The push of AI and deep tech, which already account for 36% of European venture capital investment, reinforce Spain’s position as a benchmark in the south of the continent in strategic sectors. Furthermore, Spain captures 5.5% of the first international hires of European startups in the Series A phase, due to its attractiveness as a gateway to the Spanish-speaking market.
Regarding talent, 39% of those surveyed in Spain are more optimistic about the future of the European technology sector than in 2024. 44% maintain the same level of confidence, and only 18% are less optimistic than last year.
Europe currently has 2,850 active investors, more than double the number 10 years ago. As for unicorn companies, there are already 400. Of them, 28 have emerged in 2025. In Southern Europe there are already 25 unicorns, with Portugal, Italy and Spain as prominent poles.
The European venture capital sector also outperforms the United States in profitability ten years from now, and institutional investments are beginning to strengthen, according to the report. As proof of this, the increase in the participation of the European Investment Fund in Southern Europe: it has gone from 8% to 24% in one year.
Tom Wehmeier, partner and Head of Intelligence at Atomicoemphasizes that «the Technology is no longer a sector, it is the force that is redefining how we govern, how we defend ourselves, how we generate energy or manage health. Technological sovereignty is not about protectionism, but about capacity and choice. “Europe must build the trust, capital and conditions necessary to lead autonomously and define its own future.”
To Sarah Guemouri, Principal at Atomico«he talent and ambition are here. What is missing are the conditions for that potential to translate into global leadership: simpler regulation, patient capital and public commitment. “The next decade will decide whether Europe sets the course or lets others define it.”
